Thai AirAsia has announced substantial layoffs, due to the impact of the pandemic. It is also adjusting it’s fleet size to create cost savings.
Tassapon Bijleveld made the announcement to employees at an internal meeting, outlining that staff and fleet reductions were necessary to maintain long term financial stability. Regardless of the recent Nov 1 reopening of the country, major headwinds were still challenging the aviation sector.
The Bangkok Post reported that Mr Tassapon had stated at the internal meeting.”Even though we’ve negotiated with suppliers and banks to help offload aircraft leasing costs, and we may get additional liquidity after restructuring this month, our balance sheet cannot be strong enough if those expenses still run. We have to permanently cut the fleet for at least two years or until international and domestic flights fully recover,” Mr Tassapon said at the internal meeting.
The aircraft fleet has been cut from 60 to 54 as international routes are still limited due to some countries still being close due to the pandemic. Although Mr Tassapon does feel that the company’s financial performance has ebbed to its lowest, with a bottoming out of the curve and the forecast for a fully recovered domestic market by mid 2022.
“It’s hurtful to take such a decision, but it’s based on reality which we cannot answer as to when the situation will improve. We have to wait until revenue from international routes comes back and that will depend on the entry regulations of Thailand and overseas destinations,” said Mr Tassapon.
It was only in late May 2020 that the chief of the airline was openly considering merging with another low cost airlines, as it’s “”fortune was hanging in the balance”. During the lockdown TAA was burning about 1.2 billion baht per month, straining the financial resources of the company up until this date, and adding to the overall debt burden that has necessitated the recent substantial lay offs.
At the time Mr Tassapon opined that even though Thailand has seven LCCs, three operators are sufficient for the competition in this market. With the AirAsia Group under simliar financial pressure, few options are available to bail out Thai AirAsia. The Thai government has been approached for assistance by the aviation industry, with TAA and six other airlines in the country submitting a proposal to the government in April 2020,
In the proposal they asked for soft loans to avoid job losses that would affect 20,000 employees following the impact of the first nationwide lockdown at the beginning of the COVID pandemic. However for Thai Asia Asia’s case, they currently have not received assistance from the Export-Import Bank of Thailand (Exim Bank), which has the responsibility to look after airlines.
With the current challenges in consideration, TAA has committed to assessing the situation every 2 months, with further deliberations on the retrenchments to come. Currently TAA is holding out hope for a restructuring plan to be passed at a November 26 meeting, if passed, it stands to deliver additional funds of 14 billion baht from new investors.