The Public Debt Management Office (PDMO) is poised to secure 54 billion baht worth of bridge loans to boost liquidity for beleaguered Thai Airways International Plc (THAI) to enable the national carrier to undertake a business rehabilitation plan.
The bridge loans guaranteed by the Finance Ministry will be borrowed in phases to match THAI's cash flow, an informed source at the Finance Ministry said, adding that the loans will mature for up to one year.
The 54 billion baht in short-term loans will be used as working capital to finance business operation expenses, probably including an early retirement scheme, the source said.
In exchange for the bridge loans that are crucial for the company to avoid running out of money, THAI is required to undertake a business rehabilitation plan, which includes cost management, the source said.
Downsizing THAI's employee headcount by 30-40% is an integral part of the rescue plan because the national carrier is overstaffed, the source said.
THAI, in which the Finance Ministry holds a 51% stake, suffered huge financial losses for several years before the coronavirus outbreak. According to Stock Exchange of Thailand data, the national carrier posted a net loss of 2.11 billion baht in 2017, widening to 11.6 billion baht in 2018 and 12 billion baht last year.
Recapitalisation is also included in the airline's business rehabilitation plan, as its capital is now in negative territory, the source said, adding that the company is required to lower paid-up capital ahead of the capital increase to let existing shareholders take responsibility for writing off accumulated losses.
The State Enterprise Policy Committee chaired by Prime Minister Prayut Chan-o-cha recently approved in principle the airline's business rehabilitation plan, which will seek cabinet approval later.
Gen Prayut said on May 5 that THAI's rescue plan had yet to go before the cabinet.
He warned that there would be no second chances for the flag carrier, as the government has given it a chance but it has never succeeded, so all staff should coordinate in cutting expenses to comply with the business rehabilitation plan.