The government has finally decided to bail out financially ailing Thai Airways International (THAI) by providing a loan guarantee worth more than 50 billion baht.
In addition, the government agreed in principle to keep the airline's status as a state enterprise.
The bailout was announced despite the fact there has not been a clear business rehabilitation and corporate restructuring plan.
Even though Prime Minister Prayut Chan-o-cha warned the bailout would be the last chance for the airline to turn itself around, there are reasons to believe there is "endless bailout" culture for the airline.
Meanwhile, THAI's labour union made it clear last week it would oppose any plan that seeks to privatise the airline's businesses, insisting that THAI must remain a state-enterprise and as one single organisation. The union said it agreed with the bailout and support for other rehabilitation methods on condition that the benefits and welfare of THAI staff are not affected.
Sadly, the bailout sum will not come from the pockets of Gen Prayut or his cabinet or the union, but from taxpayers. How can such large amount of taxpayers' funds be spent to subsidise the company without mentioning responsibility and accountability?
The union must be aware the airline could go bankrupt if the government does not provide financial assistance. Even by securing 50 billion baht loans, it is just buying time. With an expected net loss of 18 billion baht in the first half of this year and an annual loss of over 10 billion baht over past years as well as the current downturn and oversupply of the industry, the 50 billion baht loan can prolong the company's life only for a short time.
In fact, the information from the labour union regarding various irregularities and unusual expenditure in operations and wages and welfare of some in high-level positions is useful and needs to be seriously addressed.
Comprehensive measures are needed to solve the financial crisis and ensure the airline's long-term sustainability. All people in the organisation must make sacrifices. Exploiting the status of the national flag carrier to use taxpayers' money to secure their benefits while most people in the country are suffering is unacceptable.
Actually, as the brand value of Thai Airways is high and promising, the airline would recover if it undergoes rehabilitation and restructuring. The organisation requires drastic changes, involving everything from shareholders and board structures, to executives and staff, to end the vicious cycle undermining the airline.
Political interference is a deep-rooted problem for the airline. Most of the board members were picked by politicians who supervised the transport and finance ministries. Meanwhile, the chairmen mostly came from the Air Force in what is seen as a package to please the military which is always influential over Thai politics. Those members of the board are focused on securing benefits for their camps rather than the airline.
Meanwhile, some high-ranking executives work mainly to serve political demands. The culture of a patronage system is prevalent in the company. This vicious cycle will remain unsolved unless the shareholding structure of the company is changed and major corporate restructuring is executed.
Gen Prayut said he gave THAI five years to solve its problems but without success. In fact over the past five years, Gen Prayut has been powerful enough to enforce real change but he did not bring it about. This time may be his last chance to make a decision that will make taxpayers' expenditure worthwhile.
