Dhaka: State-owned Thai Airways is in talks with the government to approve a USD 2.2 billion bridge loan, with the Finance Ministry as a guarantor as it is alarmingly close to becoming the world's first national flag carrier to go bust amid the coronavirus pandemic, with only days left to maneuver out of its latest financial straits.
THAI made the request based on the hypothesis that the pandemic will be contained by October.
Somkid spoke on the occasion last week during a special meeting held to discuss the airline's future. As the chair of the meeting, the deputy premier ordered Thai Airways and related agencies to set up a working group to come up with a rehabilitation plan. Whether the national flag carrier would remain as a state enterprise depended on the quality of the plan, Somkid warned.
A solution must be finalised this week, or before the cabinet decides the airline's fate at a meeting that could be held as early as April 28.
Privatising the national flag carrier, however, may prove difficult. Thai Airways is important for Thais going abroad, including King Maha Vajiralongkorn, who spends most of his time in Germany. This will likely remain so even after the pandemic if the company survives.
Even before the virus hit, Thai Airways was experiencing a slump. The airline announced a net loss of THB 12 billion baht for 2019, its third straight year in the red. Total shareholder equity was THB 11.7 billion at the end of 2019, down 42.5 per cent from the previous year. Compared with the end of 2010, when the airline most recently raised capital, total shareholder equity has decreased by 84.5 per cent.
Since the coronavirus outbreak, demand for air travel has plummeted and stringent measures to prevent the spread of COVID-19 have been put in place. As a result, Thai Airways has suspended most of its international and domestic passenger services, cutting itself off from its main source of revenue.