Thai Airways Creditors Sign Off On Debt Restructuring Plan, Push For Government Support

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Thai Airways creditors have just signed off on the airlines debt restructuring plan while the airline continues to undergo bankruptcy proceedings in a Bangkok courtroom.

One caveat however is that this plan includes a call for government support in order to back new loans in order to restart and operate the airline, something which has already ruled out on the highest level.

THAI has lost it’s state enterprise status after the government has reduced their share holdings to below 50% yet that doesn’t stop remaining creditors to again ask the state for further financing.

Even prior to this meeting both the Prime Minister as well as the State Enterprise Policy Office have publicly stated that further financial contributions by the government are out of the question.

The Bangkok Post reported about yesterday’s development including specifics of the plan.

Thai Airways International’s (THAI) creditors on Wednesday formally approved the airline’s debt rehabilitation plan which emphasises the state’s role in helping the struggling flag carrier access fresh cash injections.

The creditors approved the plan in a vote which had been postponed from last week to allow them to study some last-minute tweaks to the plan.

Twenty-eight out of the 36 groups, representing 13,000 creditors which hold some 116 billion baht of THAI’s debts, casted votes in favour of the plan, after chapters 4, 13 and 15 of the plan were amended.

Chapter 4 of the plan says THAI requires consistent state support and should be allowed to operate its aviation and related businesses with the same privileges accorded to it before it ceased to become a state-owned enterprise and entered the debt rehabilitation process. …

Meanwhile, the Federation of Savings and Credit Cooperatives of Thailand Limited put forth a five-point amendment to Chapter 15, which was approved in the meeting on Wednesday.

The points include specific groups of creditors being granted debt-to-capital conversion rights, capital decrease and recapitalisation, formulation of asset management and appointment of three additional rehab plan administrators, namely THAI’s acting president Chansin Treenuchagron, the airline’s independent director Piyasvasti Amranand, and deputy finance permanent secretary Pornchai Teerawej.

The plan also calls for the state to help the airline secure 50 billion baht in fresh funding.

Following the announcement, however, the State Enterprise Policy Office insisted that the government is under no obligation to come to the airline’s rescue.

It comes without surprise that the creditors agree to a plan that doesn’t see any of them taking a haircut on what it owed to them, a step that is highly unusual in such a proceeding and considering the volume of Thai Airways debt.

On top of it all they have the audacity to ask the taxpayer for further financial handouts and loan guarantees in the region of 50 Billion Baht.

Last week Prime Minister Prayuth has already denied that this would be a viable option.

Prime Minister Prayut Chan-o-cha on Friday denied reports that the government, through the Finance Ministry, would allocate 50 billion baht to recapitalise financially struggling Thai Airways International Plc (THAI).

He was responding to reports the carrier would again become a state enterprise through the re-acquisition of the ministry’s majority stake in the airline.

The prime minister said THAI is currently moving through the debt rehabilitation process.

“I have decided that the government will not involve itself in the work of the rehabilitation plan administrators.’

If this is a correct translation the statement wouldn’t explicitly exclude the government getting involved however.

The State Enterprise Policy Office found more clear words in advance of the creditor meeting.

… Ms Pantip insisted the ministry would not seek to recapitalise the airline and was prepared to see its stake diluted if other shareholders bought more shares.

The ministry holds a 49.9% stake in THAI. She said if the ministry injected more funds into the company, it would be akin to attempting to divert money to “fill up the sea”, a move which be hard to justify to taxpayers. …

The situation is rather fluent when it comes to the Thai government and the power centers that largely gravitate to the Prime Minister and also the King. A sudden change of opinion in the matter from either of them would certainly see money flowing again. The question is to what purpose other than kicking the can further down the road.

Is the government going to swipe the big credit card yet again and provide a lifeline for THAI?


Thai Airways will have to find ways of capitalization that doesn’t involve taxpayer money. With the current debt load it’s hard to imagine the company being able to secure loans on the free market without guarantees and the only entity that could issue a suitable, sizable guarantee would be the Ministry of Finance which has ruled itself out here.

THAI and the management should take this unique opportunity to push through a proper bankruptcy for the airline that would be able to eliminate most of the companies debt and hope they would be able to do business with key entities again without having to pay cash in advance. Usually creditors who get burned badly once before don’t like to continue extending credit to the same company again.

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