Thai Airways says it “only has enough financial reserves to last until December.”
80% of the carrier’s 19,000 employees took pay cuts or unpaid leave. 5000 employees agreed to early retirement buy outs. However the carrier says it has yet to figure out how to pay for the employee buy outs.
[Thai Airways acting president Chansin Treenuchagron] said the early retirement programme had allowed the company to meet its workforce reduction target. ..Now, he said, the company’s focus was to come up with a payout plan, as it didn’t have many cash reserves and couldn’t take out loans.
Thai Airways is currently in bankruptcy. It was on the verge of shutting down a year ago, prior to the pandemic. So blaming its troubles on Covid-19 makes little sense. And there remain four basic problems at the airline more fundamental than a need to reduce their workforce.
- Corruption: Procurement, whether of planes or light bulbs, has often been done for reasons other than serving the airline’s interests or at prices that aren’t the best the airline could get. And this leads to suboptimal decisions, like a fleet of 80 widebodies that lacks more than 14 of a single type, leading to scheduling challenges and higher maintenance and training costs and an inability to reach cost efficiency through scale.
- Incompetence: Company executives in many cases have owed their position to patronage rather than skill.
- Bureaucracy: While they want very badly to lean on technology for ancillary revenue they’ve underinvested in tech (perhaps, given their other challenges, this has been a saving grace in terms of waste avoidance). Thai law and custom often places form over sound decision-making as well.
- Competition: Thai could manage in spite of being so poorly managed when the Thai economy boomed, tourists came in droves, and there wasn’t nearly as much competition from low cost carriers. They no longer have anything close to a monopoly on domestic operations, and they face competition on most routes with strong traffic and yields.
The airline is trying to raise cash to make it through restructuring in part by selling older aircraft, though of course the value of used planes – especially older used planes – has fallen markedly due to the pandemic with planes around the world parked in desserts.
The airline will sell you flight simulator time, teach you to be a flight attendant, or serve you a meal on the ground but without fresh capital and real reform Thai Airways will remain a zombie (or a frozen food brand).