Thai Airways rescued from the brink

Thai Airways International, once one of the most successful airlines in Asia, is to "go through rehabilitation via the bankruptcy courts" - a decision that ushers in complex, make-or-break steps for the national carrier, Prime Minister Prayut Chan-o-cha says.

General Prayut said the national cabinet had opted against throwing a financial lifeline to the airline because it must save the money for relief schemes needed to alleviate the Covid-19 crisis and reinvigorate the economy.

"I had to make a very difficult decision regarding Thai - but it is one that I know is in the best interests of the public and of our country," he said.

The government had three choices; find more money to keep the airline flying, let it go bankrupt, or let Thai be the subject of a bankruptcy court-approved rehab plan. 

"We've decided on the third option," the PM said. The Thailand government will give up its controlling stake in Thai Airways as it has approved a financial restructuring for the cash-strapped airline through bankruptcy protection.

The airline has made a loss in six of the last seven years and its financial health has become more perilous since the global coronavirus pandemic.

"We have decided to petition for restructuring and not let Thai Airways go bankrupt. The airline will continue to operate," the PM said. 

The restructure will be handled through the Central Bankruptcy Court, allowing the airline to operate as usual and retain staff for the time being.

Part of the restructure plan will see a shrinking of its fleet over time which may lead to a future downsizing of the workforce.

For now its few assets are protected from creditor demands although it is mulling whether it will need to seek bankruptcy protection overseas.

Limited domestic flights have restarted in Thailand but international services are still grounded until the end of June due to the pandemic.

According to the Transport Ministry, the bankruptcy petition to trigger a rehab will be filed with courts both in Thailand and the US. Some 35% of the airline's creditors are based in the US.