The Finance Ministry is considering allowing its majority shareholding in Thai Airways International to fall under 50% in order to change its current status as a state enterprise.
The SET-listed national carrier is currently 50.1% held by the ministry, and as such must comply with state enterprise regulations. The carrier also has the right to ask the ministry to guarantee its loans, helping THAI reduce its funding costs by leveraging the credit of the government.
Finance Minister Korn Chatikavanij said the ministry was considering allowing private investors to hold a greater stake in THAI to help transform its status as a state enterprise, as well as reduce the government’s financial obligations.
He did not elaborate on whether the ministry would divest shares through a public offering or private placement. Alternatively, it could see its stake diluted if THAI issued new capital directly to private investors.
In any case, a change is unlikely in the short term. A number of THAI’s aircraft procurement deals stipulate the ministry as a guarantor of its debt and also contain covenants obligating the ministry to maintain a majority shareholding.
Full privatisation as a result would likely have to wait until THAI improves its financial position and debt structure.
Mr Korn played down questions of whether a privatisation would antagonise THAI's militant unions, arguing a change would actually result in a stronger, more competitive airline to benefit customers and employees alike.
From a policy perspective, privatising THAI would eliminate any obligations on the government to tap taxpayer funds to assist the airline in the future.
Greater private-sector participation could also help THAI improve its operations and efficiency.