Bankrupt flag carrier Thai Airways International got court approval for its debt restructuring today as the Central Bankruptcy Court in Bangkok continues to scrutinize the airlines accounts.
Just last month the appointed auditors, firm Deloitte Touche Tohmatsu Jaiyos Co Ltd said it could not reach a conclusion on the statements due to issues including a lack of liquidity and debt defaults and declined to sign off on the accounts.
Apparently Thai Airways, plagued by corruption and mismanagement has swam in muddied financial waters for so long that it’s almost impossible even for well regarded accounting firms to get to the bottom of it all in such a short period of time.
At least with today’s decision by the bankruptcy court cleared the way for the process to move forward with the bankruptcy proceedings that could last as long as seven years as the Bangkok Post reports.
Thai Airways International Plc, the nation’s flagship carrier, got court approval for its debt restructuring on Monday.
The Central Bankruptcy Court decided that the airline can proceed with its plan to rehabilitate its debt. The company, which had total liabilities of 332.2 billion baht at the end of June, faces one of its biggest challenges in its 60-year history as the pandemic hits the country’s tourism-dependent economy. …
Thai Airways creditors are likely faced with a protracted process: the company is estimating that the rehabilitation could take as long as seven years.
“The court’s debt rehabilitation approval is just a tiny step,” Chanchai Chaiprasit, chief executive officer of PricewaterhouseCooper’s Thai unit, said before the ruling. “It’s an uphill task to come up with a debt plan that would satisfy banks, aircraft lessors, suppliers and other lenders.”
Thai Airways was dealt a further blow recently, when the nation’s Ministry of Transport identified potential corruption in underpricing of tickets and excessive overtime costs. Thailand’s Ministry of Finance owns around 48% of Thai Airways, according to an August filing.
The airline had defaulted on loans and bonds totalling 85 billion baht, or 33.1% of its total assets, according to its latest statement on July 22. It reported a net loss of 28 billion baht in the first half of this year, a more-than-fourfold jump from 6.44 billion baht during the same time a year ago as the carrier cancelled scheduled flights from April to comply with government rules to contain the pandemic.
The further the investigation into Thai Airways dealings go the more shady practices are expected to surface. It’s been an open secret over decades that THAI is run in a completely corrupted way as many other companies in the Kingdom. Everything from hiring practices, aircraft purchases, contracts, management remuneration and flight benefits will very likely turn up foul the more it’s being scrutinized.
As Reuters reported last month the companies auditors Deloitte Touche Tohmatsu Jaiyos Co Ltd have already said “it could not reach a conclusion on the statements due to issues including a lack of liquidity and debt defaults which created “material uncertainty” and may affect the value of assets and liabilities.”.
An investigation brought on the way by the Prime Ministers Office already revealed deep rooted corruption in airplane deals as published late August.
Some employees of Thai Airways International (THAI) became unusually rich from a major plane procurement deal struck in 2003-2004, according to a police-led investigation team set up by the Transport Ministry.
Mr Thaworn said the probe team discovered that between 2003 and 2004, THAI had purchased 10 Airbus A340 aircraft. The planes were to be used on direct flights linking Bangkok with New York and Los Angeles.
Two years after the Bangkok-US services were launched, the airline recorded losses of 12 billion baht. The losses widened to 39 billion baht after the same aircraft were flown on other routes.
The direct flights to the US went ahead despite the Office of the National Economic and Social Development Council objecting to THAI buying those type of planes. The agency questioned the feasibility of operating the planes profitably.
Mr Thaworn said the Charnthep team’s findings will be forwarded to the National Anti-Corruption Commission and he would give further details of the probe later this month.
Pol Lt Gen Charnthep also said some THAI employees had pocketed ill gotten gains from managing procurement projects including the A340 deal. …
No doubt there will be further probes coming as this saga continues down the road.
Honestly I’m surprised it took this long for Thai Airways to get their pandoras box opened but just like 9/11 upended many airlines that were already unhealthy for years prior to the event, Covid-19 and the subsequent border closures proved to be lethal for many carriers already. THAI is just one of them.
Conclusion
How far these investigations are eventually allowed to go and become public will largely depend on the political environment of the day. With the countries biggest bankruptcy proceeding on the way it should be hard however to cover up the really material things. It remains to be seen if any of the previous top managers of THAI will ever be held accountable.
The creditors of Thai Airways will eventually demand answers to these matters and where their money went. There won’t be any agreement on a debt plan if the information forthcoming isn’t believable or obviously a story of fiction as frequently presented when it comes to corruption matters in Thailand. Especially the foreign creditors won’t sign off on this.
