Many airline's problems have been worsened due to the COVID-19 pandemic; Thai Airways is just one of those airlines. According to multiple sources, Thai Airways will file for bankruptcy protection.
Thai Airways is owned by the Thai government. The Thai government will go to bankruptcy court to submit a rehabilitation plan for the carrier.
A government spokesperson states, "The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court... the procedure will be submitted to cabinet tomorrow." This process is similar to Chapter 11 in the U.S., according to the spokesperson.
Previously, Thai Airways had a rescue plan that consisted of a 58.1 billion baht loan ($1.4 billion) from the government. However, for the long-term, this would have added more debt on top of its current 92 billion baht ($2.87 billion dollars) in debt, possibly affecting the airline's long-term viability. Most of its debt is in the form of bonds, which could default very soon.
If Thai Airways undergoes a "rehabilitation", Thai Airways will restructure its fleet. Currently, Thai Airways has an assortment of aircraft, with no streamlined fleet. Thai Airways has 15 A330-300's, 12 A350-900's, 6 A380's, 7 B747-400's, 6 Boeing 777-200ER's, and Boeing 777-300, 14 Boeing 777-300ER's, 6 B787-8's, and 2 B787-9's. Its B747-400's could be at risk of accelerated retirement, previously scheduled for retirement in 2024.
Thai Airways has been undergoing losses ever since 2013. Last year, Thai Airways lost almost $400 million dollars. These losses are attributed due to the high competition that Thai faces. For example, there has been a continuous rise in low-cost carriers in Southeast Asia, with carriers like AirAsia, Lion Air, Thai VietJet, among others. Additionally, its long-haul services are overshadowed by the ME-3, not to mention other dominant Asian carriers like Singapore Airlines. With this, Thai Airways has found it increasingly hard to find its footing in the crowded market.
Many carriers are starting to either liquidate or Chapter 11. For example, last week, Avianca filed for Chapter 11 Bankruptcy in the U.S., one of the largest players in the Latin American aviation sector. Additionally, Virgin Australia and Air Mauritius filed for voluntary administration, last month. The dominoes are only starting to fall and the effects of COVID-19 will only be more painful in the coming months as airlines grasp for liquidity. Stock markets bull runs are only a cushion for a large drop into one of the worst recessions of all time.
While times may be tough for people from all walks of life, we salute and pray for those who are affected day by day with the pandemic from doctors to public service officials to mailmen to aviation workers. TheExplorerBlog stands with everyone during these tough times.
What are your thoughts on Thai Airways filing for bankruptcy protection? Do you think Thai Airways will come back stronger? Leave your thoughts in the comments below.
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