Three reasons why Thai Airways should not return to being a state enterprise
What’s the way forward for the national carrier after it exits rehabilitation?
Over the past four years, Thai Airways has undergone a business rehabilitation process, which began on May 27, 2020, when the Central Bankruptcy Court accepted the company's rehabilitation petition and set the hearing date for August 17, 2020. This marked the beginning of the company's rehabilitation.
Recently, Thai Airways announced its readiness to exit the rehabilitation plan and outlined its operational roadmap.
Piyasvasti Amranand, chief executive officer of the Rehabilitation Plan at Thai Airways, emphasised that during the rehabilitation period, Thai Airways received no financial assistance from the government, making it the only airline in the world to face the Covid-19 crisis without government support. Nevertheless, the company demonstrated strong management, returning to profitability, with last year's results being the best in its history.
A key condition for exiting the rehabilitation plan was achieving positive earnings before interest, tax, depreciation and amortisation of no less than 20 billion baht, which has already been accomplished. The remaining task is to bring equity back into positive territory. Thai Airways is now preparing to issue bonds and convert debt to equity. Once completed, this will raise 80 billion baht, restoring the company’s equity to positive.
As Thai Airways approaches the end of its rehabilitation plan, questions have arisen about whether the airline should return to its status as a state enterprise. Industry experts cite three key reasons why Thai Airways should not revert to being a state enterprise:
Interference in personnel appointments
In the past, Thai Airways has faced external interference in the appointment of its executives, with lobbying playing a role in securing positions. If future leadership is selected based on political influence rather than merit, the company risks returning to its old inefficient ways.
Government-driven policies
Thai Airways has historically had to operate under government policies. A significant portion of management meetings — more than 50% — was often devoted to reviewing and complying with regulations, rather than focusing on business strategy. Currently, over 95% of meeting time is dedicated to business-related matters, reflecting a more effective approach to governance.
Opportunities for specialised shareholders
Most creditors prefer that Thai Airways remains a private company, as this enables continued revenue generation and ensures the airline can repay its debts. Additionally, the private status allows the airline to attract diverse shareholders with business expertise. Thai Airways is preparing to sell shares via private placement, seeking new investors with expertise in the aviation industry.
A source within Thai Airways revealed that one condition for exiting the rehabilitation plan is the formation of a new board of directors. However, external interference in appointing representatives to this new board has already been observed, which the airline hopes to avoid.
