Beleaguered flag carrier Thai Airways International outlined plans to stay afloat until April or May, as it prepares to meet an extended deadline to submit its rehabilitation plan to the Central Bankruptcy Court on February 2.
The measures include a release of funds from the company pension scheme by the Government Savings Bank and Krung Thai Bank, “together with sales of some unnecessary assets,” to boost available cash, said director and acting president Chansin Treenuchagron.
The Court accepted Thai Airways’ request for rehabilitation in September. The first deadline for a rehabilitation plan was set for January 2, but extended by request from the company. The airline could request another extension if necessary, Chansin said.
Local media reported that Thai Airways has engaged a new advisory firm after the previous consultancy Finansa withdrew last year. The name of the new firm would be announced later, the company said.
The airline is expecting a creditors’ meeting to be held by mid-March. If the preliminary rehabilitation plan is submitted on time, then a final version can be endorsed by the creditors at the March meeting, and re-submitted to the Court for consideration by April or May.
In the case of approval, the company has five years to implement the plan, extendable by another two.
Analyst views developments negatively
Parin Kitchatornpitak, an analyst at KGI Securities viewed this development as negative for Thai Airways due to the potential for further delay.
“Unfortunately, we think that the chance of improvement looks more difficult as the business is likely to be hit hard by the Covid-19 outbreak.”
The analyst remained cautious over the company’s longer-term earnings outlook, due to its larger retained losses and negative equity. Given these grounds for pessimism, KGI recommends avoiding the counter for now.
The airline’s quarterly net loss to September amounted to 21.5 billion baht, rising from 4.6 billion baht in the same period last year. Thai Airways recorded a net loss of 49.5 billion baht for the nine months from January to September in 2020.
The large drop in passengers has left the company operating only between 17 and 25 aircraft. But the demand for cargo flights is expected to lift the number of planes up to 45 in 2021.
Asia Aviation AAV
Asia Aviation (AAV) said on Tuesday that it has liquidity up until March and is preparing to apply for more loans, while there has been no progress on their request for low-interest, or soft, loans from the government.
Director Tassapon Bijleveld said that he held little hope of government’s support as the airline groups had applied for soft loans in May, even though he has reduced the requested credit line from 2.4 billion baht to 1.4 billion baht.
However, the airline has no plan to lay off staff and are discussing with banks about loans and issuance for capital increase, but there is no definite conclusion for now, he added.
The number of passengers has shrunk significantly in the wake of the new domestic Covid-19 outbreak, pressuring the airline to reduce the number of flights.
AAV saw a net loss in the third quarter of 2020 of 1.8 billion baht, compared to the 416.6 million loss a year earlier. The company’s loss in the nine-month period from January to February totaled 3.65 billion baht.