Troubled Thai Airways International has taken the first step in restructuring by submitting an initial turnaround plan to the Thai Government as it bids to overturn the heavy loss it posted in 2008.It is part of a two-stage turnaround, seeking to boost revenues and cut costs this year by around 10 billion Baht ($282 million). The second stage will address its longer term strategy.
Thai posted a full year loss of 23 billion Baht in 2008 after a troubled year, as political instability hit the country's key tourism industry with Bangkok's two airports closed for more than a week late last year by anti-government protesters. Politicial uncertainty remains amid reignited protests in the country.
Upheaval has also continued at the airline after the carrier's board resigned in March. A new board will be elected shortly along with a new president. Executive vice-president Narongsak Sangapong has been acting president since Apinan Sumanaseni resigned in November last year.
The first stage of Thai's restructuring plan focuses on immediate measures and aims to enhance revenues, cut costs and "confidence build" within the financial community as it seeks to secure crucial funding.It will focus on revenue and route management, together with building ancillaries and direct channels, to grow revenues.Improving fuel efficiency and productivity, while deferring investment projects which do not create direct benefit to its core business, are among cost saving moves. Measures to "regain trust and confidence" with relevant financial institutions include investor roadshows, cashflow monitoring and seeking reserve liquidity wherever possible.
Thai has been seeking 34 billion baht to improve its balance sheet - around 15 billion baht to replace its existing short-term borrowings and the other 19 billion baht to bridge liquidity tightness for 2009.
The airline says the 15 billion baht loan is short-term and is currently being renegotiated to be extended for the full year to give it time to secure alternative long-term financing. The other remainder it now intends to borrow from financial instituations rather than the Government.