- A Monitor Desk Report 04 May, 2020 | 766 Views|-+
Dhaka: The flag carrier Thai Airways is receiving a USD 1.8 billion bailout fund from the state to survive through the crisis caused in the industry by the coronavirus pandemic, the government of Thailand announced on April 29.
The government also confirmed that a committee of aviation and business professionals will oversee the airline as it restructures its debts and raises capital. However, the loan is conditional on the airline’s plans for the future.
Thai Airways has been struggling for a while. The airline posted a net loss of USD 65 million way back in 2017. Every year since then has seen the airline accumulate more debt and the airline has been in growing trouble for almost a decade.
The State Enterprise Policy Committee (SEPC), chaired by the Prime Minister, agreed to provide the loan to the airline so long as a plan was put in place to rehabilitate the airline. Finance specialists will work with the airline to ensure the airline is cutting costs, renegotiating its debts, and is streamlining the company. It is thought there will be a new management team to oversee this process.
The loan will be provided in small chunks throughout the year as and when the rehabilitation plan is proven to be effective, or when the airline needs the money to implement changes. Part of the loan will be used immediately to deal with the shortage in cash and the liquidity issues faced by many airlines at the moment.
The airline will remain a government enterprise for the time being, but significant changes will have to be made. The airline has a huge 103 aircraft fleet; this number will no doubt have to be reduced. There will also be potential staff cuts and changes to the airline’s network. If the plan is fully approved by the government next week, the airline will likely issue new shares in November to raise capital and fund some significant changes.
Thai Airways is so ingrained in the country’s identity and tourism industry that it is not a surprise the government is willing to rescue it. The government seems to be taking a sensible approach in overseeing how the money is spent, not just providing the money.