Thai Airways files for bankruptcy protection

Despite Thai Airways issuing a press statement and taking to social media to deny rumours it intends to file for bankruptcy, various media reports appear to confirm the struggling carrier will file for Chapter 3/1 of the Corporate Reorganisation section of the Bankruptcy Act. This is the Thai equivalent of Chapter 11 bankruptcy in the US.

TTR Weekly reports that the government has confirmed the national carrier will initiate restructuring steps in a bankruptcy court. This will involve a restructuring petition being filed by either the airline itself, a government agency, or creditors who are owed more than 10 million baht. Once the restructuring application has been approved, it means Thai Airways is protected from creditors taking legal action to recover payment. It’s understood the Thai government has been planning to tender a lifeline of over 58 billion baht in a combination of loans and direct cash to the ailing carrier.

According to a Reuters report, government spokeswoman Narumon Pinyosinwat has confirmed the plan, saying the airline is expected to file for bankruptcy tomorrow.

“The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court. The procedure will be submitted to cabinet today (Tuesday).”

As recently as last night the airline has been denying the bankruptcy rumours, insisting a plan for reform submitted to the board was approved and would shortly be presented to Cabinet for approval.

“The plan will soon be presented to the Cabinet for further action. The Board of Directors made no resolution to file for bankruptcy as appeared in the news. Thai Airways again denies the bankruptcy rumours.”

It was also forced to refute long-standing rumours that all directors of the board, both past and present, along with their family members, are entitled to free first-class tickets for life.

“Thai Airways staff are not eligible for seven free tickets per year as claimed, and the Board members do not get free first-class tickets. Airline staff have the same basic welfare rights and travel incentives as normally provided by airlines around the world.”

SOURCE: TTR Weekly | Reuters