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Government will not re-capitalise struggling Thai Airways


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The State Enterprise Policy Office says the government will not back a billion-baht cash injection for Thai Airways. Pantip Sripimol from the SEPO says the 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 year, 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 […]

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This is great news for all who believe in the running of a 'proper' business, be it an airline, a taxi-service or any business that understands that it will rise or fall solely on its own efforts and success.

My fear, knowing this government's propensity for doing about-turns on its decisions, is that this re-capitalising refusal will be reversed, once the powers-that-be come to terms with the concept of Thailand NOT having its national airline. That will take some coming to terms with!

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An interesting  story of a major European airline "Swissair" running out of money.

The collapse of Swissair in 2001 and bankruptcy in 2002 was due to several factors, poor strategic decisions; the terrorist attacks in New York on 11 September 2001 were the last straw, having a disastrous and immediate effect on the company’s liquidity as passenger numbers plummeted and they were unable to afford to keep planes in the air. The company had been struggling under a huge debt burden in the economic downturn which had impacted the entire airline industry.

A total of SFr 2.7 billion was pledged from both government and corporate sources to start a new Airline named “Swiss” they obtained leases on planes from Swissair’s fleet and took over the slots for the majority of Swissair’s domestic and International destinations. The rebranded Swiss got off to a shaky start and immediately began the first of many rounds of restructuring, each involving further redundancies and aircraft disposals. A loss of nearly SFr 1 billion was posted in the first year of operations, 2002. This was narrowed to SFr 687 million for 2003; Swiss was doomed almost from the outset. In the end Swiss became part of the Lufthansa group in 2005 and is still flying today.

 

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A well-placed 'fail' story, Andrew, especially given the Thai high echelons refusal to accept that THAI has now been a ten-year FAIL, with every man and his dog being able to see many of the airline's areas of mismanagement that were simply drinking money. Since its becoming a state entity in 1977, there are various accounts of serious mismanagement, with gross over-staffing, idiotic purchases of many different makes and models of aircraft and even corrupt business dealings coming into the fray. That's the negative side of what we're still looking at, even though it's no longer state controlled.

If that's the negative side, there are various writings to be Googled that more than make clear that, when it comes to the profitable running of a business, running an airline is viewed as being the most difficult of all. There are so many aspects of man, plant and operational management that need to be kept at the most viable states that only the most committed and experienced CEOs will be capable of making a success.

Not a task for any of the current personnel on THAI's books, I fear.

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