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Thai Airways steps closer to restructuring in bankruptcy court

Flag carrier Thai Airways International is a step closer to restructuring via a bankruptcy court after a key government panel backed the plan, which is due for consideration by the Cabinet on Tuesday.

A committee that oversees policies for state-run enterprises agreed that the airline should seek such a rehabilitation, government spokeswoman Narumon Pinyosinwat told reporters in Bangkok on Monday (May 18).

Governments worldwide have devoted more than US$85 billion (S$121 billion) to propping up airlines after the coronavirus pandemic wiped out travel demand and grounded fleets. Thailand’s borders are restricted under a state of emergency through May and most inbound international flights are banned until the end of June, though some domestic flights have restarted.

Thai Airways, majority owned by the Finance Ministry, has outstanding debt of about 92 billion baht (S$4.09 billion), of which approximately 78 per cent is owed to bond investors, according to data compiled by Bloomberg.

Tris Rating Co, which is partly owned by S&P Global Ratings, said in a statement that the fact officials are considering filing for bankruptcy restructuring “has eroded our confidence that necessary actions from the government will be taken to enable THAI to meet all of its obligations in a timely manner.”

Tris Rating has downgraded its rating on Thai Airways and the carrier’s senior unsecured bonds to BBB from A.

“Holders of Thai Airways’ bonds are watching closely for details of its rehabilitation plan,” Thiti Tantikulanan, senior executive vice president of Kasikornbank Pcl, said at a seminar. “The impact on the overall bond market will be limited because Thai Air bonds have been mostly sold to a limited group of investors.”

Thai Airways has posted annual losses almost every year since the start of 2013. The flag carrier was under pressure to turn around its performance even before the Covid-19 outbreak.

Shares in the carrier slid as much as 13 per cent on Monday to the lowest level in more than a month. The stock has tumbled more than 90 per cent from a peak in 1999.

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