Thai Airways International’s (THAI) president has rebuffed claims that the airline has run into liquidity problems after deputy transport minister Thaworn Senneam expressed concerns over the national flag carrier’s financial health.
According to Thaworn, THAI reported losses amounting to over six billion baht (US$197 million) in 1H2019 and he foresees that the airline runs the risk of chalking up net losses of over 10 billion baht by year-end, said a report by Bangkok Post.
“THAI is now in crisis. Its financial status is in a critical condition,” the report quoted Thaworn as saying.
In response, THAI president Sumet Damrongchaitham said that the company has “sufficient cash flow circulation to manage its current and future business operations”, and contrary to recent news report, has not lost financial liquidity.
Sumet said that from 2013 to 2018, the company has successfully managed its debts, and have since reduced its debts by approximately 48 billion baht.
The company regularly issues reports on its loan debt and financial health to the regulatory agencies, namely, Ministry of Transport, Ministry of Finance, and Public Debt Management Office – all of which have acknowledged the reports without raising any alarm, he added.
The company’s debt request of 32 billion baht for fiscal year 2020 will go towards its investments, to refinance or as working capital in business, as payment for operational expenses, to revamp equipment, and for aircraft maintenance, according to Sumet. He added that the amount does not include the airline’s plans to procure 38 new aircraft valued at 156 billion baht, which is pending approval from the relevant unit.
Earlier on, THAI had submitted a loan request for 50.8 billion baht to the Finance Ministry to boost liquidity, according to the Bangkok Post. If the loan is approved, 32 billion baht will be set aside as working capital while the rest would be earmarked to boost the airline’s cash flow, the report quoted a source at the ministry as saying.
Sumet said that as of the end of June 2019, the company’s cash and revolving credit line accounted for 13.4 per cent of the total estimated revenue for this year, which showed that the company had sufficient funds to “proceed with normal business operations”.