Thai Airways is majority government-owned, and a government panel has recommended that the airline restructure in bankruptcy. The Thai cabinet will consider bankruptcy for the airline on Tuesday.
Thai Airways, majority owned by the Finance Ministry, has outstanding debt of about 92 billion baht ($2.9 billion), of which approximately 78% is owed to bond investors, according to data compiled by Bloomberg.
Tris Rating Co., which is partly owned by S&P Global Ratings, 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.”
The airline was on the verge of shutting down without government support back in the fall long before the coronavirus pandemic. The airline has four basic problems: corruption, incompetence, bureaucracy, and low cost competition.
Thai has lost money every year since 2013, in some of the very best times for the airline industry. It doesn’t just need a cash bridge to survive until the pandemic passes.
The best ideas the airline was able to come up with to turn itself around was crowdsourcing cost-cutting ideas and selling frozen meals under the THAI brand.