Thai Airways Plans To File For Bankruptcy Protection

Filed Under: Thai

There are so many mismanaged airlines out there that were on the brink of collapse even before the current pandemic started, and Thai Airways is among them.

Thai Airways to file for bankruptcy protection

Reuters reports that Thailand’s government has decided to go to bankruptcy court to submit a rehabilitation plan for Thai Airways.

According to government spokesperson Narumon Pinyosinwat:

“The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court… the procedure will be submitted to cabinet tomorrow.”

While I’m not familiar with these procedures in Thailand, it’s said that the process is similar to Chapter 11 bankruptcy protection in the United States.

This represents a new strategy for the airline, as previously the plan was for Thai Airways to get a further 58.1 billion THB (~1.8 billion USD) loan guaranteed by the government.

While the airline needs liquidity to survive, the reality is that the airline is already almost 100 billion THB (~3.1 billion USD) in debt, so just adding to that debt even further won’t do much for the airline long term.

Thailand continues to be closed to international tourists, meaning the Thai Airways fleet has essentially been grounded.

Thai Airways A350 business class

What changes should we expect at Thai Airways?

As mentioned above, a serious Thai Airways restructuring has been on the table for a long time, and the current situation has only made that even more necessary.

Thai Airways’ biggest problem is their inefficient route network and fleet. Thai Airways’ fleet consists of roughly 80 wide body aircraft:

  • The 80 wide body aircraft consist of 10 different aircraft types, so there’s a huge lack of consistency and commonality
  • The wide bodies are simply too big for some of the regional routes the airline operates, as all narrow body planes are now with subsidiary Thai Smile
  • Thai Airways continues to operate 747s, which are gas guzzlers, and A380s, which offer too much capacity for the airline
  • Thai Airways has an unnecessarily large long haul route network, especially when you consider that Thailand is overwhelmingly a leisure destination, and Thai Airways doesn’t do quite as well as a “transit” airline as some other airlines in the region (for example, the Gulf carriers, Cathay Pacific, Singapore Airlines, etc., carry significantly more passengers between Europe and Australia)

Could this situation cause Thai to retire the 747?

Bottom line

Hopefully Thai Airways emerges from bankruptcy protection a stronger and more efficient airline. For so long the airline has been run based on prestige and pride rather than profitability.

That will need to change if the airline is going to have a proper turnaround, though frankly I’m skeptical about that actually happening.

What changes do you think we’ll see at Thai Airways?

Comments
  1. As long as HMs The King and Queen need TG to commute between Prathet Thai and Germany/Switzerland, TG will have a future. Also, Thailand’s elite loves to park their unqualified family members and friends in highly paid jobs there, along with lifetime ROP Platinum benefits, etc. Corruption and mismanagement are their true enemies.

  2. It’s a shame that Thai may have to shrink. They are a very good airline and I love the retro 747’s they still hold onto. They are a decent transit airline if you are travelling from Southeast Asia to Europe but they can’t compete with Singapore Airlines and Cathay Pacific in the area. I hope Thai can shrink their way into profitability as they are one of my favorite airlines with one of the best liveries in the sky.

  3. They have to become a regional carrier only. They tried to run an expansive long-haul network; it was an unmitigated disaster. Maybe 15 destinations is sufficient for them: all in SE and East Asia, Australia, India. Forget the rest…they’ll never pay off.
    There would be some loss of national pride, but the main beneficiaries of the current arrangements are freeloading ‘hiso’ sleazebags flying on credit card points ( or upgrades of one sort or another). It needs to be ‘root and branch’ restructure, not tinkering around the edges.

  4. I wish Thai the best of luck.

    One of my best flights ever was in First between ZRH and BKK.

    The crew were unbelievable and made up for a poor transfer experience in ZRH.

    I also flew them on the JFK-BKK-JFK non-stop in J and even with the slightly uncomfortable angled seats both flights were enjoyable.

  5. I used my United miles many times and flew in F from BKK-SYD as well as BKK-FRA. I always loved flying Thai and an hour long massage prior to take off not too mention the amazing cocktail menu on their iPad in the F class lounge at BKK. Hoping that Thai can turn things around.

  6. Thai Airways biggest problems are cronyism, corruption, and poor management. The airline won’t be fixed until the government is fixed.

  7. I have a soft spot for Thai as it was the first airline I ever flew business class on. Upstairs in a 747 felt so special back in the day.

    Hope they restructure effectively.

  8. A start would be some logic related to their fleet. It’s like a garage sale of different aircraft types, many of which are overkill for particular routes.

    There is no reason Thai can’t survive with proper management and some painful steps to clean up operations, costs etc. They still maintain a certain “beloved” status with long time flyers given the incredible service (even when on dated aircraft). And BKK is well positioned as a hub to Asia and Australia from Europe.

    I still maintain my position though that SIA, Malaysian, and Thai should form one group like Lufthansa has done with Austrian and Swiss. Keeping their identity and national brand while being managed and run by Singapore as smaller niche carriers under the Mama guidance of SQ.

  9. There’s something about Thai Airways that brings out the worst vitriol and condescension in many avgeeks and frequent flyers. I see we all smell blood in this headline today lol… Farangs taking out their misery on Thailand is not a new phenomenon.

    I’m not Thai and I don’t defend Thailand, I just happened to grow up in Bangkok, and here’s my opinion. TG’s actual long-term problem is the “Red Shirts” of the North and Isan are NOT going to fly them anytime soon. It’s not a fare or network issue. It’s their self-image and political agenda. So TG can no longer be the default national airline for the common people that it gradually grew into in the 80s and 90s. They need to go back to the 50s and 60s when they were just one of many airlines at BKK that are all out of reach to the lay person anyhow, and fight for business with zero home advantage. Back then it was against BOAC, KLM and Pan Am, now it’s the ME3, Cathay and EVA.

    I’d want to make TG way smaller and take it upmarket. Thai service culture is extraordinarily labor-intensive, as analog as possible, and best sampled with ample time. TG clearly has a knack for maintaining longhaul F ops that the likes of Malaysia can’t touch even when they’re better-run. Oh and like the old days, hire native speakers for English-language marketing… Tyler Brule might be itching for another airline gig.

  10. Discounting the 747-8s, who will have 747 400s left after this crisis? And the a380 doesn’t have good prospects with its Asian carriers.

  11. Kacee has it perfectly nailed above:

    Thai Airways biggest problems are cronyism, corruption, and poor management. The airline won’t be fixed until the government is fixed.

    Bingo. You can’t fix the airline without addressing the very deeply-rooted, pervasive corruption across the government – and throughout Thai society, too, for that matter. Until that’s addressed, no changes to the airline will make any difference whatsoever. Forget everything floated about tweaking aircraft types, adjusting routes, and other normal business decisions. None of that will matter. At all. There are much, much more fundamental problems that need to be acknowledged and tackled – and nobody even dares whisper about such things, it’s completely taboo. TG will remain the way it is until then, and everything else is just window dressing.

  12. I have an biz award flight with them LHR-SYD-LHR over the new year, the first time I will fly this route business. i have been very excited about this since I booked in January. I think they offer excellent service. I have flown with them many many times from London to Sydney, and always had an excellent experience. So I for one am hoping they pull through!!!

  13. “gas guzzling 747s” but the 380 isnt?????
    You’re Euro stripes are showing Lucky.

  14. @skedguy
    A boeing 747-400 is a gas guzzler when compared with an a380 a 747-8 is not but given they only have -400 the -8 is not relevant in this conversation

  15. Amadeus Air Four and AVAP , as the major lease holders of Thai Airways aircraft are in talks with the Thai government.
    Expect a major revamp in the executive make up and outsiders brought in.

  16. As many point out here today, cronyism and corruption, resulting in bloated and incompetent management is pervasive at Thai.
    Maybe the bankruptcy route, Thai-style, is being pursued as a means of blasting out these time-servers and freeloaders from the top jobs. The opportunity, or necessity, is also there to trim their routes, and rationalise their fleet, pensioning off their aged 744’s and other assorted odds and ends.
    TG enjoys substantial goodwill around the world and now has a once-in-a-lifetime opportunity to capitalise on that and set itself up for the next decade, post Covid-19. Is the will there to do it?

  17. Living here for the past 5 years, I can tell you: Thailand will never let THAI fail. Lèse majesté laws of the Kingdom prohibit me from saying anymore.

    –JRL

  18. It’s just confirmed in the local news that the cabinet approved of the move to bankruptcy protection. (Thai government is the major shareholder of Thai Airways)

    What would happen is:
    1. Thai government would sell or transfer some of its shares in Thai Airways to Equity fund named Vayupak fund to make Thai government stake being less than 50% thus void the status of Thai Airways from State Enterprise. (According to Thai Laws, state enterprise cannot go into bankruptcy protection)
    2. Thai Airways would enter into Bankruptcy Protection after being out of being state enterprise

    The largest problem in Thai Airways is not inconsistent fleets or inefficient routes. The largest problem is politics-plagued decision making. That’s why CEO of Thai Airways aren’t able to stay for long or really fix the problem. The board of directors are full of ex-politicians and armed forces Generals. I hope this will be a step into the right direction for Thai Airways. As a Thai, I really like to fly them especially in their revamped business class services.

    Also, I hope they will finally renovate F lounge in BKK (fingers crossed)

  19. As for 747-400, I don’t imagine any retiring of the whole fleet coming soon unless there is a specially configured 777 with F…
    The reason is that there are some VVVVVVVVVVVVVVVVVIP in Europe that needed to be served in only F class…
    So you will continue to be able to experience the nose F or upper deck C experience for the foreseeable future but don’t bet your life on that you know how fast and last minute TG like to do plane swapping…

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