Thai Airways Expects To Run Out Of Cash Next Month

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.

Manufacturer Aircraft Quantity Age
Airbus  A300-600 1 27
Boeing  B737-400 2 27-28
Airbus  A340-500 3 13-15
Airbus  A340-600 6 12-15
Boeing  B747-400 10 17-27
Boeing  B777-200 6 22-24
Boeing  B777-300 6 20-24

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).

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. It would be bad PR for the Generals running the country to close it….but is there really any reason for Thai Airways to exist?

  2. Refunds Can’t Be On Hold For Indefinite Timeline As Covid Elimination Subject To Various Multiple Factors And Voucher In Lieu Of Cash Prohibited In Many Under Developed Countries Due Exchange Control Stringent Conditions. Thanks For Undivided Thoughts Of Authorities Of Respective Airlines. RELEASING REFUNDS WILL RESTORE DAMAGED IMAGE AND CONFIDENCE TO ATTRACT FUTUTE CUSTOMERS.

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