Thai Airways slipped back into a loss in 2022. While the airline benefitted from the recovery of passenger traffic and tourism, expenses were also higher. A gain on debt restructuring that contributed positively to the 2021 results was lacking last year, pushing Thai into a net loss for 2022. Thanks to a revised rehabilitation plan, the carrier plans to grow the fleet and network this year and hopes to complete its capital restructuring in 2024, it said last Friday.
Thai Airways has come a long way since launching a restructuring in 2020 and 2021 through a court-approved Business Rehabilitation Plan, which aimed to shed debt and reduce the airline’s size and fleet to make it more agile. The gradual reopening of Thailand and Asia helped to reduce Thai’s net loss in HY1 FY22 to -6.5 billion baht and produce its first positive EBITDA in Q2 again. The lifting of entry restrictions into Thailand for foreign tourists on October 1 gave a boost to traffic and tourism, although Thai Airways remained mostly dependent on domestic travel that was compromised by high inflation and a weak economy.
Full-year, Thai Airways and Thai Smile’s revenues recovered to Baht 105 billion from Baht 23.7 billion in 2021. Passenger revenues from nine million passengers carried and 67.9 percent load factor contributed to Baht 74 billion (2021: 5.5 billion). Thanks to almost tripling freight carried to 340K tons, revenues from freight and mail doubled to Baht 23.8 billion from 10.9 billion. Expenses soared to Baht 97.2 billion from 43.4 billion, with fuel costs up to Baht 38.8 billion from 5.9 billion due to more flying activity in combination with higher fuel prices.
The consolidated operating profit was Baht 7.8 billion, up from -19.7 billion in 2021. Whereas the airline benefitted from a Baht 61.8 billion gain on debt restructuring costs in 2021, it suffered a 5.2 billion loss on this item in 2022. This is largely responsible for pushing the net result into a Baht -252 million loss compared to Baht 55.1 billion profit in FY21. The sale of two Boeing 737-400s, three 747-400s, and one Airbus A340-600 produced a Baht 783 million gain on assets. Thai ended the year with Baht 34.5 billion in liquidity, while total liabilities stood at Baht 269.2 billion.
Amended Rehabilitation Plan
In October last year, the Bangkok Court approved an amended Rehabilitation plan that includes revised conditions for debt repayments, entitling Thai Airways to repay debt from cash flow. The company will also increase its registered capital by Baht 216.7 billion by issuing 21.7 million new shares as part of a capital increase and repayment of debt to creditors, while some debt will also be converted into equity.
“Thai expects to be able to complete the capital restructuring by the year 2024, if the implementation is in accordance with the proposed revision of the plan. Equity will return to positive in 2024 and THAI’s securities will be able to resume trading on the stock market in 2025, able to build confidence among creditors, existing shareholders, and investors in supporting THAI and become a part of THAI to raise stronger again in the future”, the airline says in its management discussion and analysis for FY22.
More aircraft
Also part of the revised Rehabilitation plan is that Thai Airways will be allowed to grow its fleet by another nine aircraft, so it can continue to grow its network and frequencies. Thai ended last year with 66 aircraft and Thai Smile with twenty, of which only 64 were active. The parent airline will activate two Boeing 777-200ERs and has signed operating lease agreements for two Airbus A350-900s, which it expects to operate in the second quarter of 2023. The Airbus will be used on services to Stockholm, Jakarta, and Melbourne. “THAI also plans to increase flight frequencies such as Tokyo (Narita and Haneda), Osaka, Seoul, Taipei, Hong Kong, Singapore, Kolkata, Mumbai, etc. and returned to provide additional flights to China in the beginning of the year, including Beijing, Shanghai, Kunming, Chengdu, Guangzhou to support the growing demand for travel.”
Thai seems to have ditched plans to reintroduce the Airbus A380 into the active fleet, which was considered last autumn as an option to grow capacity. There is no reference in the analysis document to that. The airline has two owned A380s that would have been available. Four other aircraft will be returned to their lessors as Thai reached an agreement for their rights-of-use amounting to Baht 30.116 million baht and adjusted right-of-use assets by lease liabilities remeasurement from changing in variable lease payments amounting to Baht 5.955 million in consolidated financial statement and separate financial statement.
