Thai airway file for bankrupty

[Yeshe]

https://www.straitstimes.com/business/companies-markets/thailand-opts-for-bankruptcy-court-with-thai-airways-rehab-plan-instead

Its the beginning.... 

[Neost]

lai liao lai liao...

one after another.

[Soya]

10 minutes ago, Yeshe said:

https://www.straitstimes.com/business/companies-markets/thailand-opts-for-bankruptcy-court-with-thai-airways-rehab-plan-instead

Its the beginning.... 

This kind of 'bankruptcy' is like laoma's fake resign

Just a regrouping. It'll still be there even if there's no good reason to....

 

[Kangadrool]

It's CTR ALT DEL in Microsoft Windows lah.

Will be reborned as Thai Airlines.

 

Edited May 18, 2020 by Kangadrool

[bsswan]

Haha, they went first.....before MAS and CX, which i expected to be before TH.

So they can "restructure" with other people's money before MAS and CX try to take the same money.

[Soya]

1 hour ago, bsswan said:

Haha, they went first.....before MAS and CX, which i expected to be before TH.

So they can "restructure" with other people's money before MAS and CX try to take the same money.

B4 covid, MH supposedly in ICU and ventilator for dunno how many years liao

But amazingly, still afloat today. Maybe fake MC all this while...

 

[Watwheels]

National carrier no doubt will have the govt keep pumping money into it. Since many national carriers are IPO or public listing there are the disadvantages which are mainly high cost of maintaining the company and the risk of founders loosing control over the company. Must be a painful decision.

[Albeniz]

7 hours ago, Kangadrool said:

It's CTR ALT DEL in Microsoft Windows lah.

Will be reborned as Thai Airlines.

 

Reincarnation?

天蠶變.

 

[Count-Bracula]

7 hours ago, Yeshe said:

https://www.straitstimes.com/business/companies-markets/thailand-opts-for-bankruptcy-court-with-thai-airways-rehab-plan-instead

Its the beginning.... 

of the end.

Jialat! 

[Yewheng]

15 hours ago, Kangadrool said:

It's CTR ALT DEL in Microsoft Windows lah.

Will be reborned as Thai Airlines.

 

This time is slightly different due to this covid-19 pandemic.. The losses is too great unless government bill them out.. Don't see how many airlines is able to survive this.. 

[steveluv]

https://asia.nikkei.com/Business/Transportation/Five-things-to-know-about-Thai-Airways-rehabilitation?utm_campaign=RN Subscriber newsletter&utm_medium=daily newsletter&utm_source=NAR Newsletter&utm_content=article link&del_type=1&pub_date=20200825190000&seq_num=7&si=44594

Five things to know about Thai Airways' rehabilitation
Troubled carrier faces bumpy road, even if court approves process next month

Thai Airways planes sitting idle at Suvarnabhumi Airport in Bangkok. A bankruptcy court will decide whether to give the green light to the carrier's rehabilitation process next month.   © Reuters
MASAYUKI YUDA, Nikkei staff writerAugust 25, 2020 10:11 JSTUpdated on August 25, 2020 18:28 JST

BANGKOK -- Thai Airways International will have to endure a massive overhaul of its business and management for years to come in a rehabilitation process under the court's supervision, after the COVID-19 pandemic sent the national carrier into deeper debt.

The final day of initial hearings at the Central Bankruptcy Court took place on Tuesday. The airline's board members and its consulting partner EY Corporate Advisory Services will attend court as witnesses, facing lawyers representing creditors.

The court said it had gained enough information from witnesses to give a verdict, according to local media, but it will allow seven days for parties to file an objection. If there is no objection, the court will decide on Sept. 14 whether to give the green light to the cash-strapped carrier's rehabilitation strategy. This will be formulated by nominated planners, who include the board members and the consultancy.

Why did Thai Airways enter rehabilitation?

The airline has been in financial trouble even before coronavirus struck. Thai Airways recorded net losses for seven of the past 10 years. This was in large part due to unprofessional management involving ex-Royal Thai Air Force officers, strident unions and an inefficiently employed fleet.

The novel coronavirus pandemic dealt a final blow to the airline. The Civil Aviation Authority of Thailand implemented a landing ban on all international flights from April to July, effectively grounding Thai Airways.

The ban was eventually lifted, but travel restrictions into the country meant that the tourism industry continued to suffer. The airline recorded a net loss of 28 billion baht ($900 million) for the first half of 2020. The loss had ballooned 4.4-fold from a year ago.

The court's decision on Tuesday will pave the way for the carrier to officially start drawing up its own rehabilitation plan.

The plan is expected to be submitted to creditors and the court for approval next year. It needs the endorsement of holders of 50% of the airline's debt at least. Rehabilitation administrators will be able to begin restructuring in May or June 2021, if the process goes smoothly. The airline will be given five years to rehabilitate with an option to extend by two years.

What should the rehabilitation plan include?

The plan should include a thorough review of its fleet and routes on their profitability.

Some industry observers have characterized Thai Airways' fleet as objects in a museum. The mish mash collection of Boeing 747-400s, Airbus A330s, Boeing 787-9s and Airbus A380s reflects inefficiencies that Thai Airways has not been able to iron out. Different models have different engines and specifications, forcing the airline to train its engineers for each configuration, inflating maintenance costs.

Some planes are outdated and gas-hungry. On Aug. 13, aviation consultancy Cirium pointed out that airlines tend toward using newer aircraft during this early phase of reopening borders. With fewer passengers expected, Thai Airways should shift to use newer and more efficient planes.

Under former president Sumeth Damrongchaitham, the airline did have a plan for fleet renewal, which would have required a massive financial outlay. The plan was scrapped as the company's worsening financial condition led to Sumeth's resignation. 

Plane purchases also allegedly became a source of corruption in the past for some Thai Airways staff. Some employees became unusually rich from a procurement deal involving 10 Airbus A340s, according to an investigation team from the Transport Ministry. Such behavior must be rooted out during the rehabilitation process.

Check-in counters for Thai Airways at Suvarnabhumi Airport in Bangkok are empty in this April 30 photo. The coronavirus pandemic dealt a final blow to the long-troubled airline.   © Reuters

Thai Airways must also consider ending loss-making routes. The aviation industry expects a faster recovery in domestic flights over international ones as many countries still have travel restrictions in place. This could be a problem for Thai Airways as it mainly operates international routes.

Will the airline be able to carry out its rehabilitation plan without hindrance?

Thai Airways was operated as a bureaucratic state enterprise presided over by officials who prioritized power-grabbing over tackling structural problems and improving profitability. The new board must not behave in this way. 

Management was inconsistent as president and board members, especially those who tried to streamline the company, often came and went for political reasons. Piyasvasti Amranand was the clearest victim of all. Despite helping the airline narrow its deficit in 2009 when he was the company's president, directors suddenly voted him out in June 2012, in what was seen as a politically motivated ballot.

Unprofessional board members, assigned from the Royal Thai Air Force, often complicated problems. Unions, on the other hand, were seen as overpowerful and under the protection of the state. "At times, senior captains were getting paid more than the president of the company," a former board member told the Nikkei Asian Review.

The Ministry of Finance divested a portion of its Thai Airways shareholding in May, so that it was no longer a state enterprise. The move terminated worker privileges, including the right to form a union. This will allow the rehabilitation plan to include bigger layoffs and wage cuts.

The loss of state enterprise status led to a recall of more than 50% of Thai Airways' check-in counters and aircraft stands at Suvarnabhumi Airport by the Airports of Thailand. "The carrier is treated just like any other commercial airline," said Deputy Prime Minister Wissanu Kreangam. Opening the airline to competition should pressure it to rehabilitate.

Will Thai Airways be able to raise funds through its rehabilitation?

Filing a petition for rehabilitation gave Thai Airways an automatic stay for its debt repayments. This saved the airline from an imminent risk of going bust. Yet, it still needs to raise money for rehabilitation.

The company's shareholders' equity turned negative, at minus 18.1 billion baht, as of June. While its total liabilities ballooned to 332.1 billion baht, a 36.7% increase from the end of 2019, its cash and cash equivalents fell by 35.5% to 13.9 billion baht.

Piyasvasti, who now serves as an independent director said on Aug. 17 that the airline is estimated to need about 60 billion baht of working capital a year during the rehabilitation process. Local media reported that Thai Airways will have to pay the pensions of more than 1,600 employees -- as state enterprise workers -- which is worth 5.4 billion baht over the next 13 years.

Several financial institutions have shown their willingness to extend financial support, according to Piyasvasti. It could also raise money through issuing new shares, but the government must not participate, as increasing its holdings to over 50% will revive the airline's state enterprise status.

Will the global environment be conducive for its rehabilitation?

A quick recovery from the pandemic-induced travel disruption is unlikely. The International Air Transportation Association, or IATA, said global air traffic will not return to pre-pandemic levels until 2024.

It expects the number of global passengers to decline by 55% this year from 2019. "Passenger traffic hit bottom in April, but the strength of the upturn has been very weak," said IATA CEO and Director-general Alexandre de Juniac.

The Tourism Authority of Thailand said revenue from international visitors in 2021, under its base-case scenario, could shrink to 618 billion baht, or about 32% of the 1.9 trillion baht recorded in 2019. The revenue falls to 298 billion baht in its worst-case scenario.

[Soya]

Thai Airways is a mixed bag. If lucky, u get to fly on the newer A350 or A380 as per listed during the booking. Kena a couple of times b4 where they swapped planes last minute n kena an very old 747. How old? The entertainment is those pull down screen type....OMG

 

[Mustank]

On 8/27/2020 at 9:53 AM, Soya said:

Thai Airways is a mixed bag. If lucky, u get to fly on the newer A350 or A380 as per listed during the booking. Kena a couple of times b4 where they swapped planes last minute n kena an very old 747. How old? The entertainment is those pull down screen type....OMG

 

Those Entertainment  pull down What type?

[Jamesc]

If not for Covid I would have saved them

by flying to Bangkok many many times.

[steveluv]

https://asia.nikkei.com/Business/Transportation/Mismanagement-and-graft-brought-down-Thai-Airways-panel?utm_campaign=RN Subscriber newsletter&utm_medium=daily newsletter&utm_source=NAR Newsletter&utm_content=article link&del_type=1&pub_date=20200904190000&seq_num=13&si=44594

Mismanagement and graft brought down Thai Airways: panel
Purchase of 10 Airbus enriched politicians and others but incurred $2bn loss

Thai Airways filed a petition to rehabilitate under the bankruptcy court's supervision in May. The coronavirus dealt a final blow to the long-mismanaged flag carrier. (Photo by Akira Kodaka)
MASAYUKI YUDA, Nikkei staff writerSeptember 4, 2020 12:00 JST

BANGKOK -- The financial troubles at Thai Airways International, which were so deep it needed court-supervised rehabilitation, were caused by the national flag carrier's own management and workers ripping the company off, an investigation panel commissioned by Thailand's Ministry of Transport has found.

The panel's findings will be considered during Thai Airways' rehabilitation proceedings at the country's bankruptcy court. The report and its findings were submitted on Tuesday to the Ministry of Finance, the biggest shareholder of the state-affiliated airline. According to Thai Airways, the ministry is a major creditor of the airline as well.

On Sept. 14, the Central Bankruptcy Court is scheduled to decide whether to allow Thai Airways' board members and consultancy firm EY Corporate Advisory Services to start writing its own rehabilitation plan. The carrier filed a petition to rehabilitate under the court's supervision in May.

If allowed, the plan is expected to be drawn up by early next year for approval by the court and Thai Airways' creditors. It needs the endorsement of holders of at least 50% of the airline's debt. The panel's findings should give a grounding for creditors, especially the Finance Ministry, on what should be endorsed in the rehabilitation plan.

"The main cause of this chronic issue is the procurement of 10 aircraft: [Airbus] A340-500s and A340-600s," said Deputy Transport Minister Thaworn Senneam. Thaworn worked with the investigation panel led by Chanthep Sesavej, the former commander of the country's Metropolitan Police.

"Once in operation, [Thai Airways] has been making losses [on these aircraft] since their inaugural Bangkok to New York flight in July 2005 up until their decommission in 2013 and [they] remain a burden for maintenance costs even today," he added.

Traditional Thai dancers perform in front of a new A340-500 during a ceremony at Bangkok airport in 2005. The purchase of this type of airplane later weighed on Thai Airways' business.   © Reuters

The purchase, in the early 2000s, and operation of the aircraft led to losses of at least 62.8 billion baht ($2 billion), the report said. This indicates that the company had purchased new aircraft based on a weak earnings outlook or with no prospects of positive earnings.

The panel found signs of graft in connection with the purchase of the 10 aircraft. There was evidence of bribes of at least 2.6 billion baht paid to politicians, officials and Thai Airways' executives, according to the report.

Apart from the Airbus deal, a price discrepancy of as much as 589 million baht in operating leases on eight Boeing B787s was also seen. The panel believes that the price gap was used to funnel in some $7.2 billion in bribes paid by Rolls-Royce through middlemen to officials and airline executives for the purchase of engine parts and the payment of a flat rate for repair and maintenance services.

In addition, overprotected workers' rights resulted in their paychecks not being properly monitored. Two billion baht was registered in the 2019 financial results as overtime for repair and maintenance employees. One employee claimed 2.95 million baht ($94,000) for working 3,354 hours, or 419 days, of overtime. This is more than twice Thai Airways' overtime cap of 1,500 hours. There were 567 repair and maintenance employees who exceeded this cap in 2019.

Meanwhile, excessive compensation to executives cost the company 10 billion baht.

These are just some of the issues listed in the panel's findings. As a result of sloppy management, Thai Airways recorded net losses for seven of the past 10 years. The airline made a net loss of 28 billion baht for the first half of 2020, ballooning 4.4-fold from a year ago.

Further investigations will be necessary into nepotism and lack of competition, according to the report.

Relatives and other people close to company executives were hired without having proper knowledge or qualifications, and held good positions in the company, the report said. Materials used for in-flight catering and fuel supplies for aircraft were provided by just a handful of operators, creating a closed circle of oligopoly.

The panel admitted that the investigation was not thorough enough. "Our working group has yet to fully review information and facts of Thai Airways' subsidiaries and joint ventures," said the report. The performance of these entities significantly affects Thai Airways' revenue expenses and operating results, the committee said.

But the panel has only been given the authority to investigate the parent company, as a state enterprise. The company's subsidiaries and joint ventures were not directly state-owned, thus were not within the scope of this probe.

"[The committee] hopes that those with the legal authority will proceed with the results of these findings in order for Thai Airways to regain its strength and profit, to yield fair returns to employees, and to make it a national flag carrier that can be, forever, the pride of all Thais," the panel said in the report's conclusion.