Airlines want answers on soft loans

Airlines want answers on soft loans

Patience wearing thin after six months

Executives of seven airlines meet Prime Minister Prayut Chan-o-cha at Government House in Bangkok in late August. (Government House photo)
Executives of seven airlines meet Prime Minister Prayut Chan-o-cha at Government House in Bangkok in late August. (Government House photo)

Airlines want the government to announce a definitive decision on whether they will receive soft loans, which they requested six months ago, after a deputy prime minister hinted they might not receive the aid package.

"We just want to hear a clear decision, yes or no, so we can adjust our strategy and find alternatives if needed," said Tassapon Bijleveld, executive chairman of Asia Aviation, the largest shareholder of Thai AirAsia (TAA).

Even though domestic demand is strengthening, the number of passengers is still a far cry from normal, he said.

While the government has asked airlines to keep employees on, TAA has followed the suggestion by freezing employee headcounts while offering wage cuts such as leave without pay.

Mr Tassapon said airlines in the past month have negotiated with some creditors and waived some fixed cost items, but payroll remains a heavy burden they have to carry on their own.

"TAA will not lay off any employees until we know exactly the financial situation we'll face when we have to run a business without financial stimulus," he said.

Deputy Prime Minister Supattanapong Punmeechaow said on Thursday that the 24 billion baht in soft loan requests from seven airlines is under Finance Ministry consideration.

Airlines should ultimately try to settle their debts with creditors and should not use soft loans for repaying debt, particularly for deals that cannot be negotiated, Mr Supattanapong said.

"The decision will be announced soon," he said. "We don't have to wait for a new finance minister to proceed with this request. We have to see the purposes of the soft loans. Will airlines purchase new aircraft or just want to get rid of debt they cannot negotiate, such as aircraft leases or purchases?"

Regarding the 500-billion-baht soft loan programme offered to small and medium-sized enterprises, which report receiving just 100 billion baht so far, Mr Supattanapong said that if borrowers use the soft loans for existing debt repayment, instead of new investment, the country will not benefit from the scheme.

The next step after this measure ends is to seek individual negotiations with each lender to resolve the issues, he said.

Nuntaporn Komonsittivate, head of commercial operations at Thai Lion Air, said the feedback from the government did not buck expectations, as airlines have waited for six months without concrete progress and have prepared for the worst-case scenario.

"How can we invest when we have to struggle to make payroll?" she said. "If the government rejects the loan proposal, we have to reduce fixed costs further, as domestic demand is growing too slowly."

Ms Nuntaporn said the average load factor is 70%.

Certain routes can help recover the aviation business, such as Bangkok-Nakhon Si Thammarat, a popular route with an 80% load factor, she said.


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