Government gives green light to Thai Airways bankruptcy

The Thai government ruled Tuesday that Thai Airways should be rehabilitated by the bankruptcy court, in a "difficult but necessary" decision that marks the beginning of a complex and decisive process for the national airline.

Gen Prayut insisted the cabinet had chosen not to throw the airline a financial lifeline because it needs to save the money for relief packages needed to mitigate the Covid-19 crisis and reinvigorate the economy.

"Today I had to make a very difficult decision regarding THAI. But I know it is in the best interest of the public and our country," he said.

The government had three choices:

• find more money to keep the airline running,
• let her go bankrupt or
• allow THAI to be subject to a rehabilitation plan approved by the bankruptcy court.

"We have chosen the third option," the Prime Minister said.

According to the Ministry of Transportation, the bankruptcy petition to trigger a rehabilitation plan will be filed with courts in both Thailand and the United States.

About 35% of the airline's creditors are based in the United States.

Previous attempts to rescue the airline have been ineffective due to legal hurdles, particularly the Labor Law and the State Enterprises Act, which have been criticized as complicating efforts to reform the national carrier.

The court-ordered rehabilitation, however, will involve reducing the finance ministry's majority stake in THAI and cost the airline its state-owned enterprise status.

THAI should be allowed to continue operations to generate revenue and regain its commercial strength, Gen Prayut said.

Tuesday's government resolution effectively reversed an earlier rehabilitation plan jointly devised by THAI and the State Enterprise Policy Committee (SEPC), which had favored the finance ministry guaranteeing a 54 billion baht loan to prop up THAI and splitting the airline into separate business units, with THAI operating as a holding company.

General Prayut insisted that the government must be prudent in its spending given the huge Covid-19 relief loan it has taken out.

He said any money earmarked for bailing out the airline would be better spent helping those affected by the pandemic.

“We need to think carefully about our spending now that the pandemic has hit.

"It's for the survival of our citizens," he said.

"The bankruptcy court should appoint professionals to carry out the rehabilitation of THAI who will hopefully be able to turn the airline around," Gen. Prayut said, adding that the national carrier has been a cultural ambassador for Thailand.

On Tuesday, Finance Minister Uttama Savanayana said the Office of State Enterprise Policy will propose a plan to reduce the ministry's stake in THAI from 51.03 percent to below 50 percent, effectively ending the airline's state-owned status.

Following the ministry's sale of shares, all but three members of the airline's board of directors will resign.

Those who remain will join three new board members, expected to be Tevin Wongwanich, president and CEO of PTT Exploration and Production Plc; Chartchai Payuhanaveechai, chairman of GSB; and Charamporn Jotikasthira, former chairman of THAI.

Source: bangkokpost.com