The airlines are City Airways, Kan Airlines, Asian Air and Jet Asia Airways.
CAAT director Chula Sukmanop said the four carriers were found to have serious liquidity problems and Transport Minister Arkhom Termpittayapaisith has instructed the CAAT to keep tabs on their operations, particularly their safety standards.
The CAAT is considering whether to revoke their air operating licences (AOLs), Mr Chula said. Efforts will also be made to adjust the criteria to award AOLs and Air Operator Certificates (AOCs) to carriers, he noted.
City Airways Co, which runs City Airways, has significant debts, most of which are short-term liabilities, Mr Chula said, adding the company is facing a liquidity shortage.
Based on records from Feb 5, the firm owed B25.08 million to Aeronautical Radio of Thailand (Aerothai) and B6.73 million to the Hong Kong Civil Aviation Department (CAD). The company also has debts from unpaid aircraft rentals.
Kannithi Aviation Co, which operates Kan Airlines, was found to have borrowed an additional B27 million from financial institutions to boost its liquidity. As of Feb 5, its debt-to-capital ratio reached 18:3.
The company owed B10.21 million to Aerothai and B1.11 million to Airports of Thailand Plc (AoT). Asian Air Co, which runs Asian Air, has not yet submitted its financial statements. The firm still owed 69.68 million yen (about B22.07 million) in airport charges to Japan’s Narita Airport.
The Central Bankruptcy Court ordered the seizure of the firm’s assets on Jan 26 and the company subsequently suspended its flights on Feb 5.
Jet Asia Airways Co, which runs Jet Asia Airways, posted B250 million in losses, exceeding its registered capital, based on its financial statements released on Nov 30 last year. The firm racked up accumulated losses of B525.18 million.
As of Feb 5, it owed about B49.46 million to Narita Airport and B16.23 million to Aerothai.
“We found evidence that these airlines shoulder very large debts,” said Mr Chula, adding that consideration will be given to whether they are still suitable to run an airline business.
In the past, the approval of an airline’s business operation was done easily and no audit was carried out on the airline’s financial status, he said, adding Mr Arkhom instructed the relevant officers to pay attention to these issues.
The authorities are not only interested in the losses in the airlines’ operating results, but also to their capital, liquidity as well as debt-to-asset ratio, the CAAT director said. Those found to have debt exceeding capital will be closely monitored, he noted.
Mr Chula said he instructed all the airlines to submit their financial statements by the end of next month. Some carriers have already submitted them.
Based on their financial statements, the CAAT will examine the airlines’ operational problems, accumulated losses, liquidity, loans and other financial risks, he said.
According to the CAAT director, 16 Thai-registered airlines currently provide routine flights. One of them provides a cargo transport service.
Another 29 carriers provide unscheduled flights, including nine operators providing helicopter services and one balloon service provider.
Two airlines – Asian Air and Business Air – are facing legal action by the authorities and are subject to asset seizures.
Referring to new operators who want to enter the airline business, Mr Arkhom said both their financial status and management must be examined.
The key mission is to ensure the airlines have effective safety standards in place, the minister said. He said he ordered concerned officials to conduct audits of the airlines’ financial status, which can reflect their business capacity.
“Those airlines affected by significant liabilities or debts from aircraft rentals can be seen as incapable of managing their businesses,” said Mr Arkhom.
“The question must be raised about how airlines with unstable finances and debts can still be allowed to operate.”
Referring to the problem of the Thai aviation industry, the minister said that Thai-registered airlines can seek protection by law, which means they can even counter-sue their creditors, which he said is not right.
As for Thai-registered carriers which rent aircraft but fail to pay rental charges, the planes’ owners still have no authority to revoke the airlines’ right to use the aircraft, he said. This results in problematic airlines still using the leased planes.
The owners of the aircraft can do nothing, except to seek the court’s approval to seize the airlines’ assets.
Mr Arkhom acknowledged concerns over the CAAT’s failure to accede to the Cape Town Convention, an international treaty that protects commercial ownership rights and security interests in aircraft, which could be an impediment to foreign aircraft lessors who would be unable to take action against airlines that still owe rental charges.
Other loopholes include the fact that Thai airlines can also seek court injunctions and that the CAAT cannot force them to return the aircraft to the plane lessors, he said.
Mr Arkhom said efforts are being made to fix the problem because many debt-ridden airlines are still allowed to operate and it is hard to ensure the safety of these carriers.
Referring to the country’s aviation oversight, the minister said a major problem is the shortage of qualified personnel to ensure the airlines are above board.
Read original story here.