It was expected that Thailand’s Cabinet would give the go-ahead to the rehabilitation of Thai Airways International (THAI) as per the Bankruptcy Court’s procedure at its meeting on Tuesday.
This could potentially result in the airline losing its status as a state enterprise.
The State Enterprise Policy Committee, chaired by Prime Minister Prayut Chan-o-cha, decided on Monday to force the national carrier to file for bankruptcy and rehabilitation under the court’s process.
THAI is listed on the stock market and has been in financial trouble for many years, and now, with the Covid-19 crisis, things have become worse.
Deputy Prime Minister Anuthin Charnvirakul said THAI may lose its status as state enterprise once it starts going through the rehab procedures set by the Bankruptcy Court.
Once that happens, the State Enterprise Committee will no longer have authority over the carrier, though the manager of the rehabilitation will have the power to manage the airline’s business restructuring plan, he said.
The airline will be able to continue operating while its debts and businesses are being restructured, and it will not have to service debts during that time.
Government spokesperson Narumon Pinyosinwat said it is still not clear whether the airline’s bankruptcy case will be filed in a Thai or foreign court.
However, an informed source at the Ministry of Transport said the case should go to a Thai court even though 30 per cent of the airline’s 200 billion baht ($6.3 billion) debt is owed to foreigners.
Some sources suggested that the government file the case in the US to stop foreign creditors seizing THAI airplanes when they land on foreign soil.
However, the ministry source said there should be no such problem if THAI can negotiate with its foreign creditors, most of whom have leased planes to the airline.
Meanwhile, THAI trade union leader Nares Puengyam voiced concern about the airline potentially losing its status as state enterprise.
“The union agrees with the plan to rehabilitate via the Bankruptcy Court’s process, but we do not agree with the proposal to reduce the finance ministry’s stake by two per cent,” he said.
The Ministry of Finance currently holds a 51.03 per cent stake in the airline, but if its holding is cut to below 50 per cent, THAI will no longer be a state enterprise.
Nares said he was worried that this would adversely affect the company’s credit rating and push up the cost of future borrowing.
However, officials say once THAI becomes a private entity, it will find it easier to restructure by cutting redundant staff, slashing wages as well as cancelling perks offered to the local elite and efficiently managing its costs as a whole.
THE NATION (THAILAND)/ASIA NEWS NETWORK