Business

Thailand’s THAI Union Battles to Keep Government Out of Airline Rehabilitation Plan

Published

2 months ago

November 10, 2024

In a significant development for Thai Airways International (THAI), the airline’s labor union is pushing back against government intervention in its rehabilitation strategy. As THAI aims to emerge from bankruptcy, tensions are rising over a proposal to bring in government officials, which the union argues could jeopardize the airline’s recovery efforts and autonomy. Here’s a closer look at the evolving situation and what it means for the future of Thailand’s national carrier.

Thailand’s THAI Union Battles to Keep Government Out of Airline Rehabilitation Plan

THAI Union’s Protest Against Government Involvement

On November 8, THAI employees gathered in protest outside the airline’s Bangkok headquarters, voicing opposition to proposed amendments to THAI’s rehabilitation plan. Displaying placards, the union urged creditors to reject changes that they believe could compromise the airline’s independence.

Concerns Over Government Intervention in THAI’s Future

The Thai Finance Ministry has suggested appointing two officials, Polchak Nimwatana and Panya Chupanich, to THAI’s rehabilitation team. The union fears that this move may lead to political influence in crucial decisions, especially regarding aircraft purchases, and ultimately damage THAI’s competitive edge on the global stage.

Union’s Stand on the Government’s Influence

In a powerful statement, the union argued that “political interference and corruption” have been detrimental to the airline’s performance. They emphasized that employees, having dedicated years to the airline, are best suited to oversee its successful recovery without external interference.

The Proposed Changes and Their Implications

The Thai government’s plan to appoint two ministry officials to the rehabilitation team has sparked controversy, not only among union members but also some creditors.

The Role of New Government Appointees in THAI’s Recovery

Under the government’s proposal, new appointees would have a say in THAI’s rehabilitation strategy, potentially involving debt-to-equity conversions, adjustments to capital structure, and even policy decisions on asset acquisitions. This has raised concerns among analysts, who worry that government influence might prioritize state interests over the airline’s operational health and market competitiveness.

A History of Challenges for Thai Airways

THAI filed for bankruptcy in 2019, with approximately 245 billion baht in debt. In 2020, the Thai Cabinet approved a plan under the Bankruptcy Act to help THAI rehabilitate and rebuild its operations. Since then, THAI has implemented various restructuring initiatives, targeting profitability and shareholder returns.

Financial Strategies in THAI’s Rehabilitation Plan

As THAI approaches its mid-2025 recovery target, the restructuring plan includes several key components, including debt repayment options and capital restructuring. This also includes a debt-to-equity conversion for certain creditors, allowing them to become shareholders in THAI.

Debt-to-Equity Conversions and Capital Restructuring

The rehabilitation plan calls for mandatory and voluntary debt-to-equity conversions, with certain creditors offered a conversion rate of 2.54 baht per share. This conversion, slated for the end of 2023, aims to ease the airline’s debt burden, with capital restructuring measures including issuing 9.8 billion new shares.

Banks and Creditors’ Perspective on THAI’s Recovery

Thailand’s leading banks, Bangkok Bank (BBL) and Krungthai Bank (KTB), are among THAI’s creditors and have seen both risks and opportunities in the rehabilitation plan.

Debt Repayment Options for Major Banks

Creditors like BBL and KTB are being given options, such as debt-to-equity conversions and extensions for repayment. Both banks expect a positive outcome if the airline exits rehabilitation, forecasting improvements in their Non-Performing Loan (NPL) ratios.

What Lies Ahead for Thai Airways?

While the union’s protest against government intervention draws attention, THAI’s path to recovery involves numerous stakeholders. Should the Finance Ministry’s proposal be accepted, the airline may see more direct government involvement in the coming years, shaping both financial decisions and the airline’s strategic vision.

THAI’s 2025 Exit Target

Thai Airways aims to exit the rehabilitation process by mid-2025, marking a major milestone in its journey toward financial stability. With an eye on increasing shareholder equity, the airline hopes to restore its position on the Stock Exchange of Thailand (SET) and resume trading by June 2025.

Conclusion

The battle over Thai Airways’ future reflects broader concerns about political influence in corporate recovery efforts. While the Thai government aims to safeguard the airline’s financial future, THAI’s labor union and analysts argue that independence is key to ensuring a sustainable recovery. As THAI moves closer to a mid-2025 rehabilitation exit, the airline’s fate rests on achieving a delicate balance between government support and operational autonomy.

Ref-Thaiger

Business

Thailand Commits to Becoming an AI Learning Hub

Published

3 weeks ago

December 5, 2024

Wadi

Ministers Announce Plans for AI Governance Collaboration

Thailand is dedicated to advancing global trust in artificial intelligence (AI) governance and establishing itself as a learning hub for AI through collaboration with UNESCO, according to Prasert Jantararuangthong, the Minister of Digital Economy and Society (DES). This initiative aims to enhance the ethical application of AI technologies while fostering skilled professionals in the field.

Goals for AI Workforce Development

The Ministry of Higher Education, Science, Research and Innovation (MHESI) has set ambitious goals to increase the number of AI-skilled workers by adding 30,000 engineers over the next three years. This plan includes generating 100 AI innovations valued at 40 billion baht and promoting AI adoption across 600 agencies nationwide.

Significant Increase in AI Adoption Rates

According to the AI Readiness Measurement 2024 report by the Electronic Transactions Development Agency and the National Science and Technology Development Agency, AI adoption plans among Thai organizations have reached 73.3%, reflecting an increase of nearly 20 percentage points year-on-year. This surge indicates a growing recognition of the importance of AI in various sectors.

Hosting the UNESCO Global Forum on AI Ethics

On Wednesday, the DES Ministry, MHESI, the Education Ministry, and UNESCO announced their partnership to host the 3rd UNESCO Global Forum on the Ethics of AI 2025, themed “Ethical Governance of AI in Motion.” This event is scheduled to take place from June 24 to 27, 2025, in Bangkok and will serve as a platform for knowledge exchange and collaboration on AI governance.

Commitment to Ethical AI Implementation

Prasert emphasized that Thailand’s commitment aligns with UNESCO’s AI Readiness Assessment framework, which is recognized globally. The country has recently introduced key frameworks such as the AI Governance Guideline for Executives and the Generative AI Governance Guideline for Organizations. These resources aim to ensure responsible and transparent implementation of AI at all organizational levels.

Multilateral Collaboration for Developing Countries

The upcoming forum is expected to foster multilateral collaboration and build AI governance capacity in developing countries. It highlights Thailand’s dedication to global trust in AI governance while positioning itself as a leader in ethical AI practices.

Integration of AI Technologies Across Industries

Suphachai Jaismut, vice-minister for MHESI, stated that Thailand is prepared to integrate AI technologies across various industries, driven by a commitment to advancing research and development (R&D). This integration is crucial as Southeast Asia’s digital economy continues to grow rapidly.

Addressing Challenges in the Digital Economy

While advancements in AI infrastructure are promising, challenges such as the digital divide and job displacement due to automation remain significant concerns. Xing Qu, deputy director-general for UNESCO, emphasized that building peace through education, science, and culture is vital in an era where AI increasingly influences societies and economies.

Business

Thailand to Finalise Free Trade Agreement with EFTA by January 2024

Published

4 weeks ago

December 1, 2024

Ashley Wings

Thailand is preparing to finalise a landmark Free Trade Agreement (FTA) with the European Free Trade Association (EFTA) by January 2024. The agreement marks Thailand’s first FTA with a European trade bloc and is expected to bolster exports, attract investments, and enhance Thailand’s position in the global economy.

EFTA Partnership: A Milestone in Thailand’s Trade Strategy

Who Are EFTA Members?

The EFTA comprises Switzerland, Norway, Iceland, and Liechtenstein, offering Thailand access to lucrative European markets.

Commerce Minister Pichai Naripthaphan highlighted the FTA’s importance, describing it as a pivotal step for economic growth and trade expansion.

“This is Thailand’s inaugural FTA with a European bloc, setting a precedent for modern trade standards and sustainable development goals,” said Pichai.

Comprehensive Scope of the Agreement

What Does the FTA Cover?

The FTA includes 15 broad areas designed to modernise trade relations and foster sustainable development. Key areas include:

Trade in Goods
Rules of Origin
Investment Opportunities
Trade Facilitation
Intellectual Property Rights
Sustainability and SMEs Development

Future Expansion Opportunities

The FTA is seen as a stepping stone toward future trade agreements with other significant partners, including the European Union, advancing Thailand’s global trade ambitions.

Economic Impact of the Thailand-EFTA Trade Partnership

Surging Trade Figures

Between January and October 2023, trade between Thailand and the EFTA exceeded US$10 billion, accounting for 2.03% of Thailand’s global trade and reflecting a 23.22% year-on-year growth.

Key Thai Exports and Imports

Exports to EFTA: Jewellery, watches, canned seafood, machinery, cosmetics, and rice.
Imports from EFTA: Gems, gold, pharmaceuticals, scientific equipment, and fresh seafood.

The agreement is expected to further diversify and increase Thailand’s trade portfolio.

Next Steps: Approval and Implementation

High-Level Signing at WEF Davos

The FTA will be presented to the Thai Cabinet for approval before its official signing at the World Economic Forum (WEF) in Davos, Switzerland, in January 2024. Prime Minister Paetongtarn Shinawatra and Commerce Minister Pichai will attend the signing ceremony.

Ratification and Rollout

Following Parliamentary approval, the agreement will be ratified, paving the way for implementation and significant contributions to Thailand’s GDP growth.

A Strategic Vision for Thailand’s Future

The Thailand-EFTA Free Trade Agreement aligns with Prime Minister Paetongtarn Shinawatra’s vision of positioning Thailand as a global trade hub. By establishing this partnership, Thailand is set to achieve:

Increased export opportunities
Enhanced foreign investment
Strengthened trade ties with Europe

As the January deadline approaches, Thailand’s first European trade agreement symbolizes a bold step toward economic transformation, underscoring its commitment to modernisation, sustainability, and global collaboration.

Business

Thai Airways Secures 44 Billion Baht to Propel Post-Rehabilitation Future

Published

4 weeks ago

December 1, 2024

Ashley Wings

Thai Airways International (THAI) has secured approximately 44 billion baht through a share rights offering, marking a significant milestone in its recovery journey. The move is set to bring the national carrier closer to exiting its court-supervised debt restructuring process and resuming stock trading by mid-2025.

Thai Airways is offering 9.82 billion new shares to existing shareholders at 4.48 baht per share. This capital infusion represents the final phase of its restructuring, aimed at ensuring financial stability and market re-entry.

“This marks a critical step before the airline resumes operations as a publicly traded entity,” said a Cabinet source.

Government’s Role: Strategic Investment Without State Enterprise Status

Maintaining a National Flag Carrier

The Thai government has announced plans to increase its investment in Thai Airways while ensuring it does not revert to a state enterprise.

Current Stake: The Finance Ministry holds 47.9% of THAI shares.
Post-Restructuring: The ministry, the Vayupak Fund, and the Government Savings Bank will collectively own around 40% of the airline.

“This structure ensures Thai Airways remains a national flag carrier while avoiding direct state control,” confirmed Finance Minister Pichai Chunhavajira.

Debt Conversion and Shareholder Dynamics

Debt-to-Equity Swap Secures Creditor Support

Thai Airways’ creditors have agreed to convert approximately 53 billion baht of debt into equity as part of the rehabilitation plan. This move aligns with THAI’s efforts to stabilize its financial position.

The Council of State approved the recapitalization as a legitimate component of the restructuring process.
Despite debates over the Finance Ministry’s voting rights during the creditor meetings, officials clarified that the debt-to-equity swap remains incomplete, allowing the ministry to retain creditor status.

Path to Recovery

THAI is expected to exit rehabilitation by February 2025.
The airline plans to resume stock trading by May 2025, paving the way for a return to the public market.

Broader Implications for Thai Airways

Strengthened Financial Position

The successful share rights offering bolsters Thai Airways’ financial resilience, ensuring the airline’s ability to navigate post-rehabilitation challenges.

National Pride and Strategic Vision

The government’s balanced approach highlights its commitment to preserving Thai Airways’ status as a national carrier while encouraging operational independence.

Soaring Toward a Brighter Future

Thai Airways’ 44 billion baht share rights offering symbolizes its steady progress toward financial recovery and operational excellence. With strong government support and strategic restructuring, the airline is poised to regain its position as a leading player in the global aviation market by 2025. This pivotal moment underscores THAI’s resilience and its importance to Thailand’s economic and cultural identity.