Air Transport

Thai Airways International is seeking a 20-30 billion baht ($572-858 million) bridging loan from the Thai Government because it has loans it needs to refinance and has suffered a revenue shortfall.

The Star Alliance carrier's VP of investor relations, Raj Tanta-nanta, says in the last quarter of 2008 Thai posted a loss and is now speaking to the State-Owned Enterprises Policy Office and Ministry of Finance about getting a bridging loan for 20-30 billion baht.

Thai has 15 billion baht of short-term loans it needs to roll over in the coming months, says Raj.

"The sooner the airline receives the money, the better," he says when asked when the airline needs the money by.

He stresses: "We're not asking for an equity injection from the Government" but rather a bridging loan.

Yesterday Thai's share price plummeted to 6.5 baht a share, the lowest it has been in 16 years. Raj says the share price fell because shareholders are concerned their stakes may be diluted.

The other reason is because of the depressed outlook for the global travel industry, he adds.

Thailand's Government already owns 51% of the airline directly, with a further 18% and 3% held by two government-controlled funds and a government savings fund, respectively.

The airline needs the 20-30 billion baht because it has to refinance loans, says Raj, adding that it has also experienced a drop in revenue due to the global economic downturn and the temporary closure late last year of Bangkok's two major airports.

Currently the airline has a passenger load factor of 74% across its network, which is better than the mid-60 percentages it had forecast. But Raj qualifies this by saying Thai has reduced capacity significantly.

He declines to say what the loss for the fourth quarter and full-year are but says the annual results will be announced in mid-February.

Thai's final results will depend on the foreign exchange fluctuations which can have a major impact, he adds.

Raj also confirms the airline has made losses on fuel hedging but says Thai's losses are less than those of many other carriers because it has generally hedged less than others.

In January it has 22% of its fuel hedged and for the next two months it has 17% hedged, he adds.

The airline is also working to improve its finances by cutting costs and last year reduced its headcount by 670.