BANGKOK (Reuters) – Thai Airways International Pcl’s request to restructure its debt amid bankruptcy proceedings was approved by a bankruptcy court on Monday, sending its share price soaring.
The court ruling, which is hearing bankruptcy and restructuring claims in Thailand, allows the airline to move forward with developing 245 billion baht ($7.83 billion) restructuring plans of debt.
It comes as the fallout from the coronavirus has added to the woes of the airline, which has been struggling since 2012 and in which the government has a large stake.
Shares of Thai Airways rebounded more than 7% after the news, thwarting a fall in the broader stock market.
“The court ordered the restructuring,” Judge Kampol Roongrat said.
“If the debtor is not restructured, it could cause damage to the company, creditors, employees, investors, the public and impact the national economy,” he said.
The court also approved a seven-member committee to develop the restructuring plan. It includes veteran banker Boontuck Wungcharoen, Piyasvasti Amranand, the former airline chairman and EY Corporate Advisory Services Co Ltd.
After three hearings and negotiations with the airline, some creditors withdrew their opposition to the restructuring.
“More than half of the creditors supported the restructuring,” the airline’s acting chairman, Chansin Treenuchagron, told reporters on Monday.
“We will be in negotiations with creditors this quarter and a plan will be ready by the first quarter of next year.”
The airline had previously said a second committee would be set up to carry out the restructuring plan – a process that could take up to seven years – once it was accepted by creditors and the court.
Thai Airways was struggling long before the coronavirus grounded its flights around the world, posting losses almost every year after 2012. It reported losses of 28.03 billion baht in the first half of this year.
The same court in May accepted the airline’s application for bankruptcy protection, allowing debt payment to be suspended. Later that month, the government reduced its stake in the carrier to 47.86%, ending its state-owned status.
Other Thai airlines have requested $770 million in state support.
Reporting by Chayut Setboonsarng; Written by Orathai Sriring; Editing by Ed Davies and Ana Nicolaci da Costa