Thai Airways set to take major step towards exiting rehabilitation plan

Thai Airways will file to enter the restructuring process on September 30, paving the way for its exit from the rehabilitation plan after four years.

Thai Airways International Pcl has been undergoing a business rehabilitation process since September 14, 2020, when the Central Bankruptcy Court approved its plan on October 20, 2022. Throughout this period, Thai Airways has implemented a rigorous austerity plan to stop losses and reduce costs by cutting its workforce by half from 30,000 to 15,000 employees.

In addition, Thai Airways raised funds through various channels, including selling assets such as aircraft, office buildings both domestically and internationally, and in-flight equipment. 

Chai Iamsiri, the CEO of Thai Airways, announced that on Monday, (September 30), the airline will begin the first phase of its "organisational restructuring" by submitting a filing for the offering of securities and a draft prospectus for the capital restructuring to the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET).

“Thai Airways will submit a document for consideration of this capital restructuring plan, which includes 2,000 pages of details, including company information, business plans, and aircraft procurement plans. We are confident this will restore investor confidence in Thai Airways after exiting the rehabilitation plan,” Chai said.

Meanwhile, Thai Airways has been in discussions with various creditor groups, such as cooperatives and financial institutions, to convert their debt into equity. Most creditors support the rehabilitation plan and believe that this capital restructuring will be completed as targeted, allowing Thai Airways to exit the rehabilitation plan.

However, this filing for capital restructuring is one of the conditions necessary for exiting the rehabilitation plan. The success of the rehabilitation plan is contingent on meeting four criteria:

Increase in registered capital: The company must increase its registered capital and secure new loans as specified in the plan, with amounts sufficient for business operations.

Compliance with the rehabilitation plan: The company must not default on payments for five consecutive years from the date the Central Bankruptcy Court approves the plan.

Positive EBITDA: The company must achieve earnings before interest, taxes, depreciation, and amortisation (EBITDA) from operations, after accounting for cash used to pay lease obligations for aircraft, averaging no less than 20 billion baht per year in the two years preceding the reporting of the rehabilitation plan’s success.

Appointment of a new board: In the event of a change in shareholders.

After submitting the filing to the SEC, the subsequent process will begin in November, where the company will initiate the rights exercise and notify the intention to convert debt into equity for each creditor group. By December 2024, the process for offering and subscribing to additional shares will commence for existing shareholders, company employees, and specific investors through a Private Placement (PP) before the company entered the rehabilitation plan.

Once the capital restructuring process begins, Thai Airways expects to achieve positive equity, which may take up to two months to verify the financial statements. The financial results for the fiscal year 2024 will be announced in February 2025. Following this, the company will file a petition with the Central Bankruptcy Court to exit the rehabilitation plan, with hopes to have its shares traded again on the SET within the second quarter of 2025.