The cabinet on Tuesday resolved that cash-strapped Thai Airways International (THAI) would file for bankruptcy at the Central Bankruptcy Court in order to work out its rehabilitation plan.
Prime Minister Prayut Chan-o-cha said it was the best course to help the troubled airline back onto its feet. Under the rehabilitation plan, THAI would not receive financial assistance from the government and its 20,000-member staff would not be laid off.
"It is a difficult decision but it is in the national and public interest," he said.
The other two options -- that the government decided against -- were to find money for the airline and to let it go bankrupt on its own, he said.
The prime minister also said that it had been difficult to rehabilitate THAI because there were legal restrictions under labour and state enterprise laws.
To send the airline to the Central Bankruptcy Court was the best choice and there would be many subsequent procedures to solve the internal problems at the enterprise, Gen Prayut said.
"Today it is time to show the courage to undergo the rehabilitation process at the court. Today Thailand and countries worldwide face a crisis. Thailand must spend money to help people, farmers, SMEs, wage earners, self-employed people and those who work hard for their families," he said.
"The Covid problem is not yet over. The most serious issue is the survival of the people of Thailand. I do not know when they can return to normal work. This is a crisis that will continue in the future."
Gen Prayut said that THAI would continue operating.
"With professional management, it will regain its strength. Its staff will keep their jobs and it will be restructured. The court will decide the details," he said.
Acting THAI president Chakkrit Parapuntakul said the airline would not go bankrupt but would carry out its rehabilitation plan effectively. Pending the rehabilitation process, the airline would continue with its normal service, he said.
According to the Stock Exchange of Thailand, THAI's assets were recorded at 256 billion baht at the end of last year while its total debts stood at 245 billion baht. The airline's debt-to-equity ratio has skyrocketed to 21:1.
THAI recorded a net loss of 11.6 billion baht in 2018 and 12 billion baht in 2019. For the first half of this year, the airline is projected to record a loss of 18 billion baht due to the impact of the Covid-19 crisis.