Government will not re-capitalise struggling Thai Airways

The State Enterprise Policy Office says the government will not back a billion-baht cash injection for Thai Airways. The national airline is currently been dragged through bankruptcy proceedings.

Pantip Sripimol from the SEPO says the Thai Finance Ministry will not re-capitalise the carrier, although it remains its largest shareholder. The Bangkok Post reports that there are concerns Thai Airways could become a state enterprise once more if the ministry were to assume a majority stake once more.

Last September, the Finance Ministry reduced its stake in the national airline to less than 50%, in an effort to facilitate the debt-rehabilitation process. As a result, the carrier is no longer a state-owned enterprise and it’s understood a number of cabinet ministers are concerned that, should the airline regain its status as a state enterprise, the government would have to guarantee a billion-baht loan to ensure its survival.

The Bangkok Post reports that both the Finance Minister, Arkhom Termpittayapaisith, and Deputy PM, Supattanapong Punmeechaow, both support re-establishing the airline as a state enterprise. They argue that doing so would improve its financial situation and provide more leverage for negotiating with creditors. Such a move would mean the Finance Ministry becoming a majority shareholder once again.

As it is, the airline’s bankruptcy proceedings have been taken up with renegotiating with creditors – mostly aircraft lessees. The majority of Thai Airways’ fleet remains grounded and gathering dust, parked at Suvarnabhumi airport.

However, Pantip says the ministry will not re-capitalise the airline and is prepared to reduce its shareholding if other investors purchased additional shares. The ministry currently has a 49.9% stake in Thai Airways, with Pantip saying it would be difficult to justify a further cash injection to shareholders.

With the airline now operating as a private business, the government is no longer obliged to prop it up monetarily, nor is the Finance Ministry obliged to offer financial help to a private company, despite being its largest shareholder.

On Wednesday, creditors will meet to discuss the airline’s debt restructuring plan and decide if they are to accept it.

SOURCE: Bangkok Post