THAI Clarifies The Extension Of Debt Repayment To Finance Ministry

7 February 2002, the Public Relations Office of Thai Airways International Public Company Limited clarified recent news reports alleging that the airline’s lack of liquidity resulted in the extension of debt repayment period to the Ministry of Finance.

In year 2000, Thai Airways International took the delivery of two Boeing 747-400 aircraft, number 15 and 16, which joined the fleet in May and June of that year. The deliveries were in accordance with the company’s long-term plan 2000/01-2004/05 wherein the Ministry of Finance would consider the long-term financing for the purchasing of these aircraft.

On 4 April 2000, in a letter to THAI, the Ministry of Finance recommended the airline to make payment for these aircraft through lease financing with the US Eximbank as the guarantor.

The approval of such long-term lease financing required a considerable amount of time, and therefore the financing arrangements were not complete in time for delivery of these aircraft.

The Ministry of Finance has therefore made a temporary short-term loan in the form of Euro Commercial Paper or ECP of USD 300 million for THAI to pay for these aircraft. THAI is to seek a long-term financing to repay the ministry within the initial period of three months with the option to renew up to one year.


In a normal circumstance, US Eximbank will allow approximately six months to approve a long-term loan. However, the September 11th attacks on the US have had a direct affect on the operations of US Eximbank as well as the whole commercial aviation sector, resulting in delay of the approval. Thai Airways International expected to complete a long term financing in November 2002.

In these circumstances, Thai Airways International will not be able to acquire the long-term financing for the two Boeings in time to repay the ECP loans to the Ministry of Finance, and therefore it is necessary for THAI to rollover the repayment of ECP until the long-term financing is in place.