Thai Air, Hurt By Airport Trouble, Seeks USD$974 Mln
January 21, 2009
Thai Airways said on Wednesday it was seeking nearly USD$1 billion in funding after the closure of airports by political protests last year added to problems caused by the global economic slowdown.
Thailand's national carrier said in a statement it was looking for up to THB34 billion baht (USD$974 million) in loans from financial institutions -- THB19 billion for working capital and THB15 billion for refinancing short-term loans.
"We need the funds as soon as possible," a Thai Airways official said without giving details.
The problems pushed the airline's shares to a record low of 6.35 baht on Tuesday but they rallied 1.6 percent to 6.50 baht in early trade on Wednesday, with investors heartened by reports the government would help state enterprises find loans to solve cash flow problems.
The airline is majority owned by the government.
The shares have fallen more than 12 percent over the past week due to concerns about the company's health.
"Every airline around the world is facing some difficulty but Thai has particular difficulties because of the political situation right now and the fact the airport was shut down," said Nicholas Ionides, Asia Editor of Flight International magazine.
"It also doesn't help that their management is in a bit of turmoil right now," he added.
Acting President Narongsak Sangapong said on Monday the airline was looking for THB19 billion in loans from state-owned banks after being hit by the week-long closures of Suvarnabhumi and Don Muang airports by protesters late last year.
Local newspapers quoted the transport minister as saying the airline's board would need to be replaced if it couldn't improve the management of the carrier.
The previous president resigned at the start of the month. Media reported that was because of disagreements with the board plus health problems.
The airline completed a bond sale worth THB5 billion baht on Tuesday, issued to a few institutional investors to support its cash flow, its statement said. The THB34 billion it is seeking is on top of that.
"We may need less funds if passenger traffic is back to normal faster than expected," it said.
Analysts have downgraded the airline recently, citing the weak outlook for tourism due to the global downturn and the impact of the political unrest in Thailand.
The airline is in the process of drafting a restructuring plan, which could be put to the board in February.
Earlier this month, Thai Air said it had agreed with Airbus to postpone payments for six A330 aircraft, and it subsequently said it would try to delay delivery of the A330s, scheduled for later this year.
Copyright © 2009 Aviation News Release
