Thai Airways Files For Bankruptcy Protection, Won't Refund Any Tickets For At Least Six Months
It finally happened: Thai Airways has filed for Bankruptcy Protection in Bangkok's Central Bankruptcy Court on Tuesday and the petition was accepted on Wednesday afternoon.
As luck would have it, the bad news didn't take long to come as the carrier announced that refunds won't be forthcoming for at least six months as the law prevents THAI from any cash disbursements.
At the same time of the court filing the company did a big re-shuffle of their board of management as previously announced. To say it didn't go exactly well would be an understatement.
With Thai Airways fleet grounded since late March there many thousand passengers waiting for refunds of their tickets but this bankruptcy protection (or "Debt Rehabilitation" as they call it) filing refunds will be a long way out, even though THAI has promised they will eventually pay.
It all started on Tuesday when Thai Airways went to court and then Wednesday their petition was accepted according to Bangkok Post.
The Central Bankruptcy Court accepted a Thai Airways International (THAI) debt rehabilitation petition on Wednesday amid concerns of a technical setback after one of the airline's board members poised to be made a rehab planner resigned.
The petition said THAI deserved to be revived because of its sound business foundations, years of experience, the profit-generating potential of its business units, and its brand value.
Tough negotiations with creditors will commence before that process can get under way, a court source said.
Forthcoming actions include a major debt restructuring, deep cost cuts, all-round reorganisation of the company, an income-generating capability shake-up and flight route improvement. ...
But as the petition was approved in court, Pailin Chuchottaworn, former CEO and president of PTT Plc, quit as a newly-appointed member of the THAI board, citing a violation of an anti-graft regulations.
He was one of four new additions to the airline's board. The others are Piyasvasti Amranand, a former THAI president; Pirapan Salirathavibhaga, a former justice minister; and Boontuck Wungcharoen, a former CEO of TMB Bank.
Those four and two other board members - THAI acting president Chakkrit Parapuntakul and airline chairman ACM Chaiyapruk Didyasarin - were nominated as rehabilitation planners in the petition submitted to the court. ...
A THAI source said Mr Chakkrit also faced a conflict of interest allegation as he sits on the executive board of the Siam Commercial Bank, one of THAI's creditors.
Just to recollect, Mr Piyasvasti was Thai Airways president between 2009 - 2012 and then dismissed by the board over "communication problems" concerning procurement of new aircraft, so basically corruption.
The procurement of aircraft at Thai Airways has always been controversial as it's widely known that the process of acquiring new planes the THAI presidents and CEO's is being used to line their own pockets through kickbacks, a situation that led to the carrier having pretty much every single commercial aircraft in their fleet which cause skyrocketing maintenance costs.
Whoever thought the the overhaul of the board would result in industry experts being hauled in was probably dreaming, as the developments this week show all appointees are cronies of the political leadership, in other words: Business as usual at Thai Airways.
Who is going to suffer from all of this? Likely the creditors and the customers. More than half of the debt of the company is held abroad and THAI will have to file for Chapter 11 Bankruptcy Protection in the U.S. as well as the most debt is held there.
As Bangkok Post reported today many customers are also out of luck for their ticket refunds.
Thai Airways International (THAI) has admitted that debt rehabilitation has kept it from refunding customers for unused tickets.
THAI's Corporate Image and Communications Department said on Thursday it is unable to offer refunds at this time as the Central Bankruptcy Court admitted the airline's request for rehab under the bankruptcy law on Wednesday.
The airline is restricted by obligations under the law which prevents it from disbursing refunds at this point in time. But it promises to return the money within six months without any fees. ...
The airline pledged to continue to take care of customers holding valid tickets as well as members of the Royal Orchid Plus, its loyalty programme.
THAI earlier announced on its website that it will resume flight operations in July, a delay by one month as borders slowly begin to reopen and passenger start trickling in.
"However, the (planned) resumption in July 2020 is still under consideration. THAI is monitoring the situation and preventive measures and lockdowns in each country as well as travel demand to resume services as the Covid-19 situation improves," the airline's website said.
Considering THAI hasn't operated any international or domestic flights in April, May and June I'd estimate that (considering the size of the airline) at least one Billion US$ [31 Billion THB] is outstanding to be repaid to passengers. It's unclear how much money - if any - has so far been refunded. Of course this amount will go up with each month where the airline can't operate. Mind you this is an estimate on my side, there are no official figures that would prove- or disprove this right now.
Thai Airways website has been updated to the affect that they will put THAI Smile back into service on June 1st, serving some domestic routes.Conclusion
This could have been a chance for THAI to get rid of their massive debt burden and restructure under competent leadership, maybe even looking beyond Thailand to find competent management that isn't just a lackey of the government and local dignitaries. Of course the chances of that were slim from the get go and considering who has been let go from management and reappointed to the board just reinforced the "good old boys club" policy that got Thai Airways into this position in the first place. Cronyism at it's best!
Passengers who paid by credit card and are now left hung out to dry might be well advised to attempt a chargeback through their credit card company considering the airline has now filed their case and is officially not completing any refunds anymore. If a charge back is successful often depends on the bank and how customer friendly they are. If a bank refuses one might have the option to complain to the national regulator for banking and financial products or the assigned ombudsman.