Thai Airways International’s creditors have voted to approve the airline’s restructuring plan, its legal advisor said on Wednesday (19 May), according to media reports from Bangkok. “Ninety percent of creditors voted to approve the plan,” Kitipong Urapeepatanapong told Reuters, adding a court will need to review the plan on May 28. There were some changes to the original debt proposals but not too many, Kitipong said, according to reports. These include allowing some creditors to convert their debt into equity.
Thai Airways International announced in March that it would cut its operations significantly by shedding 50 percent of its workforce and its aircraft in operation from 102 to 86 as part of a rehabilitation plan that it submitted to the bankruptcy court. The restructuring will see the airline’s number of full-time employees reduced from 27,944 to between 13,000 and 15,000. Efforts to redesign the organisation and revamp compensation will bring the proportion of total flight revenues that are taken up by crew costs down from 23 percent to 13 percent, the carrier said in March. The airline added that it believes it would be able to return to profitability by 2025 with the cuts and as air travel returns to pre-COVID-19 levels.
The company, however, did not mention measures to secure stable sources of funding through the rehabilitation during a March news conference, even though an executive told reporters that it will have to raise 50 billion baht (US$1.65 billion) of working capital to operate the company for the next two years. Nor did it ask creditors to write-off any of its debt. Thai Airways’ plan may appear insufficient in terms of addressing issues on financial restructuring, according to media reports.
Under the proposed plan, the airline requested a six-year extension on debenture redemptions and said banks will be asked to give three-year concessions on repayment without urging any write-offs, according to media reports. On fundraising, an executive only mentioned that the company seeks to raise funding by various options, including issuing new shares to preferentially sell to creditors. He also hinted that the Thai government may be interested in investing in new shares. The Ministry of Finance sold a 3.17 percent stake in the airline in 2020 to lower its total holding below 50 percent.
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