Thai Airways International Plc is a step closer to restructuring via a bankruptcy court after a key government panel backed the plan, which is due for consideration by the Cabinet on Tuesday.
The State Enterprise Policy Committee that oversees policies for state-run enterprises agreed that the airline should seek such a rehabilitation, government spokeswoman Narumon Pinyosinwat told reporters on Monday.
Governments worldwide have devoted more than $85 billion to propping up airlines after the coronavirus pandemic wiped out travel demand and grounded fleets. Thailand’s borders are restricted under a state of emergency through May and most inbound international flights are banned until the end of June, though some domestic flights have restarted.
THAI, majority owned by the Finance Ministry, has outstanding debt of about 92 billion baht of which approximately 78% is owed to bond investors, according to data compiled by Bloomberg.
Tris Rating Co, which is partly owned by S&P Global Ratings, said in a statement that the fact officials are considering filing for bankruptcy restructuring “has eroded our confidence that necessary actions from the government will be taken to enable THAI to meet all of its obligations in a timely manner.”
Tris Rating has downgraded its rating on Thai Airways and the carrier’s senior unsecured bonds to BBB from A.
“Holders of Thai Airways’ bonds are watching closely for details of its rehabilitation plan,” Thiti Tantikulanan, senior executive vice president of Kasikornbank Plc, said at a seminar. “The impact on the overall bond market will be limited because Thai Air bonds have been mostly sold to a limited group of investors.”
THAI has posted annual losses almost every year since the start of 2013. The flag carrier was under pressure to turn around its performance even before the Covid-19 outbreak.
Shares in the carrier slid as much as 13% on Monday to the lowest level in more than a month. The stock has tumbled more than 90% from a peak in 1999.