Thai Airways Disputes $7.4 Billion of Aircraft Lessor Claims

Thai Airways International Pcl is challenging some $7.4 billion in claims from dozens of aircraft lessors and engine service provider Rolls-Royce Holdings Plc, saying that it isn’t liable for the monies because they concern future expenses and were incurred after the airline received bankruptcy protection from a Bangkok court, Bloomberg News reported. Thailand’s flag carrier, which is undergoing a court-supervised restructuring to trim debt and return to profit by raising fresh capital, is disputing around 192 billion baht ($6.3 billion) claimed by 48 lessors including BOC Aviation Ltd. and SMBC Aviation Capital Ltd., and another 33 billion baht that Rolls-Royce says it’s owed for maintenance services, according to a copy of the debt rehabilitation plan seen by Bloomberg. The disputed amount is more than half of Thai Airways’ total liabilities of 410 billion baht. Yet an amicable settlement with creditors is key for the airline to stave off bankruptcy. The carrier will require 30 billion baht by the middle of this year to resume its scheduled commercial services and pay for one-time employee separation costs, Acting President Chansin Treenuchagron said earlier this month. Some 50 billion baht of fresh capital in total will be sought over the next two years, either through new shares or borrowings. Thailand’s finance ministry, Thai Airways’ largest shareholder, has already backed the proposed restructuring, which also seeks to impose a three-year freeze on debt repayments, a waiver of unpaid interest on loans and the deferment of bond repayments for six years. Read more.