Thai Airways borrows $550 million to upgrade fleet

Thai Airways International Pcl’s board approved a plan for the national carrier to borrow about $550 million to pay for new airplanes as tourists return to Thailand, President Piyasvasti Amranand said.

The airline will borrow 17.5 billion baht ($548 million) from four Thai banks, with 12 billion baht of that coming from Bangkok Bank Pcl, the nation’s largest lender. The move will help Thai Airways add capacity to handle more passengers as demand picks up following recent unrest, Piyasvasti said.

“Tourists came back quickly after the political situation stabilized,” he told reporters in Bangkok Friday.

“So we’re now revisiting our old problem of aircraft shortages. "

Thai Air, which competes with Singapore Airlines Ltd. and regional carriers to carry travelers to beach resorts like Phuket, has sought to modernize its fleet and expand routes as it copes with political unrest that has cut into its profit in recent years. The airline agreed in June to acquire 15 aircraft from Boeing Co. and Airbus SAS to replace aging planes.

Thai Air filled 76.5 percent of its seats in July, up 17 percent from June and 7.3 percent from the same period a year earlier, Piyasvasti said. The number of seats Thai filled in May fell 8.9 percent from a year earlier amid political unrest that killed at least 89 people and a volcanic ash cloud that stranded passengers in Europe.

Thai Air shares have doubled this year, making it the second-best performer in the 64-member Bloomberg Asia Pacific Travel Index, which has increased 15 percent in that time. The company’s shares fell 1.3 percent as of 3:06 p.m. local time, compared with a 0.5 percent decline in the benchmark SET Index.

Thanachart, TMB, Tisco

In addition to the Bangkok Bank loan, Thai Air will borrow 2 billion baht from Thanachart Bank Pcl, 2 billion baht from TMB Bank Pcl and 1.5 billion baht from Tisco Bank Pcl, Piyasvasti said. It also obtained revolving credit lines of 1 billion baht from TMB and 1.5 billion baht from Tisco, he said.

The company signed a contract Friday to acquire seven Airbus A330-300s to be delivered late next year in line with a plan announced in June, Piyasvasti said. The company is still in talks to lease eight Boeing 777-300 ERs, he said.