THAI seeks B25bn loan, expands cargo flights by 30 routes
Thai Airways International (THAI) is expected to seek 25 billion baht in loans to boost its financial liquidity as the airline expands its cargo flight services to a further 30 routes from now until March next year.
Finance Minister Arkhom Termpittayapaisith said the airline's business rehabilitation plan administrators recently met Prime Minister Prayut Chan-o-cha to report about the plan. The PM is thought to be pleased with the progress. The Finance Ministry, which is one of the airline's shareholders, agreed the rehabilitation plan, which was approved by the Central Bankruptcy Court on June 15, has made more progress than anticipated, Mr Arkhom said.
Regarding the airline's liquidity situation, the plan administrators said it was initially predicted that the airline would have run out of liquidity in July, though the carrier has still been able to keep its business operations running, Mr Arkhom said.
He added the airline last month reported its profits which resulted from its business operations, not from the sale of its assets.
Therefore, the airline may need a loan of only 25 billion baht to boost its financial liquidity, instead of an initially estimated 50 billion baht, Mr Arkhom said.
He said the company will make a decision on the borrowing method and there will be no need for the Finance Ministry to guarantee the loan.
This is because the airline is no longer a state enterprise, but a private company.
Mr Arkhom also said the airline's ticket bookings are expected to increase following the country's reopening on Nov 1 and this will boost its liquidity and profits and the need for loans will decline. Nond Kalinta, the airline's vice president for commercial affairs, said the company will provide cargo flight services on 30 routes covering Asia, Europe and Australia, in line with the airline's winter flight schedule between Oct 21 and March 26.
He said the airline provided a total of 1,622 cargo flights between July and September, earning more than 2.5 billion baht, with a growth rate of about 19%, which is expected to increase during the winter flight programme.
The International Air Transport Association (IATA) recently released data for global air cargo markets showing that demand continued to be well above pre-crisis levels and that capacity constraints persist in the wake of Covid flight curbs.
"Air cargo demand grew 9.1% in September compared to pre-Covid levels. There is a benefit from supply chain congestion as manufacturers turn to air transport for speed," said Willie Walsh, IATA's director-general. "But severe capacity constraints continue to limit the ability of air cargo to absorb extra demand," he said, adding supply-chain bottlenecks need to be solved.