Airlines give up on state's soft loans

Airlines give up on state's soft loans

Seven carriers see no hope of support

Puttipong Prasarttong-Osoth, Bangkok Airways president and president of the Airlines Association of Thailand (Bangkok Airways photo)
Puttipong Prasarttong-Osoth, Bangkok Airways president and president of the Airlines Association of Thailand (Bangkok Airways photo)

The long-awaited soft loans for local airlines valued at 5 billion baht have failed to materialise as there is no further support from the government to shore up the aviation business, while Bangkok Airways is banking on a recovery in international tourism to help revive its profits.

Puttipong Prasarttong-Osoth, Bangkok Airways president and also president of the Airlines Association of Thailand (AAT), said after many discussions, the government hasn't provided any commitment to allocate soft loans and seven airlines are giving up hope of getting that support.

"From the government's explanation, they cannot allocate soft loans to us because it might discriminate against other industries that also suffer from the pandemic. The 4 billion-baht loans that Exim Bank [The Export-Import Bank of Thailand] has provided to us are ordinary loans with normal interest rates which still require collateral assets, which are not the conditions we requested," he said.

Last year, seven local airlines submitted 24-billion-baht's worth of soft loan requests to the state, but due to the subdued response, they reduced the proposed figure to 5 billion baht.

"We do not expect to receive a soft loan from the government and every airline has to find its own way to manage cash flows."

Mr Puttipong said Bangkok Airways plans to reduce its fleet from 38 to 30 aircraft by 2022, which will help reduce fixed costs by around 300-400 million baht per aircraft per year.

The number of employees at Bangkok Airways was cut by 30% during the pandemic, and the firm may have to streamline its workforce again next year.

After the soft loans, which were set to help sustain employment for 20,000 staff in the local aviation industry, were not approved, every airline also had to downsize or cut expenses within its own human resources to be in line with actual operations and existing fleet, he said.

Bangkok Airways reported total revenue during the first nine months at 3.47 billion baht, down by 57.5% year-on-year, while flight frequencies shrank 75.9% from the same period last year with load factor of 55.2%.

Recently, Bangkok Airways announced the resumption of a second international route from Bangkok to Phnom Penh in Cambodia, starting from Dec 1. Mr Puttipong said this route had received positive forward bookings at 30-40% as there are no mandatory quarantine requirements on either side.

The airline plans to resume more international flights including Samui-Hong Kong during April-October 2022, and is considering Luang Prabang, Yangon, Danang, the Maldives and Siem Reap as the next destinations from the end of October 2022.

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