Thai Airways to Reduce Its Debt-to-Equity Ratio.

Byline: Chatrudee Theparat

Jul. 25--Thai Airways International will cut its debt-to-equity ratio to no more than two times from 11 now under a restructuring plan approved yesterday by the cabinet.

The national carrier will issue up to 400 million new shares under the plan by the end of the year. Paid-up capital currently is 14 billion baht.

Pracha Maleenond, transport and communications minister, said the airline's debt-to-equity ratio was as high as 17 if airline lease obligations were included.

He said the corporate restructuring plan would help raise shareholder value and increase the airline's competitiveness. The total debt of THAI is 105.8 billion baht, excluding aircraft rental obligations worth 56.4 billion baht. The company has shareholders' equity of 9.5 billion baht.

"The figures demonstrate the weak points of the company in terms of equity and shareholders' value," said Mr Pracha.

THAI posted consolidated losses of 935.3 million baht for the first half of fiscal 2001 ending March 31, compared with 9.7 billion in profits for the same period last year. The company attributed the difference to higher fuel expenses and losses on foreign exchange.