The national flag carrier of Thailand, Thai Airways, is reportedly looking to buy between 20 and 30 aircraft when it expects the aviation industry to have recovered in 2025. The plan is to refresh its fleet of aircraft with newer fuel-efficient planes as it recovers from the fallout brought about by the COVID-19 pandemic.
The cash-strapped airline recently reached an agreement with its lessors due to the carrier’s restructuring process. While the agreement is not binding and won’t come into force until the airline exits bankruptcy, most Thai Airways lessors have agreed to sign it. According to the aviation enthusiast website, FlightGlobal 15 lessors have exposure to Thai Airways to the tune of 40 aircraft.
The restructuring plan needs to be approved
Citing an unnamed source, Bangkok’s English daily newspaper The Nation claims that the airline expects the airline industry to fully recover from the pandemic by 2025. According to The Nation, the news source said the following:
“The plan to buy new planes would be submitted to the Central Bankruptcy Court on March 2 along with THAI’s business rehabilitation plan, subject to approval by its creditors.”
In a move to try and survive the massive decline in revenue brought about by COVID-19 last November, Thai Airways decided to sell 34 passenger planes.
One its website Thai Airways lists having the following 42 aircraft for sale:
- 10 x Boeing 747-400s
- 2 x Airbus A380-800s
- 12 x Boeing 777-200s
- 6 x Boeing 777-300s
- 3 x Airbus A340-500s
- 6 x Airbus A340-600s
- 1 x Airbus A300-600
- 2 x Boeing 737-400s
Thai Airways wants to spend $3 billion
Last July, Reuters reported a similar purchase plan suggesting Thai Airways was looking to buy $3 billion worth of new planes to replace older aircraft. According to Thai Airways acting president Usanee Sangsingkeo, the order would be for 13 widebody and 10 narrowbody jets. Most likely, Thai Airways will look to order Airbus A320neos for its regional subsidiary Thai Smile and next-generation widebody options for the parent airline such as the Airbus A350, Airbus A330neo, and the Boeing 787 Dreamliner.
Thailand relies heavily on tourism
While not profitable for many years, Thai Airways is a vital part of the country’s tourism industry, unlike many other state-owned carriers. Nearly 13% of Thailand’s GDP comes from tourism, and it has been virtually non-existent since the coronavirus outbreak and the closure of international borders. The bankruptcy court overseeing the re-structuring of Thai Airways is not pulling any punches, having already sold off much of the airlines’ assets in a bid to raise cash. The court is also aware that Thai Airways is overstaffed and took the measure of offering early retirement to many Thai Airways employees while the airline has had most of its fleet grounded due to COVID-19. In a bid to get rid of some of the airlines’ top earners, Sky News says the court announced on Friday that it was cutting 240 executive positions. It also said that supervisory levels would go from eight to five in a bid to improve efficiency.
Thai Airways must now submit its restructuring plan to the Central Bankruptcy Court on 2 March before being voted on by creditors in May. If most creditors vote against the plan, Thai Airlines will then proceed with its bankruptcy. With most Thai Airways lessors already backing the plan, it’s hard to imagine it not passing. The court has proven that it is willing to take all the necessary steps to make Thai Airways profitable, including the slashing of jobs.
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