Thai Airways to finally reimburse injured passengers

Thai Airways will refund tickets purchased by customers before its bankruptcy filing, with refunds expected to be completed by January 31, 2024.

The airline, kept alive by cargo revenue and bankruptcy court protection during the pandemic, has made substantial progress in reducing its once-huge cost base while capturing market share as the country reopens.

Other international airlines are currently struggling to secure higher revenues while others are unable to compete on routes to Bangkok as they once did.

See: Business picks up for Thai Airways

The airline, whose operating results have improved since Thailand reopened earlier this year, is expected to carry 4.4 million passengers in 2022, with an average load factor of around 80%.

On Thursday, October 20, the Central Bankruptcy Court in Bangkok approved the main elements of a revised business reorganization plan as part of the debt restructuring efforts of national carrier Thai Airways.

Reimbursement of passenger payments

Thai Airways flight attendant practicing Wai.

Under its revised business plan approved Thursday by the Central Bankruptcy Court in Bangkok, Thai Airways will finally begin refunding tickets purchased by customers before its bankruptcy filing in May 2022.

Under the revised provisions, approved by the court on Thursday, these payments are expected to be made, in many cases through refunds of credit card payments, to passengers by the end of January 2024.

Creditors threaten to seize Thai Airways planes

In its ruling on Thursday, the court considered proposed amendments to the plans regarding foreign creditors who are threatening to seize Thai Airways' planes due to outstanding debt despite the bankruptcy process.

According to management, this situation prevents those working on the rehabilitation of the airline from implementing a more comprehensive flight schedule in line with market conditions.

The amended plan was supported by a majority of the airline's creditors last September, but it still needed to be approved by the court on Thursday, after reviewing the proposal in detail and hearing opposition from dissenting creditors.

The amended plan comes after a marked improvement in the airline's financial performance this year, which saw passenger numbers rise from 2,092 per day in January to 17,554 per day currently, with consistent load factors of 80% and above, as well as improved revenues and margins on passenger traffic and cargo, which have been crucial in funding and keeping the airline flying during the Covid crisis.

Thai Airways fills seats again on flights from Europe

Photo: Ty Yang

During its recovery, the airline halved its workforce, from 29,000 to 14,400, resulting in a monthly payroll of €700 million, compared to €3 billion previously.

The airline reduced its fleet to 58 aircraft and sold 45.

It is expected to take delivery of three new Boeing 777-330 ERs in October, with two of these aircraft having already been delivered on October 18 and 19, while the third is expected on October 26.

These aircraft are suitable for lucrative long-haul flights and can accommodate 8 first-class passengers, 40 business-class passengers and 255 seats for those traveling in economy class.

Thai Airways is particularly important this year for the kingdom's foreign tourism prospects, with its flight schedule to Europe and the UK offering some of the most competitive fares to potential visitors to the kingdom.

See: Thai Airways aims for a return to global glory

The airline expects a busy and successful peak season in the run-up to Christmas 2022 and New Year 2023, with other international airlines busy pursuing more lucrative destinations than Bangkok.

A long process

The revised business plan, approved Thursday, was submitted on July 1 and came after an electronic creditors' meeting was held on September 1, 2022.

Despite objections, particularly from creditors based in Thailand, the plan was approved in September by 78.59% of creditors before being submitted to the Central Bankruptcy Court.

Objecting creditors filed motions with the court, which were also considered and impacted the revised plan approved Thursday, which does not give Thai Airways management everything it requested in September.

The current plan was proposed by senior airline executives, including CFO Chai Eamsiri, who filed a court application in September.

If successfully implemented, the state's stake in the national carrier will be reduced to 33% in preparation for its refloating on the Stock Exchange of Thailand (SET), a move planned for 2025.

Convert debt into equity before another stock market comeback

The cornerstone of the amended business plan calls for the capitalization of 25 billion baht within the company by the end of 2024 through the sale of new shares and the conversion of existing debt into equity before the company is listed again on the stock exchange.

Prioritize creditors who threaten to seize planes

The court's ruling on the revised plan on Thursday was detailed and addressed a proposal by Thai Airways to prioritize payments to key creditors, such as ground service providers, deemed essential to the continued operation and achievement of its business plans.

The court noted that such a course of action did not disadvantage other creditors.

However, it did not immediately endorse proposals in the revised plan to deal quickly with creditors in countries or territories where the airline said there was a risk of its aircraft being seized.

The executives stressed that this would cause serious damage or harm to the airline's reputation and brand.

The court requested that this part of the revised plan be reworked and raised the issue of equal treatment of all creditors.

Bangkok Bank is one of the main creditors opposed to the plan.

Bangkok Bank has emerged as one of the main opponents of the company's revised business plan, and on Thursday the court noted that the airline will need to generate significant credit for the plan, as currently finalized, to be successful.

Bangkok Bank also expressed concern that the airline would take on more debt.

However, the airline's management highlighted its thriving outlook this year, with cash flow of around 20 billion baht, and argued in court that it needed to make changes to keep the plan moving toward completion.

Sources within the airline also point to the support of the Ministry of Finance, which has stressed the importance for the airline to convert its current debt into equity over the next two years, with a view to a new stock market listing in 2025.

A new financial advisor will now be employed by the airline to implement the 25 billion baht package, which was halved this year due to better-than-expected operational performance.

Source: Thai Examiner