Push to keep THAI in the sky
Creditors are likely to try to keep Thai Airways International (THAI) afloat to pay off debts, raising hope the airline's rehabilitation plan will pass the court's scrutiny, according to a source in the Finance Ministry.
The creditors are not out to seize the airline's business. If rehab plan fails and the airline cannot make an income, it will head for default and the creditors knew they would be in trouble too if that were to be the case, the source said.
The best way forward is to keep THAI flying and that would be a "win-win" formula for both the creditors and the airline, the source added.
Before the cabinet decided to let THAI file for bankruptcy and seek debt rehab, the Finance Ministry had other plans, he siad.
The ministry wanted to offload part of the government's stake in the airline to Dhanarak Asset Development Company Limited, which is supervised by the Treasury Department. The intention was to maintain THAI's status as a state enterprise for which the Finance Ministry would be legally permitted to guarantee a bailout loan.
The plan had also called for a replacement of the airline president and revamp of the company, including restructuring ticket sales that relied heavily on agents.
The source said the plan met with public resistance as it required pouring taxpayers' money in to prop up the cash-strapped airline. In the end, the cabinet chose to subject THAI to rehab via the Central Bankruptcy Court which accepted the airline's petition for examination last week.
The source said the rehab plan prepared by THAI stands a good chance of sailing through creditor vetting and winning their approval. Many major creditors based in Thailand are state enterprises including PTT Plc which supplies petrol to the airline.
However, a hurdle ahead for the rehab executors has to do with the inevitable downsizing of an airline with more than 20,000 employees. It is reported that this retrenchment will affect one-third of the workforce, which is certain to run into internal opposition.
The airline's union, disbanded when THAI lost its state enterprise status, has already voiced its resistance to the airline's extension of salary cuts to the end of this month.