Thai transport authorities have given national carrier Thai Airways 30 days to revamp its financial recovery plan as part of a major restructuring effort to drive down costs and return the airline to profitability, AINonline.com reported.
The order comes after deputy transport minister Thaworn Senneam met with the carrier on Thursday as part of a review of the company’s flailing financials.
Speaking to Thai media, Senneam disclosed the carrier must submit a new business plan and expedite a fleet adjustment program to sell 19 decommissioned aircraft in a bid to reduce maintenance costs, the report said.
Thai Airways also received an order to submit a monthly update regarding its ambitious aircraft acquisition scheme to procure a mix of 38 narrowbody and widebody jetliners. Board members in late September rejected the airline’s aircraft procurement proposal, valued at US$5.1 billion, after they called for a revision of funding sources and an analysis of market conditions.
The management team has about five months to revise and resubmit a new fleet acquisition program, which could see the carrier take aircraft on lease. A separate plan to lease three Boeing 777-200ERs remains under evaluation.
The review of Thai Airways’s operational and financial restructuring program comes as the airline battles with fierce market conditions and an accumulated debt of more than US$3.2 billion, the report said.
According to second-quarter regulatory filings, Thai and its subsidiaries reported a net loss of US$226 million in the first half of 2019, compared with a loss of about US$105 million during the same period a year before. Senneam previously expressed concern that the airline could see net losses exceed US$329 million by year-end.
Thai Airways president Sumet Damrongchaitham has sought to quell mounting concerns over the carrier’s financial predicament, stating the company controlled sufficient cash flow and a credit line that accounts for roughly 13% of revenue estimates.
Nevertheless, the carrier has requested a loan of $1 billion for the 2020 fiscal year to cover investment and working capital needs. According to Damrongchaitham, the airline would not use the loan to help finance its US$5.1 billion fleet procurement plan.
Last week, Senneam publicly questioned Thai Airways’s management team and its ability to return the carrier to profitability. The airline must now submit a plan that explicitly details cost-cutting measures on unprofitable routes and a revised marketing plan to increase internet ticketing sales.
A multimillion-dollar maintenance, repair, and overhaul joint venture with Airbus also remains under examination, with plans to break ground in early 2020.