BANGKOK - A Thailand court on Monday approved the restructuring of Thai Airways, which is billions of dollars in debt and struggling to survive the coronavirus tourism crash.
The global aviation sector was plunged into crisis by the pandemic as countries severely restricted travel, forcing airlines to ground vast numbers of planes and seek government help as they haemorrhaged cash.
The kingdom, once a majority shareholder in Thai, reduced its stake in May and went to the insolvency court to resolve the airline's debt -- which totalled 332.2 billion baht ($10.6 billion) by the end of June, according to local media.
"The problem that caused debtor's financial situation is not from its business but from the rapid change in aviation, particularly the impact from Covid-19," Bangkok's Central Bankruptcy Court said Monday.
It approved Thai's request for a rehabilitation plan, which would see its debt and company organization restructured.
Thai said after the ruling that it would propose that plan by the end of the year.
It has long been accused of mismanagement, and Thailand's transport ministry found in August that some of its financial damage was due to corruption, including "bribes" paid for the acquisition of 10 aircraft.
The government was previously mulling a 54 billion baht bailout for the airline, which was met with a public outcry.
Thai has restructured multiple times over the last several years but it never "went deep enough to resolve many of the longstanding systemic issues", aviation expert Brendan Sobie told AFP.
Thailand's tourism-reliant economy has been battered by the pandemic, and is expected to shrink by more than seven percent this year according to government estimates.
Agence France-Presse
BANGKOK - The UN International Civil Aviation Organization has removed a red flag against Thailand over safety concerns, the Civil Aviation Authority of Thailand said on Monday, sending shares in Thai airlines sharply higher.
Thailand was downgraded in June 2015 after its regulator missed a deadline to resolve significant safety concerns, meaning that airlines in Thailand were unable to add further international routes, though they could continue to operate routine flights.
The Thai aviation authority said the ICAO had made the decision after a meeting on Friday. The Montreal-based UN agency was not immediately available for comment, but the red flag which appeared against Thailand on its website had disappeared.
"Although lifting the red flag is a significant turning point for her aviation industry, Thailand as well as CAAT need to carry on their missions to improve the aviation safety standards," the CAAT said on its website.
CAAT director general Chula Sukmanop told a news conference the removal of the red flag would give Thai airlines a chance to start new flights to China, Japan and South Korea.
Shares in Thai Airways climbed nearly 8 percent on the news before falling back to trade at over 5 percent higher. Shares in Asia Aviation, which operates as Thai Air Asia, rose as much as 5 percent and later traded up nearly 4 percent. Shares in airport operator Airports of Thailand rose over 2 percent.
The biggest beneficiaries of the decision would be smaller carriers, such as Thai AirAsia X, NokScoot and Thai Lion, said Corrine Png, the CEO of Singapore-based transport research firm Crucial Perspective.
"The ICAO downgrade had seriously impeded these new entrants’ growth to lucrative markets such as Japan and South Korea," she said. "These airlines can now grow more aggressively. This would, however, imply increased competition for Thai Airways when they expand."
Chula said he expected Thailand would regain a Category One status from the US Department of Transportation’s Federal Aviation Administration (FAA), which also downgraded Thailand in 2015. The FAA downgrade meant Thai carriers could not start new routes to the United States.
The CAAT said its aim was to be at "the world's forefront" in safety and reach the global average in each safety category. Actions were still needed to address findings of an ICAO inspection in January 2015 and an audit in July, it said.
ICAO's red flag was based on its audit of the regulatory body, rather than individual airlines. Some major Thai airlines, including Thai Airways, Bangkok Airways, Thai Lion and NokScoot, have passed the International Air Transport Association Operational Safety Audit, a benchmark for global safety management in airlines.
Aviation safety is particularly important for Thailand given that tourism accounts for around 12 percent of its economy, the second largest in Asia.
The countries which still have red flags against them are Djibouti, Eritrea, Haiti, Kyrgyzstan and Malawi, according to the ICAO list.
source: news.abs-cbn.com
