Thai Airways on Monday 18 said that it would file for bankruptcy after suffering severe economic setbacks in the emergence of the nationwide COVID- 19 pandemic outbreak. The airline has been reporting losses since 2017, but this year due to the pandemic breakout it has incurred huge losses. The country has additionally suffered a large drop in tourism, with the government having banned international flights since April and on May 16 government announced that this would remain so through June.
A spokeswoman for Thai Airways International Pcl said flag carrier would declare bankruptcy in the coming days instead of going ahead with a rescue plan it had drafted following the most recent round of losses as a result of the pandemic. The Prime Minister, as a chairman of the State Enterprise Policy Office, has approved on Monday the proposal that was presented earlier by the Ministry of Transport to file for bankruptcy to enter a rehabilitation plan. The State-Enterprise Planning Office agreed to the proposal and said that the procedures will be submitted to Cabinet today (May 19).
The company generated 12.04 billion baht loss last year and asked the Stock Exchange of Thailand for an extension until August to register its January to March financial statements. The company had previously planned to seek 58.1 billion baht ($1.8 billion) rescue package from Prime Minister Prayut Chan-o-cha’s government, who in recent years has kept the underperforming company from collapse.
“Thailand’s Cabinet approved the plan to restructure Thai Airways International’s finances through a bankruptcy court”, the country’s Prime Minister said on Tuesday (May 19). The plan for a court-led rehabilitation of the national carrier replaces a previous proposal of a government-funded rescue package that was criticized in the country.
Thai Airways had been in trouble even before the outbreak of the nationwide COVID- 19 due to the stiff competition from budget airlines. It posted losses every year after 2012 except in 2016. In 2019 it reported losses of US $377.3 million. The Prime Minister Prayut Chan-o-cha said, “The government has reviewed all dimensions and we have decided to petition for restructuring and not let Thai Airways go bankrupt. The airline will continue to operate.” He also added to his statement that, “Thai Airways will be protected by the courts and professionals will be appointed to oversee the restructuring, adding that the airline workers will continue to have their jobs.”
Thai Airways said the plan will be implemented through the Central Bankruptcy Court and it will work as soon as the restructuring takes place. Thus, Thai Airways today shares surged 11.7 percent, but are still down by about a third this year.