Nok Air insisted on Thursday its business would be able to return to solvency despite the airline following Thai Airways' lead and filing a business rehabilitation request with the Central Bankruptcy court.
The airline was reported to have 26.79 billion baht worth of debt as of March 31.
Nok Air chief executive Wutthiphum Jurangkool said the impact of Covid-19 had prevented the airline from flying its 18 international routes, while domestic routes in 23 provinces were still running less often as it could only fly on 30% of its pre-pandemic schedule.
Mr Wutthiphum said the company has had to pay out passenger refunds of around 100 million baht per month since the early days of the pandemic.
"It's company policy to refund all passengers who had to cancel flights during the coronavirus crisis as soon as possible, resulting in a heavy burden on us, as well as a lower income," he said.
He estimated just 200 customers were still waiting for their refunds.
Although some of the company's creditors had made compromises, including allowing repayments to be made in instalments, the fact that fixed costs exceeded the airline's income each month had resulted in its board of directors applying for rehabilitation, he said.
Mr Wutthiphum said Nok Air currently had no intention of downsizing its workforce or operations, and would add two new 189-seat Boeing 737-800s to the fleet by the end of this year.
He said the company still had assets worth 23.8 billion baht but had to submit a business rehabilitation plan to the Central Bankruptcy court this year.
If the plan is accepted, the company will have to follow instructions related to the number of planes it flies and staff that are employed.
"The airline won't be bankrupt but we have to solve our liquidity problem," he insisted.
"Our 1,500 employees will continue to do their jobs as they are now."