Thai Airways to close its low-cost subsidiary

The budget airline recently turned eight years old. In July 2012, Thai Airways International launched a new subsidiary, Thai Smile, to compete with the growing competition in the low-cost segment. Today, its fleet consists of 20 Airbus A320-200, of which about half are active during the current crisis.

But now the low-cost airline’s future is threatened. As part of the restructuring programme of the parent company, Thai Smile is to be closed down and integrated into Thai Airways, the newspaper Thai Enquirer reports. This move comes as the subsidiary has made high losses for years.

Creditors question the restructuring plan

Meanwhile, the restructuring of Thai Airways International is proving to be difficult. Last week, the company’s auditor refused to sign the airline’s annual financial statement because of concerns over liquidity, unpaid debt and continuing losses.

Earlier this week, a large group of creditors were not satisfied with the airline’s restructuring plan at a hearing at a bankruptcy court. They also questioned the competence of involved consulting firm EY Corporate Advisory.

Corruption investigation into Airbus A340

Furthermore, on Friday (August 21), newspaper Bangkok Post reported that corruption investigations into Thai Airways are also underway. Airline employees are said to have enriched themselves during acquisition projects for new aircraft. According to an initial probe by investigators of Thailand’s Ministry of Transport, this involved the purchase of Airbus A340.