Thai Airways : raising capital won’t be enough… 50 billions needed

Thai Airways International’s board of directors approved the Bt10 billion capital increase, which needs shareholders’ approval at the April 28 meeting.

THAI President Piyasvasti Amranand said that proceeds from the share offering will be used for general corporate purposes, including to manage its liquidity, finance future aircraft investments, strengthen THAI’s capital base, and repay its debts. (Nation)

And then a few days later:

Thai Airways International must raise Bt50 billion this year and next to repay debts and finance business expansion, president Piyasvasti Amranand said yesterday.

Funding will come from a share offering planned for later this year, bank loans and debenture issues.

Once the debt-to-equity ratio is halved from 4 at present, whatever is left over will be used for business expansion. […]

THAI recently won board approval to issue up to 1 billion shares, pending shareholder approval on April 28. The airline is now capitalised at Bt16.99 billion. […]

THAI is due to retire Bt29 billion worth of debts this year. Earlier, it was reported that debentures worth no more than Bt11 billion would be issued, to roll over maturing bonds. (Nation)

10 billions ? 50 billions ? Different tools but only one reality : Thai Airways needs money. Badly.

Not to expand the business (“whatever left…” like says the president) put to face its obligations : to roll over debts.

Healthy ? Of course not.

And don’t be fooled by the so called return to profit in 2009… It’s an illusion. Most of the airlines in the world are badly hurt.

The double dip recession is going to create a terrible cisor effect.

Apparently, the thai government (as main shareholder) has accepted to pay. The thai tax payers will pay.

5 Responses to “Thai Airways : raising capital won’t be enough… 50 billions needed”

  1. 1 Faith 20 March 2010 at 3:31 pm

    I foolishly had some hopes when the new TG president was appointed and started sending out some signals that he wanted to really change things at TG and get TG back to its former prestige.
    I must say , it now seems like this guy is just another incompetent bullshitter.
    I fly TG in C and F almost on a weekly basis, and have seen none of the promised improvements in service. Actually , it’s quite the opposite.Nothwistanding the fact that Suvarnabhumi is a shithole( not TG’s fault ) , the whole premium flying experience on TG is appalingly below the standards , not only of its asian competitors ( SQ,CX) , but even way inferior to its middle eastern competitors ( QR,EY,EK ) , who often charge much less than TG.
    Every week there is a new TG press release on fleet expansion , which contradicts the previous one .Same for the capital increase, it seems these buffoons have no idea how much cash they need to survive… Scary for a company with a multi billion US $ balance sheet.
    As for the 2009 profit, I seem to remember that most of it is due to currency exchange gains ( basically a lottery) and I’m sure a lot of creative accouting went into it as well.

  2. 2 ThaiCrisis 20 March 2010 at 4:07 pm

    Very true : we are witnessing an amazing “spin” (although very cheap) bordello about the issue of new aircrats procurements.
    It’s really pathetic.

    TG is way behind now. And, in crisis times, they can’t afford to buy a new fleet…. So they will lease, increasing the costs etc.

    The bottom line is : the whole airlines industry is in the hole, with a shrinking (solvent and profitable) market, and a deep crisis. It makes no sense to add capacities when we have over capacities.

    Sure : ask 6 billions people if they would like to fly : they would surely say yes.
    But they can’t afford it. And the airlines are already at the “non profitability” line.

    Add to this nightmare… the (real) possibility of an increase of oil prices (like we had in 2008)… and you get the perfect recipe for a maxi disaster.

  3. 3 fall 20 March 2010 at 6:39 pm

    Aww, it’s always warm me heart to see taxpayers’ dollar goes to bloat, inefficient, and greedy companies. Especially one with no restructuring plan nor change of strategy.
    A good, old government bail out with new name, AIG should be proud.

  4. 4 Insanity 30 March 2010 at 12:58 am

    Jet Airways is to lease three of its Boeing 777-300ER aircraft to Thai Airways as part of a “capacity rationalisation initiative”.

    The three aircraft will be dry-leased for a period of three years with immediate effect.

  5. 5 Insanity 6 April 2010 at 1:35 pm

    As part of THAI’s policy to establish itself as a “premier” airline 🙂 and following increased international fares over the last three months Thai Airways has now increased domestic fares from Bt8 to Bt13 per flown kilometre.

    Salary costs increase 7% every year & the airline employs 27,000 staff, the highest workforce of any airline in the Asia Pacific.

    Thai aiways obviously doen’t want to tackle the issues that make it uncompetive. And why should it as long as the Thai taxpayer picks up the bill for its expanding losses.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

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.

%d bloggers like this: