Minister lukewarm to calls for airline loans

Minister lukewarm to calls for airline loans

Exim Bank yet to submit proposals

A fleet of Thai Airways airplanes are parked at Suvarnabhumi international airport. The aviation sector has been hard hit by the Covid-19 pandemic. Somchai Poomlard
A fleet of Thai Airways airplanes are parked at Suvarnabhumi international airport. The aviation sector has been hard hit by the Covid-19 pandemic. Somchai Poomlard

Finance Minister Arkhom Termpittayapaisith has responded with many reservations to calls for the government to provide soft loans as a lifeline for struggling airline businesses.

The Export-Import Bank of Thailand (Exim Bank) has been tasked with devising a financial measure to help the airlines, but the bank has yet to submit its proposal to the Finance Ministry, said Mr Arkhom.

Providing soft loans to airlines or bringing such business loans under the Public Service Account means the Finance Ministry has to shoulder the difference of market interest and soft loan interest, he said.

Other sectors may also urge the government to provide loans if the administration offers soft loans to airlines.

Airlines seemed to gradually recover before the second Covid-19 outbreak in Thailand emerged and further examination of each airline has to be made to assess the scale of impact, he said.

It was reported in January that Exim Bank planned to propose a loan measure to the Finance Ministry in early February, aiming to beef up liquidity for crippled airlines to retain employees.

The proposal emphasises helping airlines retain staff by offering financial liquidity through loans, said Pisit Serewiwattana, Exim Bank's president.

The amount of loans will depend on the cost of hiring personnel for each airline, said Mr Pisit. While most of the loan conditions cannot be disclosed yet, loans will be principally offered to Thai-owned airlines, he said.

The aviation industry is among the sectors most affected by the pandemic as countries place stringent restrictions on foreign arrivals because of a persistent rise in infections across the globe.

Thai AirAsia was reported to be keeping only a quarter of staff, asking the rest to take a leave-without-pay offer for four months, starting in February, as a second wave outbreak pummels the aviation sector.

The furlough, the second in the past few months, is larger in scale than the first round late last year.

Nuntaporn Komonsittivate, head of commercial operations at Thai Lion Air (TLA), said airlines have teamed up and asked for a bailout from the government since April 2020.

Even though most of them wanted to secure the soft loans, airlines did not include this loan in their future plans as the scheme had been delayed many times during the past year.

"We could not just wait aimlessly. Airlines have already streamlined operations to reduce our fixed costs. If the government cannot allocate financial aid, we have to find plan B on our own," said Mrs Nuntaporn.

Prior to the new outbreak, low-cost carriers saw a positive outlook for domestic routes as travel demand gained positive momentum starting from the third quarter.

Lockdowns in many provinces, however, caused the average load factor to plunge to the lowest point in January.

The average figure for TLA this month just increased to 30%, but it is still low compared with the normal situation.

"Most of us will struggle to find another way to stay afloat. It could be worse if another wave of Covid strikes," said Mrs Nuntaporn.

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