Court gives approval for Thai Airways restructuring

Bangkok

THAI Airways International Pcl, the nation's flagship carrier, got court approval for its business restructuring on Monday.

The Central Bankruptcy Court decided that the airline can proceed with its business reorganisation plan, a crucial step forward for the embattled company, which has around 350 billion baht (S$15.3 billion) of debt, according to Chansin Treenuchagron, its acting president.

The flagship carrier is facing one of its biggest challenges in its 60-year history as the pandemic hits the country's tourism-dependent economy. The company's shares jumped as much as 10.7 per cent, the most since Aug 5. Shares of Nok Airlines Pcl, a budget carrier which Thai Airways holds a stake in, also rose.

The Covid-19 crisis has devastated the global travel industry, forcing airlines to suspend flights, lay off employees and seek financial help from governments and investors. Companies such as Virgin Australia Holdings Ltd and Avianca Holdings SA, Latin America's second-largest airline, have gone into administration or sought bankruptcy protection.

If the airline fails to rehabilitate, it will damage the company, employees, debtors, investors and the whole economy, the court said in a statement after ruling on the carrier's petition.

Industry strains have been mounting in Asia, with Singapore Airlines Ltd eliminating about 20 per cent of its workforce.

The court also approved Thai Airways' request to appoint EY Corporate Advisory Services Ltd and the carrier's board members as debt revamp planners. The airline plans to submit a debt plan to the court in the fourth quarter and aims to complete the restructuring process in five years, according to Mr Chansin.

"The court's debt rehabilitation approval is just a tiny step," Chanchai Chaiprasit, chief executive officer of PricewaterhouseCooper's Thai unit, said before the ruling. "It's an uphill task to come up with a debt plan that would satisfy banks, aircraft lessors, suppliers and other lenders."

Thai Airways was dealt a blow recently, when the nation's Ministry of Transport identified potential corruption in underpricing of tickets and excessive overtime costs. Thailand's Ministry of Finance owns around 48 per cent of Thai Airways, according to an August filing.

The airline had defaulted on loans and bonds totalling 85 billion baht, or 33.1 per cent of its total assets, according to its latest statement on July 22. It reported a net loss of 28 billion baht in the first half of this year, a more-than-fourfold jump from 6.44 billion baht during the same time a year ago as the carrier cancelled scheduled flights from April to comply with government rules to contain the pandemic. BLOOMBERG