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Thai Airways warns of extended delisting risk

Acting president targets 2030 for shareholder equity to turn positive

A Thai Airways Airbus A380-800 aircraft at Bangkok International Suvarnabhumi Airport in September 2019.   © Reuters

BANGKOK -- Thai Airways International's listing on the Stock Exchange of Thailand will remain in jeopardy, the flag carrier said Friday, as the company does not expect to regain positive shareholder equity for nearly a decade.

The airline "expects to generate profits from its main business operation in 2023, and the shareholder equity will be greater than zero in 2030," Chansin Treenuchagron, the acting president, said in a statement, citing a preliminary estimate under the company's reorganization plan.

The COVID-19 pandemic virtually halted international air travel in 2020, dealing a crushing blow to the underperforming airline. Thai Airways' net loss in 2020 grew twelvefold from the previous year to 141 billion baht ($4.54 billion at current rates), and shareholder equity sank from 11.7 billion baht to minus 128.6 billion baht.

On March 8, the stock exchange notified the flag carrier that it fell within the criteria for delisting under the bourse's regulations by reporting negative shareholder equity. Chansin's statement Friday came as a response to the bourse's notice.

The Thai carrier, in rehabilitation under Central Bankruptcy Court supervision, on March 2 revealed the plan it will propose to debtors. But this rehab plan lacked measures to improve the company's battered balance sheet quickly, even though bourse regulations require Thai Airways to resolve the issue within three years.

Thai Airways did not ask creditors to write off any debt, nor did it propose secured sources of funding through the rehabilitation period, which could last five to seven years.

In Friday's statement, Chansin mentioned a possible capital increase. The airline also plans to offer creditors the option of debt-to-equity conversion to increase shareholder equity and reduce debts. But the company does not expect these efforts to lift the airline out of negative shareholder equity.

"It can be seen that [Thai Airways] might not be able to fully eliminate the [grounds for delisting] because the shareholder equity would remain less than zero," the acting president said. "It may result in the Stock Exchange of Thailand proposing" that its board of governors "consider possible delisting" of the airline.

Thai Airways' rehabilitation plan focused on improving profitability, with restructuring measures for the company's fleet, lease contracts, flight routes and workforce. The airline looks to cut staff to between 13,000 and 15,000, down by roughly half from 27,944 in 2019 before the pandemic.

The airline on Monday released results from a survey of current employees, excluding outsourced workers and staff at overseas branches. Roughly 13,500 of the 17,121 employees expressed interest in continuing to work at Thai Airways.

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