2022 could be the year that Thai Airways returns to operational profitability as the Minister of Finance reveals that state banks will provide any required facilities for the flag carrier as it currently plays a strategically important role in flying in foreign tourists to the kingdom while now on target to complete its business rehabilitation plan early by 2024.

Thai Airways shares could be traded again on the kingdom’s Stock Exchange of Thailand (SET) sooner than expected after Finance Minister Arkhom Termpittayapaisith revealed on Monday that the airline is on course to exit its bankruptcy rehabilitation plan as early as 2024 as it benefits from a stronger than expected recovery being seen in foreign tourism and its role in flying European passengers into Thailand since the beginning of 2022.

Minister of Finance Arkhom Termpittayapaisith (right centre) revealed on Monday that Thailand’s state banks can facilitate the financial requirements of Thai Airways as its operating performance has improved due to cost-cutting and efficiency measures and surging passenger numbers on flights as the airline focuses on flying passengers in from Europe and other key markets to assist the country’s accelerating foreign tourism recovery.

Thai Airways appears to be benefiting from the foreign tourism recovery underway in the kingdom with passenger numbers reported to have risen by over 600% since the beginning of the year.

On Monday, the Minister of Finance Arkhom Termpittayapaisith, long seen as a friend of the national carrier within the cabinet and his ministry, told Bloomberg that a stronger operating performance by the airline this year had left it in a position where it now only required ฿13 billion of loan funding as part of its recovery plans hammered out with the Bankruptcy Court in Bangkok in June last year.

Airline rebuffed last year by key Finance Ministry officials as it sought ฿25 billion in loan funding

At the beginning of 2022, this was set at ฿25 billion and had earlier drawn a negative response from top officials at the Ministry of Finance itself in particular form Director of the Public Debt Management Office, Patricia Mongkhonvanit who argued, in November last year, that it was inappropriate as the airline was no longer a state enterprise.

Thai Airways ฿25 billion funding request from state coffers rebuffed by a senior Finance Ministry official

In May 2020, the then failing airline filed for bankruptcy after the government reduced its shareholding below 50% and afterwards spent no less than 13 months trying to work out a survival plan acceptable to both the Bankruptcy Court and its creditors with repeated requests for additional time.

Thai Airways still requires borrowed time and money as the firm submits a survival plan to the bankruptcy court

On Monday, Mr Arkhom said it now looked like the airline, flying high this year, may emerge from its bankruptcy process up to a year earlier, in 2024, and that state banks would be able to facilitate its borrowing requirements going forward.

Airline recorded a net profit for 2021, first since 2012 with once-off gains and subsidiary profits although it made an operating loss of ฿19.7 billion

The airline began to return to profitability last year posting an ฿11.1 billion net profit for the first six months of 2021 in August last year which was achieved through once-off gains as the airline still posted an operating loss, for the full 12 months of 2021, coming in at ฿19.7 billion although the airlines’ subsidiaries and debt restructuring activity generated it a net gain of ฿81.5 billion leaving it altogether with a net profit on its books of ฿55.1 billion for 2021.

This was the first profit for the firm since 2012.

The airline survived during 2021 on the revenue generated from its cargo and postal services business which accounted for ฿10 billion of its total revenue last year which was ฿23.747 billion.

Passengers number in 2022 are up over 600% and still rising as airline takes advantage of growing demand

However, all is changed for the better this year with passenger numbers in recent months climbing to over 13,000 per day from a modest 2,000 a day at the start of the year as Thai Airways focused its passenger flight services on providing access to Thailand for passengers from Europe with flights serving London, Paris, Frankfurt, Copenhagen, Zurich and other Scandinavian airports while the airline has recently opened up flights from India while also restarting its flights to and from Australia as well as Singapore and Malaysia.

The national carrier is also working with partner airlines as it flies into Dubai while, at home, its subsidiary airline, Thai Smile, is operating and expanding its schedule of internal flights including routes from Suvarnabhumi Airport to Roi-Et and Trang with regular flights from Don Mueang airport to Chiang Mai.

The airline is proving itself to be strategically important to the kingdom this year as other international carriers have been slow to resume their full range of services into Suvarnabhumi Airport in Bangkok and other Thai international airports due to resource constraints and a surprisingly strong rebound in demand for international air travel leaving airlines struggling to find airport-based staff.

International airlines slow to take up their slots at Thai airports after the kingdom fully reopened

British Airways, at the end of July, announced that it would not be resuming its regular flights from London to Bangkok previously earmarked for the end of this year, as the UK carrier decided to prioritise its flights into Singapore on which there is superior demand for business class seats.

British Airways snubs Bangkok in favour of elite travellers to Singapore as Thai Airways load levels rise

Recently, the Airports of Thailand (AOT) President, Nitinai Sirismatthakarn, revealed the current number of flight connections to Thailand is only running at 33% of pre-pandemic levels with Tourism Authority of Thailand (TAT) Governor, Yuthasak Supasorn, suggesting that at least 55% of the pre-pandemic level of seats is needed this year for the kingdom to achieve its full potential as it targets more than 10 million visitors.

At the same time, Thai Airways is reported to be organising regular charter flights from the United Kingdom in association with UK travel agents from the end of the year to fulfil strong demand in that market among prospective tourists to Thailand.

Up to mid-May 2022, 85,926 UK foreign tourists had entered Thailand with the figure currently projected to be over 120,000 arrivals making the country the kingdom’s second-largest market up to that point.

On Monday, Minister Arkhom told Bloomberg that the European market was currently the most profitable for the airline.

Airline will not return to its status as a state enterprise with the government aiming for a 40% stake

Nevertheless, although the minister was upbeat about the airline’s prospects, he made it clear that the Thai government does not seek to bring it into the fold again as a state enterprise suggesting that a 40% shareholding by the ministry would be an optimum arrangement to keep the carrier competitive after its reorganisation plan is complete.

That plan saw the airline cutting costs last year by a whopping ฿40.396 billion or 48.2% that an operating level coming in at ฿43.449 billion for the year. 

This year with even greater efficiencies within both its passenger business and its cargo operations despite elevated fuel costs, the airline is expected to see a more profitable performance on rising passenger numbers and fare prices.

This has meant that as well as cutting its borrowing or loan requirements, the airline will be able to achieve its business targets under the rehabilitation plan a year ahead of schedule by 2024 with Minister Arkhom, on Monday, also suggesting the company’s suspension of its shares from May 2021 on the Stock Exchange of Thailand (SET) may be lifted earlier than the current projected date given of 2025.

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Further reading:

British Airways snubs Bangkok in favour of elite travellers to Singapore as Thai Airways load levels rise

Thai Airways ฿25 billion funding request from state coffers rebuffed by a senior Finance Ministry official

Thai Airways still requires borrowed time and money as firm submits survival plan to the bankruptcy court

Thai Airways seeking business rehabilitation plan that has the unanimous support of it’s creditors

Thai Airways seeks a second and last extension to file its survival plan with the Bankruptcy Court on March 3rd

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