To face debts, Thai Airways plans to raise… capital

funny_plane

Thai Airways International, Thailand’s largest airline, plans to issue shares next year to raise funds for repaying short-term debt, its newly appointed president said on Monday.

Piyasvasti Amranand did not say how much money the flag carrier will raise. But 29 billion baht ($869 million) of debt matures next year, he added.

Kosin Sripaiboon, a senior analyst with UOB Kay Hian Securities, said he expected Thai Airways to raise almost 20 billion baht ($600 million), or issue 800 million new shares, half of its current registered capital of 1.7 billion shares.

The carrier has a total debt of 160 billion baht [4,8 billions USD]

“We need to raise capital because we have a lot of short-term debt to be repaid,
” Piyasvasti said.

“We are also trying to convert our short-term debt to longer maturities. As the long-term debt has a maturity of six years, that doesn’t match our funding for plane procurements,” he told reporters on the first day of his top job. (Reuters)

Let me translate what the new president seems to have discovered on his first day on the job : Thai Airways is broke. Speak about a discovery !

Let’s review the titles of some of my articles about the national carrier.

Thai Airways : “The situation has deteriorated from bad to worse “...
Thai Airways : is there any captain on (the) board ?
If… if… if and if… Thai Airways will return to profits
No cash to pay new airplanes, airports closure, economic downturn… Thai Airways is crashing
Peter Principle : desperate Thai Airways relies on… government officials to fill its aircrafts and seeks 1 billion USD
Thai Airways : tales of the daily corruption

You have an image coming to your mind ? Yes, you’re right : a crashing airplane.

Sure… we could blame the high oil prices in 2008… the political crisis… the flu… then the recession… then the extraterrestrials, etc. This is exactly what the new president is doing.

Long gone are the days when Thai Airways was so terribly exotic… when tourism increased every year… when the reputation of the airline was a rising star…

Those externals factors had a cruel effect : they expose the company, naked, in front of the whole world. It’s impossible to lie anymore, to hide behind a reputation and a never ending tourism growth. The party is over. Now it’s time to pay, and the smart money is unlikely to answer the call.

Thai Airways is a public company (the thai government is the first shareholder), baddly managed, indebted, overstaffed, with an old fleet, acting like a reservoir of privileges for many lunatics in unform (the cousin, the maid, the mia noi of General X, colonel Y etc.), frozen in time, rapped and abused over and over by politicians, and unions too.

A perfect cas d’ecole. A negative show case.

So who is going to buy this generous offer ? Shares from Thai Airways ? To invest now in an airline, and in Thai Airways, would be just suicidal.

The thai government ? Broke too.

And what about dilution ?

But eventually, of course, someone will pay : the thai people.

19 Responses to “To face debts, Thai Airways plans to raise… capital”


  1. 1 silenced 21 October 2009 at 9:11 am

    What is also interesting is Piyasavasti himself. He’s a crony of democrat. He was an energy bureaucrat before Thaksin came in and kicked him out.
    After that he got a chairman job with Kasikorn Asset, the fund management company of Kasikornbank, although he had no prior business experience, fund management whatsoever. Never mind, it was a ceremonial position anyway and he is a close relalive of the Lamsams.

    Then he moved on to become the advisor of CEO of KBank. Right, an advisor to his own relative, another ceremonial position.

    And now he got the top management post at THAI. If he wasn’t a crony of Democrat, the Lamsams, would he ever get the job at the flag carrier, given his lack of “real” business experience.

    This is cronyism at its worst!

  2. 2 ThaiCrisis 21 October 2009 at 12:57 pm

    -> Silenced : thanks for those very interesting details about Piyasavasti’s background.

    It makes the case even worse…

    As usual, I could have ended the article by my classic gimmick : “Change we Abhisit ? Yes We Can’t”.

    Unfortunatly.

  3. 3 Insanity 21 October 2009 at 2:24 pm

    If Thai Airways wants to survive, it has to change its way to conduct business and get rid of political interference, nepotism and its culture of inefficiency. In the last decade, Thai Airways’ strategy has been constantly fluctuating due to regular changes in its board of directors. They are generally acknowledged as rather incompetent as most of them are political appointees.

    Thai Airways currently has one of the oldest fleet of any large Southeast Asian carrier. On average, 11.6 years with over 20-years old aircraft such as Airbus A300 and Boeing 747-400.

    Adding to the airline’s woes is its overstaffing problem. The airline currently has 27,000 employees, compared to 14,000 at Singapore Airlines or 19,000 at Malaysia Airlines.

    The Thai flag carrier is also struggling to build an efficient air hub at Bangkok Suvarnabhumi & completly messed-up the integration of low cost subsidiary Nok Air into Thai’s network strategy.

    Thai Airways needs to make changes but it is unlikely that anything will happen. The President will definitely face resilience from Thai staff with a board of directors watering down any decision until another President takes over. It is also unlikely that Thai Airways will reduce its staff, many of them being there thanks to their connections.

    As to plans to raise capital maybe the government can print paper money & exchange it for the paper shares, as surely no one in their right minds would touch the proposed new issue of shares.

    LaLaLala

  4. 4 david 21 October 2009 at 4:26 pm

    well,
    i’ve seen the same in italy with ALITALIA, major shareholder was the government which always use money of others in a bad way…grrrrr
    surplus of staff, almost the double of similar airway companies in europe and crazy over paid emplyees.
    thai airways should be privatized in time before shares go to almost zero.

  5. 5 Pricilla 21 October 2009 at 7:29 pm

    Yes, private equity into most inefficient government run businesses is madness, this lemon though is a text book case of where not to invest your money. However, no doubt a means will be found to make it appear the capital has been raised. Perhaps a few bonuses will emerge for a job well done.

    Also interesting about the idiot political hack that probably couldn’t run a sun tum booth being put in in charge, but in all fairness this type of nepotism is not unique to Thailand. The well connected crud always rises to the top.

  6. 6 bodhisattva 21 October 2009 at 9:05 pm

    Thailand needs Khun Thaskin to fix the economy and get people straighten out.

    Khun Thaskin, please, get back to run this lawless country ASAP.

    We need you NOW.

  7. 7 Leopold 21 October 2009 at 11:27 pm

    It might be be a bit unfair to simply label Piyasavati as a Democrat/Lamsam crony. Nobody denies he has got a privileged background, but at least he is a staunch free marketeer. Clearly, his record shows that his decisions do not serve the interest of politicians.
    A lot of Thais actually hate him for his demand for floating the LPG prices and ending Shinnawatra-era oil subsidies. Then, there are unionists who also hate him for wanting to privatise the energy sector in the 90s’.
    Not a popular guy, and that might be what THAI needs.
    A google search on his name produced this http://sanpaworn.vissaventure.com/log/219/piyasvasti-amranand-on-egat-privatization
    Don’t let the post itself fool you, check out the comments.

  8. 8 ThaiCrisis 22 October 2009 at 3:20 am

    Sure. But everything is relative.

    What is a “staunch free marketeer” in Thailand ? 😉 Compared to what ? To who ?

    Furthermore, he can have his own ideas…. but his job at Thai Airways won’t be like a quiet and joyful tea party.

    Unions, the clowns in military uniforms, and his masters the politicians won’t allow any “decise action”.

    This “company” doesn’t need precise and tiny surgery. It needs a butcher. With large and dirty hands.

    I mean, in a funny and striking parallel, look what’s going on at SRT… A shame. Exactly the same. Too many private and little interests involved…

    They would need someone like Ronald Reagan (with the air controllers). Not happy ? Fire them all.

    So to summarize : there is probably room for a “national flag” carrier in Thailand… But the best solution would be to dissolve the one that exists right now. And to start a new one.

    From scratch.

    We experienced the same situation in France with Air France during the 80’s… This “public” company was a shame for so many years. And a pitt for public money… But France had money and time to bend and change, slowly, the situation. It took 20 years.

    Thailand doesn’t have the means nor the time to do such “delicate” surgery…

  9. 9 KV 22 October 2009 at 10:19 am

    So Thai airways wants to raise capital from stock markets to do what? To restructure its business? To invest in new planes? To fund new ventures into new business areas?

    No.

    To pay off their debt.

    My god.

  10. 10 silenced 22 October 2009 at 1:29 pm

    Re: Piyasvasti

    No matter how you look at it, he’s a crony of democrat and the lamsams. His only business pedigree came from Kasikornbank/Kasikorn Asset job. Ask those in the banking industry what was his achievement during the tenure? Nothing! He got staffs under his wings to do all the real works. And those people work under him just because the owner, the lamsams, told them so. His only “work” while there was to speak at a seminar as an economist, energy expert. Is that all it take to be a CEO of a major company? Of course not, unless you are a good close friend to the company’s owner!

    His wife was a democrat party list candidate in 2007. Right before that he also held a post in the coup-installed, surayud’s, government.…

  11. 11 ThaiCrisis 22 October 2009 at 4:42 pm

    My god“.

    Will god be enough ?
    😉

  12. 12 fall 22 October 2009 at 9:05 pm

    Simple math, 29 billion debt due vs. 20 billion expected capital.
    that’s 9 billion short…
    It would be funny to raise capital, then immediately file Ch 11.

    Wonder who’s gonna underwrite those share?

  13. 13 AR 24 October 2009 at 11:33 am

    But Thai International is ranked fourth, according to Skytrax (known for its World Airlines awards), in the group of Top Ten Airlines in the world. Singapore Airlines and Cathay Pacific, btw, were ranked 1 and 2, respectively.

    http://airtravel.about.com/od/airlines/tp/skytraxbest10.htm

    Obviously the ranking was NOT based on financial performance or efficiency, I could guess.

  14. 14 StandUp 26 October 2009 at 10:01 am

    ThaiCrisis, by that logic the whole country needs to be butchered, dissolved and started anew.

    That’s obviously not a solution, people get the government, SRT, and airline they deserve.

    There was a letter in The Nation addressing Piyasvasti’s qualifications:

    http://www.nationmultimedia.com/search/read.php?newsid=30105917

  15. 15 Tarrin 27 October 2009 at 12:33 pm

    Fall – Only the dare devil would even considering underwrite those shares, BUT, this is Thailand and I can assure you the market maker can turn a pile of s*** into gold.

  16. 16 Rockderk the Lenient 27 October 2009 at 3:14 pm

    OK… I can be lenient. But not today. I’ve been a fan of watching Thai Airlines mismanage themselves into oblivion for some years. So obviously I wouldn’t fly with them. Which brings me to my story: Last month I flew with Etihad. I like their new planes and several hundred choices of entertainment. Except they didn’t show up. They transferred us hapless passengers aboard 12 hours of hell on a 25 year old shitheap scheduled by…TG. This thing still had ashtrays in the armrests. Those old monitors hanging from the ceiling that nobody can see. I won’t mention the fat ugly waitresses. That would be unnecessary. The guy next to me paid 12 thousand more than me. He actually chose Thai. That was the only consolation.

  17. 17 Insanity 28 October 2009 at 4:28 pm

    October 28, 2009
    Australia’s competition regulator has started court action against Thai Airways as part of an ongoing investigation into alleged price fixing in the air cargo industry.

    The Australian Competition and Consumer Commission (ACCC) said in a statement on Wednesday that it alleges that between 2001 and 2006, Thai Airways entered into arrangements or understandings with other international air cargo carriers in specific countries that had the purpose or effect of fixing the price of fuel surcharges and security surcharges.

    The regulator has already sued some eight airlines over the same allegations.

    (Reuters)
    http://news.airwise.com/story/view/1256721260.html

  18. 18 ThaiCrisis 2 November 2009 at 9:42 pm

    Hey… we learn that he’s a “good skier“. No need to ask more 😉

  19. 19 How the end always is 7 November 2009 at 9:35 pm

    TG is the hub of incompetence,corruption and nepotism.
    Now if there is anyone out there who who thinks that this incompetent crony is going to change anything about it, they are delusional brainwashed morons.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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