The business rehabilitation at Thai Airways continues with administrators recently providing a progress report for the three months to mid-December. The embattled airline continues to make slow but steady progress as it navigates its way back to profitability and long-term viability.
Thai Airways filed for bankruptcy protection in May 2020. The airline buckled under the pressure of US$9.8 billion in debts and the worldwide travel downturn. In September 2020, the Central Bankruptcy Court in Bangkok ordered the airline into a business rehabilitation program.
With administrators now running Thai Airways, the airline is attempting to reduce its day-to-day operating costs and expenses, restructure and downsize the business, boost its income, and seek new funding sources.
Thai Airways spectacularly defaulted on over US$3 billion worth of debt in 2020. However, no further defaults have occurred since entering into the rehabilitation program. Last week, Thais administrators reported the airline had repaid US$39.09 million in debt principal and interest per the agreement with creditors since entering into the rehabilitation program
The administrators have also sold more Thais shares in aviation fuel provider Bangkok Aviation Fuel Services. The share sale raised US$6.84 million in the three months to mid-December. Previously, the administrators had sold off Nok Air and land and buildings at the Laksi training center. The airline has received payment in full for these sales.
So far, attempts to sell five spare CFM56-3C1 engines for Boeing 737-800 aircraft have been unsuccessful.
Building on the sale of land and buildings at Laksi, the administrators moved to sell land and buildings at Lun Luang, Phuket, and Chiang Mai. The administrators successfully sold Thais land and building assets at all three sites for US$37.4 million. The prices received for all three assets packets exceeded the administrators estimated prices.
In the past three months, Thais administrators also report successfully negotiating with aircraft operating and finance lease creditors to amend the original lease agreements for 12 aircraft.
One of those lessors, Amedeo Air Four Plus Ltd, recently confirmed Thai would pay rent on a power-by-the-hour basis on those aircraft leases until December 2022.
According to the Wall Street Journal, Thai Airways has been making some power-by-the-hour payments to lessors and meeting its current aircraft lease interest payments.
The same report says the renegotiated leases will switch back to monthly lease payments in January 2023. Thai Airways and its lenders have entered into hedging arrangements to service the debt.
The administrators last week said negotiations with 35 creditors concerning a further 45 aircraft continue.
In November, one of the administrators, Piyasvasti Amranand, told Reuters the airline wanted to sell 42 planes and return 16 to lessors. After this, Thai Airways would retain 58 planes across four types. Mr Amranand said the sale would see Thais lose its older and less efficient aircraft.
The administrators are happy with the rehabilitation plans progress over the last three months. They highlight the continuing debt repayment program and absence of further defaults as evidence of Thai Airways slowly beginning to find some financial and operational altitude.
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