Thai Airways : how to disguise need for state’s money with “massive expansion plan”

You probably saw the headlines : “Thai Airways plans massive expansion”

The Thai Airways board of directors met on Monday morning to discuss the airlines expansion over the next 15 years. A decision was reached to purchase 15 new aircraft over the next 4 years, expanding the fleet to over 100 planes.

Bangkok, the 8th of February 2010 [PDN]: Thai Airways Chairman Amphon Kittiphong revealed that the airline had agreed on plans to acquire or lease 15 new aircraft between 2010-2014. A budget of 35 billion baht has been allocated for the expansion. (Pattaya Daily News)

And then another… version :

Thai Airways International is seeking Bt10 billion to add 81 new aircraft over 15 years, thereby reducing maintenance costs and improving the fleet in line with travel demand on each route.

“The aircraft acquisition plan will take place in parallel with the capital increase. THAI is asking the Finance Ministry to inject Bt10 billion to maintain its 51.03-per-cent stake,” Transport Minister Sophon Saram said yesterday. […]

Sophon said THAI needed new aircraft, but that required a huge amount of money. Seventy-seven aeroplanes will be replaced. (Nation)

So let me recap :

– 15 new aircrafts until 2014 :  budget 35 billions
-or 10 billions for 81 airplanes over 15 years


Don’t try to understand. Nation has it wrong. As usual.

Anyway. The most important part is not these grand “expansion” plans (there is no expansion : just the need to totally renew the old fleet)… and furthermore Thai Airways can’t afford to renew “77 airplanes”. No the real information is :  need for state’s funding.

I wrote it before : the thai people would eventually pay for the Thai Airways Folies.

Nation throws  away the information in one sentence :

THAI is asking the Finance Ministry to inject Bt10 billion to maintain its 51.03-per-cent stake, Transport Minister Sophon Saram said yesterday.

The real information is here, and was given not yesterday but on february 3, by a serious media, western of course : the Wall Street Journal.

Thai Airways International PCL said Thursday it is looking to raise up to 25 billion thai baht ($756 million) in fresh capital via a rights issue as part of its recapitalization plan.

The plan, which is meant to bring down the airline’s debt-to-equity ratio to two from its current level of more than three, must get approval from the Ministry of Finance, then the Cabinet and the company’s shareholders.

“The new shares would first be offered to existing shareholders. The [capital raising] figure hasn’t been finalized yet, but the range we’re looking at is up to 25 billion baht,” said Raj Tanta-Nanta, vice president of investor relations.

Last month, Thai Airways President Piyasvasti Amranandsaid the Finance Ministry has unofficially agreed to buy half of the airline’s new shares to maintain its 51% stake in the carrier.

As part of the financial restructuring program, Thai Airways plans to issue 11.5 billion baht worth of bonds, with expected maturities of five to seven years, to refinance existing bonds that will mature this year, Mr. Raj said. The airline is also seeking to extend 8.5 billion baht worth of short-term debt, due within this year, by at least seven years, he said.

Now it’s more clear.

Thai Airways needs cash, badly. They need cash… not to buy airplanes, but to refinance its debt. The new airplanes will come later… or in “parallel ” like the Transport Minister is saying.

In any case,  the thai people will pay. There is no free lunch : the state is shareholder.  We are talking about the “flag airline”… Debts, losses, horrible management, corruption and economic downturn mean only one thing recapitalization. No escape.

Otherwise : bye bye Thai Airways…

But eventually, it’s just another Thai Folie… Look at the results of the main airlines around the world and the situation of the economy…. Believe me, you don’t want to invest in Thai Airways bonds !

But the thai government will of course do it.


6 Responses to “Thai Airways : how to disguise need for state’s money with “massive expansion plan””

  1. 1 Lord HaHa 11 February 2010 at 5:54 pm


    Suvarnabhumi to get new airport police station

    The Thailand cabinet has agreed to set up a new police station at Suvarnabhumi International Airport in order to increase safety for passengers and their belongings. The airport station, located on the first and second floors of the passenger terminal, will have 291 officers and come under the supervision of the Central Investigation Bureau’s Tourism Police Division.

    An official said the cabinet had not set a timeframe for the completion of the project but construction of the station should start immediately and be completed as quickly as possible.
    Security services at the airport are handled by Asia Security Management, a joint venture set up by Loxley and ICTS Europe Holding BV of Germany. It employs 2,000 staff, supported by another 500 staff from Airports of Thailand, but they have no authority to press charges or take legal action against suspected offenders.

    The planned establishment of the new police station was initiated after a government committee looking into problems at Suvarnabhumi received many complaints from passengers about crime at the airport. The cabinet also approved setting up a customer service centre at the airport to receive complaints from passengers and provide them with 24-hour information on airport services.

  2. 2 Pricilla 11 February 2010 at 6:48 pm

    Yes, governments should never be involved in business. They are as incompetent with running a business as they are with the country. The same lazy, useless public servants or sycophants get to play with a business and bankrupt it through their stupidity and then keep asking for more handouts to maintain the insolvent gravy train.

    Thai should privatize and save the suffering tax payers from supporting inept management and bloated staff. That would also stop the military, politicians and bureaucracy from using it as their privileged plaything, which is of course why it will never happen.

  3. 3 ThaiCrisis 11 February 2010 at 11:11 pm

    The police station at Suva is indeed a good news. Time to get rid of all the “private” mafia that are operating within the airport…

  4. 4 richsamui 12 February 2010 at 12:49 pm

    Yes, circa 300 more hungry mouths in the form of police….what an improvement at suva that will be…just cost us a whole lot more and with even less redress when they fuck us more…useless and a sure thing to make matters a whole lot worse…

    thai airways….all i can say is please, please, please don’t even think about ever using this airline…for your own wellbeing and for the sake of ordinary thai people this organisation should be consigned to the same historical garbage can as the dinasaurs…

  5. 5 Smakonhed 12 February 2010 at 4:26 pm

    The police station at Suva is indeed a good news. Time to get rid of all the “private” mafia that are operating within the airport…

    Yep, time to get rid of the unofficial mafia and give it to the police. The official mafia.

  6. 6 ThaiCrisis 12 February 2010 at 5:09 pm

    The official mafia is always better than the private one. 😉

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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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