Thailand Government ‘Not Obliged to Save THAI’

There is no commitment to a state bailout in Thai Airways International debt rehabilitation plan, according to a source close to people conducting the process.

In an online meeting between THAI’s creditors and business rehabilitation planners last week, Chansin Treenuchagron, the airline’s acting president and one of the planners, told the meeting that in the plan, the government is not obliged to bail out the airline. Nor it is required to act as a loan guarantor as it tries to get back on its feet.

The Finance Ministry joined the meeting on behalf of a creditor and its presence did not mean the government was obliged to save the airline, Mr Chansin was quoted as saying.

According to the source, some creditors expressed concerns about how the airline would secure a loan without the Finance Ministry’s intervention, but Mr Chansin said if the debt-restructuring plan is considered financially feasible, finding loans is unlikely to be a problem, despite the airline’s heavy debts.

More than 15 creditors asked the rehabilitation plan to be amended during the May 12 meeting. As a result, the vote for the plan has been postponed to Wednesday 19 May.

According to the source, a no debt cut is proposed under the debt-structuring plan and several creditors, including the Finance Ministry, are also opposed to it. The airline is reportedly seeking a deferment of bond repayments.

On 19 May, THAI’s creditors will decide whether they will accept the proposed rehabilitation plan and the fate of the national airline, burdened by debts exceeding 400 billion baht.

The airline needs more than 50% of creditors to accept its plan and if the vote is cast in favour, the plan will be forwarded to the Central Bankruptcy Court for consideration.

But if not, the airline could be declared bankrupt.

By Joe Cusmano