The Thai Cabinet has approved a reform plan for Thai Airways International (TG, Bangkok Suvarnabhumi) to file for business reorganisation under its own administration, the carrier said in a stock market filing.
While the airline disclosed the move in an investor update on May 19, the filing for business reorganisation itself has yet to be made.
"Although Thai's reform plan will be implemented and exercised through the business reorganisation chapter under the bankruptcy law, Thai will not be dissolved or go into liquidation, or be declared bankrupt. On the contrary, the business reorganisation chapter will enable Thai to reach its reform plan's objectives even more effectively step by step as required by the law which provides equitable protection to all relevant stakeholders while Thai will be able to conduct its normal business operations," the airline said in a stock market filing.
Thai Airways, which has debts totalling around THB200 billion baht (USD6.3 billion), had previously denied plans to file for restructuring as recently as one day before the decision. The government, in turn, was previously adamant that it would not deprive the airline of its state-owned enterprise status.
As such, the Bangkok Post said that in preparation for the filing, the Ministry of Finance sold a 3.17% stake in the flag carrier to the state-owned Vayupak 1 Fund.
Following the sale, which was executed on May 22, the Ministry of Finance continues to own a 48% stake in Thai Airways. The stock-listed airline has yet to file an investor announcement detailing the terms of the sale which means that Thai Airways is no longer considered a state-owned enterprise, as the government's share in the carrier has dropped below 50%.
Although the Vayupak 1 Fund was established by the state, it is not considered a state-owned firm and, legally, does not represent the government. The fund already owned a 15.12% stake in Thai, managing a 7.56% stake each on behalf of state-owned Krungthai Asset Management and partially state-owned MFC Asset Management. A further 3.28% in Thai Airways is owned by Thai NVDR, a subsidiary of state-owned Stock Exchange of Thailand, while another 2.13% is owned by the Government Savings Bank. In total, at least 71.7% of shares in Thai Airways are owned either directly by the state or by firms under the ultimate control of the government.
The sale follows the airline's announcement from May 19 in which it said that the government had approved its plan to file for the business reorganisation chapter at the Bankruptcy Court of Thailand.
Sources said that the sale was executed swiftly to allow the airline, now deprived of its status as a state-owned enterprise, to file for bankruptcy reorganisation under its own administration. If it had dragged its feet, the creditors would have likely filed for reorganisation under external administration.
The airline hopes to obtain court approval to nominate government-appointed members of its board as bankruptcy administrators. However, the government has yet to pick its nominees.
In parallel with the planned bankruptcy reorganisation, the Ministries of Transport and Finance said they would establish a "superboard" for the airline, which will oversee its restructuring. The "superboard" will not have a direct say in how the restructuring is conducted but will report progress to Prime Minister Prayut Chan-O-Cha.
