Thai Airways International’s union has pledged to “oppose to the end” a possible reduction of the Finance Ministry’s stake in the national carrier that would end its state-enterprise status.
Nares Puengyam, president of the union, on Monday issued a statement on the union’s position regarding the restructuring plan.
According to the statement, THAI employees agreed with the proposal by the Transport Ministry on debt restructuring under the supervision of the central bankruptcy court.
“We are confident the company can be rehabilitated under this proposal. The plan would benefit the company, which will be back in business with improved competitiveness,” read the statement.
But the group disagreed with the ministry’s proposal for the Finance Ministry to reduce its stake in the airline by 2%, citing two reasons.
First, as the company will be restructured under the supervision of the court, the downsizing of the stake by the Finance Ministry could lead to creditors opposing the restructuring and using the bankruptcy law as a tool.
Second, the union continued, the stake reduction beyond 50% of all shares would automatically dissolve the union, leaving employees unprotected at this critical time when staff numbers would be cut and their benefits trimmed.
"We, therefore, disagree [with the reduction of the stake held by the Finance Ministry] during this time and we will oppose it to the end," read the statement.
The Finance Ministry is currently the largest shareholder of the airline, with 51%, followed by the ministry’s two publicly traded Vayupak funds (7.6% each) and Government Savings Bank (2.1%).
THAI is seeking a 54-billion-baht loan from the government for use as working capital.
It has 245 billion baht in debt compared to 257 billion baht in assets. The liquidity boost it is seeking will be enough to keep it afloat for only five months. An 80-billion-baht capital increase is also needed after that.
Its main creditors, however, are state-owned Krungthai Bank and Government Savings Bank. Its debt is also held by dozens of savings cooperatives of various organisations.
Among its major problems is productivity. THAI has around 30,000 employees including outsourced staff and revenue per employee per year stood at 8.8 million baht, lower than the industry’s average. Another problem is competitiveness from loss-ridden routes and competition from budget airlines.
THAI's union and some academics claimed the downward spiral began with the open-sky policy that brought on competition from low-cost carriers, the plan to buy a fleet of gas-guzzling Airbus A340 and the launch of loss-making direct flights to New York, all of which happened during the Thaksin Shinawatra government.
On the rehabilitation plan, critics warn the government against using taxpayers’ money to prop up THAI when it is still a state enterprise. They reason creditors and shareholders, as well as management, must first take responsibility for the damage caused by mismanagement over the years before any help from the government comes.
Few support the bailout plan for the airline but those who do cited the debts THAI owes to state banks such as Krungthai Bank and Government Savings Banks, and its debentures held by dozens of savings cooperatives, which could suffer the consequences if THAI is allowed to go under.
THAI shares plunged 14.9% to 4.10 baht each in trade worth 363 million baht on the Stock Exchange of Thailand on Monday.