As Thai Airways loses government backing, its share price skyrockets 60%
Thailand’s national carrier was already out of sorts prior to Covid-19, but a new rescue plan has given investors some confidence back.
Share price of Thai Airways International, trading under the iShares Morgan Stanley Capital Investment (MSCI) Thailand Capped ETF banner on IG, has risen over 60% since its debt restructuring plans were approved by the Thai government on Tuesday 19 May 2020.
Shares of the airlines hit as high as 6.20 Thai baht on Thursday 21 May 2020.
Gain access to Thai Airways via iShares MSCI Thailand Capped ETF through IG's world-leading trading and investments platform. With CFDs, you can buy long or sell short on these funds and stocks depending on whether you think prices will rise or fall. Start today by opening an IG account.
Thai Airways to undergo reform under Thailand’s bankruptcy law
Chakkrit Parapuntakul, Second Vice Chairman and Acting President, Thai Airways International Public Company Limited, had revealed in a press release the Thai Cabinet’s approval of the airline’s reform plan.
The debt restructuring will be implemented through the business reorganisation chapter under the auspices of the Central Bankruptcy Court of Thailand and the Bankruptcy Act.
Although Thai Airways’ reform plan will be implemented and exercised through the business reorganisation chapter as per the country’s bankruptcy law, the entity ‘will not be dissolved or go into liquidation or to be declared bankrupt’, he added.
On the contrary, he noted that the business reorganisation chapter will enable the airline group to reach its reform plan’s objectives even more effectively step by step as required by the law, which provides equitable protection to all relevant stakeholders.
Thailand government to reduce shareholding in Thai Airways
This was endorsed by Thailand’s Prime Minister Prayuth Chan-ocha, who told reporters during a press conference that ‘the government has reviewed all dimensions’ and has ‘decided to petition for restructuring and not let Thai Airways go bankrupt’.
Mr Chan-ocha also revealed that the Cabinet has agreed to the government reducing its stake in Thai Airways from the current 51% to under 50%, effectively ending the airline’s status as a state-enterprise.
‘Thai Airways will be protected by the courts ... and a professional will be appointed to oversee the restructuring,’ he further stated, adding that the airline will be able to continue operations with jobs kept intact.
Business operations to be conducted as usual
In the meantime, Parapuntakul affirmed that Thai Airways will aim to conduct its normal business operations as usual, including its passenger charters and cargo flights.
‘The business will be conducted in parallel with the reform plan to increase operational efficiency and improve product and service quality,’ he said, adding that the group is ‘committed’ to doing ‘everything possible’ so as to emerge from the crisis as a ‘stronger and more sustainable entity’.
On 18 May, the Civil Aviation Authority of Thailand extended the prohibition of international flights into Thailand until 30 June 2020. Thai Airways will also suspend operations in June 2020 accordingly, with resumption of services in July 2020 still under consideration.
IG is a world-leading online trading and investments provider for thousands of financial markets. With CFDs (read about CFDs here), you can buy long or sell short on Thai Airways (via iShares MSCI Thailand Capped ETF) depending on whether you think prices will rise or fall. Start today by opening a live or demo IG account.
Thai Airways posted losses every year after 2012 (except in 2016)
While Covid-19 has severely impacted airlines globally, the pandemic has only exacerbated Thai Airways’ problems, which go back several years. The airline has posted losses every year after 2012, with 2016 the exception.
In 2019, the airline and its subsidiaries suffered losses of US$377.3 million and lower passenger traffic, which it attributed to the US-China trade war, Hong Kong protests, natural disasters and the strongest Baht appreciation in six years.
For now, Thai Airways’ share price is still down roughly 16% year-to-date. As at 13:30 SGT on 21 May, shares are trading at 5.80 Thai baht apiece.
How to trade Thailand stocks with IG
Are you bullish or bearish on iShares MSCI Thailand Capped ETF and other ETFs? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs (read about CFDs here) in a few easy steps:
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
React to global volatility
Market volatility continues as coronavirus dominates the global agenda. Trade with us to take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and you’ll only pay a small fee if they’re triggered
- Round-the-clock assistance – our highly-skilled team are on hand to support you
Live prices on most popular markets