Rehab plan ‘failing’ as THAI losses mount

Carrier warned over B156bn loan request

Deputy Transport Minister Thaworn Senneam has expressed concern that the loss-ridden national flag carrier Thai Airways International (THAI) may be in danger of running up net losses of well over 10 billion baht this year.

He said the financial rehabilitation programme implemented nearly a year ago does not seem to be working, noting yesterday that the airline reported a loss of well over 6 billion baht in the first half of this year alone.

“THAI is now in crisis. Its financial status is in a critical condition. The question is, how well aware is the airline’s board chairman about this matter,” he added.

The deputy minister said he wondered how serious the airline’s executives were in discussing and dealing with the worsening financial situation.

He said the executives responded poorly to his assignments aimed at easing the carrier’s financial woes.

“There will be a lot more assignments to hand out regarding their [business rehabilitation and investment] plans, which need to be revised,” he said.

Despite his pledge to pull the national carrier out of trouble, Mr Thaworn admitted he lacks the authority to fire its executives for underperforming.

He also cautioned the airline about its plan to boost liquidity via a 50.8-billion-baht loan from the government, saying THAI must think carefully before taking such a step with taxpayers’ money.

“If things go awry, someone will have to be held responsible,” he said.

The loan request has already been submitted to the Finance Ministry, he said, adding that efficiency of the airline’s financial rehabilitation programme will definitely be taken into account when assessing its ability to repay the debt.

If the loan is granted, 32 billion baht will be set aside as working capital while the rest would boost the airline’s cash flow, said a source at the ministry.

The government’s public debt management committee, chaired by the finance minister, has expressed concern over THAI’s liquidity problem and further debt from a planned purchase of 38 aircraft, said the same source. Mr Thaworn has since ordered revisions to the purchase plan.

The committee recommended that the Transport Ministry act to revitalise the airline’s finances, said the source.

Mr Thaworn said the airline has not yet responded to his question of where it will obtain the loan to finance the 156-billion-baht aircraft purchase. He also queried its long-term business plan for utilising the new aircraft and its marketing strategy to compete with low-cost airlines.

The deputy minister said the airline plans to deploy the first batch of 25 new airliners for medium-range flights of 5-6 hours from Bangkok.

That would put THAI in direct competition with low-cost carriers. Mr Thaworn said the national carrier’s only strategy to win back customers from budget airlines was to offer customers premium services.