THAI AIRWAYS TRIES TO AVOID BANKRUPTCY

The national airline of Thailand applied to the court. The reason for the appeal is the desire to avoid bankruptcy and implement the restructuring proceedings. If the local court makes a positive decision, Thai Airways International will be able to not pay its debts for some time. But the question is - will the measure, restricting the rights of the lenders to demand the immediate payments from the air carrier, help to save the company from the bankruptcy?

We should recall that the Thai Airways company, which was founded 60 years ago, is a national premium air carrier of Thailand. Its controlling stake (51%) belongs to the state, and the company itself is a part of the Star Alliance. The main part of the Thai Airways air fleet consists of long-haul wide-body vessels (Boeing 777, Airbus A380, etc.).

Before the start of the COVID-19 pandemic, the airline operated regular flights in 74 directions with a fleet of 82 aircraft. Now almost all the employees (more than 20 thousand) work remotely, and the company itself stopped to operate the flights by the order of the authorities from the end of March. The answer to the sanitary-epidemiological regime, approved by the government of the country and causing huge losses to the company was a government meeting, at which it was decided to provide the carrier with maximum support.

According to some sources, the total debt to the creditors is 92 billion baht (approximately € 2.6 billion).

However, the experts note that the financial problems of Thai Airways have started long before the coronacrisis - losses have accompanied the company since 2013. The difficult situation was caused by two factors at once: the pressure from the competitors, working in the low price segment, as well as the changes in the national currency (baht) against the dollar and the euro. At the end of 2019, the experts evaluated the financial condition as critical. With the assets of $ 8.1 billion, the company has accumulated the obligations of $ 8.04 billion, thereby putting itself on the brink of bankruptcy.

In October last year, the president of Thai Airways issued an appeal in which he warned of a difficult situation and a possible termination of the activities. The press service subsequently tried to disavow the words of Sumet Damrongchatham, pointing to the misinterpretation of his speech by individual media.

Since then, the cost-cutting regime has become dominant in the airline.

The managers tried to reconsider the strategy of the company to abandon insufficiently productive flight directions, including flights to Moscow and back in the summer (from June to September). However, due to the pandemic, the flights were canceled much earlier.