BANGKOK: Thailand's military-led government has approved a restructuring plan for Thai Airways International PCL in a bid to restore profitability to the national carrier's operations, a senior government official said on Monday.
State-controlled Thai Airways is one of the major state companies to undergo reform after the military seized power from an elected government in a May coup.
The restructuring plan includes measures to cut operating costs, boost revenue and sell some non-core assets, said Kulit Sombatsiri, Director General of the State Enterprise Policy Office.
"Thai Airways' board will brief details to its employees and media in the afternoon," the official told reporters after a meeting of the government's state enterprise super board chaired by Prime Minister Prayuth Chan-Ocha.
The restructuring process comes amid speculation that Thai Air, 51 percent owned by the Finance Ministry, faces financial distress after its debt soared amid high operating costs and the purchase of new aircraft.
"The airline won't go bankrupt because the government will take care of it," Prayuth said, adding the troubled airline needs to reduce the number of non-performing routes.
Thai Airways' leverage has been high and increasing since 2011 and is expected to remain high in the medium term, Thailand's TRIS Rating said in a December note.
The airline's adjusted debt to capitalization rose to 82.3 percent at the end of September from over 70 percent in 2011-2013 and 66 percent in 2010 due to the huge capital expenditure plan, mainly to acquire the new aircraft fleet, the ratings agency said.
Thai Airways has received 41 aircraft in the last four years and is due to receive another 22 during 2015-2018.
Helped by a huge foreign exchange gain, Thai Air returned to a net profit in the latest July-September quarter, but has still posted a loss from operations for six consecutive quarters after the tourism industry was hit by domestic political unrest.
The airline has said it expects to make a net profit in the October-December quarter due to a pick up in the tourism industry and declines in global oil prices. It is due to report fourth-quarter earnings in March.
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