The Thai cabinet today approved the plan to bring Thai Airways International Plc to bankruptcy court following news of the decision breaking yesterday afternoon.
Thai Prime Minister, Prayut Chan-o-cha, confirmed that the airline will go to bankruptcy court admitting it was a “difficult decision” at a press conference on Tuesday afternoon.
However, he remained defiant that the airline would not go bankrupt and instead would undergo a reconstruction under the supervision of the court. The Prime Minister said:
“The government has reviewed all dimensions … we have decided to petition for restructuring and not let Thai Airways go bankrupt. The airline will continue to operate.”
There is now a strong suggestion that Thai Airways could become privatized under the reconstruction with Deputy Prime Minister, Anuthin Charnvirakul, saying that the airline may lose its status during the process.
For now, the airline will continue operations while its debts and assets are being reconstructed. During this period, Thai Airways will not have to service debts.
It is currently unclear whether the bankruptcy case will be heard in Thai courts or foreign courts as Thai Airways International Plc owes 30 percent of its huge debt to foreign investors.
Some investors have called for the case to be heard in the United States to ensure that assets from the airline are not seized when airplanes land on foreign soil.
If, and when, Thai Airways becomes a private company there are likely to be huge cutbacks in terms of staff, wages, and perks for employees at all levels of the company.
The news of the airlines filing for bankruptcy led to a huge drop of almost 20 percent in its share value over the past 24 hours.