Thai Airways International Plc's (THAI) rehabilitation plan to shed 5,000 employees will target only workers set to retire or seeking early retirement, according to Transport Minister Prajin Juntong.
The remarks by ACM Prajin Tuesday came amid rumours the ailing national flag carrier's financial woes will lead to mass layoffs.
Prior to shaping its rehabilitation plan, THAI conducted an assessment of the airline's business situation. The study found the company should release at least 5,000 employees to reach a suitable ratio of employees per aircraft and estimated THAI should employ no more than 20,000 workers to operate its 100 planes.
ACM Prajin clarified the carrier's position, saying there would be no forced redundancies of employees. According to the plan, the downsizing will be carried out instead through retirements and early retirements each year over the course of several years. THAI has promised incentives and benefits to employees seeking to leave the company early, he said.
"A certain amount of money will be spent in compensation to workers who choose to terminate their contracts. In the long run, however, this sum will pay off and the reorganisation of the airline's workforce will be profitable," ACM Prajin said.
The budget for restructuring the airline's staffing as well as its time-frame has yet to be discussed. THAI executives will shape a plan and forward it to the State Enterprise Policy Committee, or "Super Board", chaired by Prime Minister Prayut Chan-o-cha, he added.
Damrong Waikanee, president of THAI's labour union, said it should not take more than five years for the airline's downsizing goals to be achieved. He said 500 employees are due to retire each year while 500 more will seek early retirement, encouraged by the company.
Mr Damrong said that, as a state-run enterprise, THAI cannot downsize through making employees redundant. However, he warned the airline will need to reduce the number of its outsourced workers by a thousand. At the moment, around 8,000 outsourced workers are on THAI's payroll.
He also said THAI's problems partly stemmed from increases in the number of company executives, which led to poor management. This in turn caused the company to rely heavily on outsourced workers, causing costs to escalate.
On Monday, THAI president Charamporn Jotikasthira addressed the airline's employees at the main office buildings on Viphavadi Rangsit Road.
Several staff members complained the commercial aspects of THAI's rehabilitation plan lacked clarity and they were concerned this would not allow them to compete well in the air travel market, Mr Damrong said.
ACM Prajin maintained there is no plan to downsize Thai Smile Airways, THAI's low-cost subsidiary, for now, but its itineraries will be tweaked to complement THAI's. It will scrap unnecessary routes and focus on domestic flights.
Nok Air will be unaffected by THAI's rehabilitation plan. While the national carrier owns 39% of Nok Air, the low-cost airline has its own executive board which will consider the plan, he said.
THAI's executives will need to consider which of the company's affiliate businesses − such as hotels and fuel pipeline transportation − are profitable and which are not. According to the rehabilitation plan, activities which generate losses will be sold.