GKN Aerospace's new engine parts repair center in Johor, Malaysia, has just reached an important milestone with the delivery of the first parts of a low pressure compressor for a CFM56. The repaired components were returned to an Asian MRO service provider. The Johor site employs around 70 people today and is positioned as GKN's repair center for customers based in the Asia Pacific region. MORE

BANGKOK, Sept 14 (Bloomberg): Thai Airways International Pcl, the nation’s flagship carrier, got court approval for its business restructuring on Monday.

The Central Bankruptcy Court decided that the airline can proceed with its business reorganization plan, a crucial step forward for the embattled company, which has around 350 billion baht ($11 billion) of debt, according to Chansin Treenuchagron, its acting president.

The flagship carrier is facing one of its biggest challenges in its 60-year history as the pandemic hits the country’s tourism-dependent economy. The company’s shares jumped as much as 10.7%, the most since Aug. 5. Shares of Nok Airlines Pcl, a budget carrier which Thai Airways holds a stake in, also rose.

The Covid-19 crisis has devastated the global travel industry, forcing airlines to suspend flights, lay off employees and seek financial help from governments and investors. Companies such as Virgin Australia Holdings Ltd. and Avianca Holdings SA, Latin America’s second-largest airline, have gone into administration or sought bankruptcy protection.

If the airline fails to rehabilitate, it will damage the company, employees, debtors, investors and the whole economy, the court said in a statement after ruling on the carrier’s petition.

Industry strains have been mounting in Asia, with Singapore Airlines Ltd. eliminating about 20% of its workforce.

The court also approved Thai Airways’ request to appoint EY Corporate Advisory Services Ltd. and the carrier’s board members as debt revamp planners. The airline plans to submit a debt plan to the court in the fourth quarter and aims to complete the restructuring process in five years, according to Chansin.

"The court’s debt rehabilitation approval is just a tiny step,” Chanchai Chaiprasit, chief executive officer of PricewaterhouseCooper’s Thai unit, said before the ruling.

"It’s an uphill task to come up with a debt plan that would satisfy banks, aircraft lessors, suppliers and other lenders.”

Thai Airways was dealt a blow recently, when the nation’s Ministry of Transport identified potential corruption in underpricing of tickets and excessive overtime costs. Thailand’s Ministry of Finance owns around 48% of Thai Airways, according to an August filing.

The airline had defaulted on loans and bonds totaling 85 billion baht, or 33.1% of its total assets, according to its latest statement on July 22.

It reported a net loss of 28 billion baht in the first half of this year, a more-than-fourfold jump from 6.44 billion baht during the same time a year ago as the carrier cancelled scheduled flights from April to comply with government rules to contain the pandemic. - Bloomberg

A so-called "Survival Team" has been formed to work out a business plan for Thai Airways International (THAI) to support the debt rehabilitation of the carrier, according to a source at the airline. Acting THAI president Chansin Treenuchagron has ordered the team to get up and running.

The Survival Team is in charge of producing a business plan, effective from July 9 to Oct 31.

It represents an integral part of the rehabilitation blueprint which the airline will submit to the Central Bankruptcy Court on Aug 17, one day before the court is scheduled to decide whether to admit the airline's rehab case, according to the source. The source said the team will be headed by Chai Eamsiri, vice-president for Petroleum, Corporate Insurance and Aviation Environment.

It will comprise 21 members who are executives of various departments of the airline. The team will be advised by executive vice-presidents for commerce, corporate strategy and sustainable development, operations, and the technical department.

On Wednesday, Mr Chansin also signed an order appointing Nond Kalinta, vice-president for Alliances and Commercial Strategy Department, to concurrently hold the post of acting executive vice-president for corporate strategy and sustainable development. The appointment came into effect immediately.

Also on Thursday, acting executive vice-president for commerce Wiwat Piyawiroj admitted tickets on THAI flights have been offered for sale for next month although no date has been set as to when the airline will resume its scheduled flights and what cities it will fly to. Mr Wiwat said it was normal practice for commercial airlines to prepare marketing plans ahead of time while keeping in mind the economic outlook in a given year.

Source: Bangkok Post

The development of U-Tapao Airport and Eastern Aviation City is set to take off after U-Tapao International Aviation Co Ltd (BBS Group) signed a joint investment agreement with Eastern Economic Corridor Office of Thailand (EECO) on June 19, with the goal of making U-Tapao an aviation hub.

EECO has revealed that the Covid-19 (coronavirus) outbreak has had only a slight impact on the aviation city project.

Experts in the aviation industry who are advising the office said that regardless of what people say travel is an inevitability.Many parties estimate that within two years from now, air travel will return to normal.

At the same time, transportation is becoming more important and air transportation will return soon, so the aviation city is still important.The development of the U-Tapao Airport will take four years.

When the construction is completed, it will be a time when air travel would be expanding, an important opportunity for the aviation city.

The crisis of Covid-19 will make the aviation business model change from using very large aircraft to the use of medium-sized jets with more flying frequency.

So, the airport's detailed design may be adjusted based on the frequency, the size of the plane and changing customer behaviour.

Meanwhile, there have been no bids for the proposed maintenance, repair and overall centre in the first round yet, but Thai Airways International plc has to build this aircraft repair centre since it has demolished the old Map Ta Phut to enlarge the runway area of the airport.

However, in the EEC, there will be other aircraft repair centres that will be open for bidding.

There are still many private companies interested. From the analysis, it is seen that air travel must return to normal and Thailand will be an important aviation link in the region.

The growth of the aviation industry in the Asia-Pacific region will make maintenance in the region more valuable than returning to Europe or the United States.

However, the plan may be somewhat delayed due to the virus.

In terms of attracting investment in high-tech industries, although Thailand has many strengths such as infrastructure, communications infrastructure in technology, 5G network that will be used in 50 per cent of the EEC in 2021 and accelerating the development of highly skilled personnel, there is a weakness in international trade and investment agreements that are less than competitive, especially the Comprehensive and Progressive Agreement of Trans-Pacific Partnership and the Thai-European Free Trade Area.

The EECO officer said that Investors asked a lot about the time frame of action, especially on the EU FTA because it is a very important market and Vietnam has already signed these agreements.

According to discussions between EECO and investors coming into the target industry, they want to know about highly skilled workers to support advanced technology.

Thailand has started to develop skilled labour to support future investments.

The free trade area is a secondary issue that investors asked about.

The 4-5 industries that came to consult with EECO are mostly in the biological industry and the new advanced material technology industry, such as the use of sugarcane to produce fibres for durable use in the high-tech industry, which involves high technology.

In addition, EECO has worked with Japanese high-tech companies who are going to move out of China while the Board of Investment has constantly revised the package to pull more investment. - The Nation Thailand/ Asian News Network

The state agency overseeing eastern seaboard development, on Friday signed a 290-billion-baht deal to build the Eastern Airport City Project at U-Tapao.Those behind the project say the deal will catapult Thailand into a regional aviation hub.

The Eastern Economic Corridor (EEC) Office's Eastern Special Development Zone Policy Committee yesterday signed the deal with winning concessionaire, U-Tapao International Aviation Co, an offshoot of the BBS Joint Venture that won the bid to develop the "aeropolis" in Ban Chang district of Rayong Province.

Prime Minister Prayut Chan-o-cha, who presided over the contract signing at Government House, said the 290-billion-baht scheme was a shining example of a public-private partnership investment. "This is considered an important step for the country to become a regional aviation hub. The government will speed up such investment projects to meet its goals," he said.

The project is is expected to create 78,000 jobs in the aviation industry sector and related businesses in the first five years.

EEC Office secretary-general, Kanit Sangsubhan, said the aviation city scheme is part of the largest investment projects in the Asia-Pacific region. U-Tapao would become Bangkok's third international airport under a scheme that would link it with Don Mueang and Suvarnabhumi airports and boost their handling capacity to up to 200 million passengers annually.

The U-Tapao International Airport City Project; Eastern Airport City Project also incorporates a high-speed train route linking the three major airports. That contract was signed last October between the Charoen Pokphand Group-led consortium and the State Railway of Thailand (SRT).

For the aeropolis development, the BBS Joint Venture comprises Bangkok Airways, which owns 45% of the shares, BTS Group Holdings which owns 35%, and Sino-Thai Engineering and Construction (STEC) which owns 20%.

U-Tapao International Aviation Co has starting capital of 4.5 billion baht that will increase to 9 billion baht in 2024.

Bangkok Airways (BA) president Puttipong Prasarttong-Osoth said the project requires a 130-billion-baht investment throughout its four phases starting from now until 2055.

The four phases involves the building of a 157,000-square-metre-passenger terminal that when fully completed in 2055 will make the airport able to handle 60 million passengers per year, according to Chokechai Panyayong, the project's special adviser. The first phase, expected to be completed in 2024, is the building of a passenger terminal to handle 15.9 million passengers annually. This phase also includes the development of a commercial area, parking facilities, a ground transport centre and 60 aircraft parking bays. Phase 2, 3 and 4 are all about expanding the passenger terminal. Phase 2 will be completed in 2030 and increase passenger capacity to 30 million per annum, 45 million for Phase 3 by 2040 and 60 million passengers per year by 2055.

He said construction of a second runway, which is the responsibility of the Royal Thai Navy, is at the design and environment and health impact assessment stage and is expected to be completed by 2024.

Source: Bangkok Post

The move to allow wholly foreign-owned companies to manufacture aircraft and aircraft parts in Thailand will boost foreign investment in the country, said Kobsak Pootrakool, deputy secretary-general to the prime minister for political affairs.
The Cabinet recently approved a draft amendment drawn up by the Civil Aviation Authority of Thailand (CAAT) that will scrap the requirement for aviation-related manufacturers to be at least 51-per-cent Thai-owned. MORE

Thailand's Cabinet on Tuesday approved a US$9 billion bid from a consortium led by Bangkok's billionaire skytrain operator to develop an airport in its southeastern coast, which the kingdom hopes will transform into an economic and tech hub.

Located near resort town Pattaya, U Tapao airport is one of the infrastructure centrepieces for Thailand's Eastern Economic Corridor (EEC), an ambitious 1.7 trillion baht (S$75.4 billion) scheme seeking to attract investment from industries like auto and tech manufacturing.

BTS Group Holdings, which operates Bangkok's skytrain and is owned by billionaire Keeree Kanjanapas, led a consortium of companies approved to develop the "Eastern Airport City" project. They were chosen "as the winner because it proposed the best guarantee and returns, rent and revenue-sharing to the government", said the Cabinet in a statement after their meeting Tuesday. Bangkok Airways - owned by Prasert Prasarttong-Osoth, who Forbes lists as among the kingdom's richest - is part of the consortium, as well as construction firm Sino-Thai Engineering and Tokyo's Narita International Airport.

The 290 billion baht project will include a new terminal, an air cargo centre, and an aviation repair and maintenance site, according to official EEC documents. Primarily used as a navy airport, U Tapao is touted by the EEC as having the potential to be transformed into a tourist hub, due to its proximity to Pattaya.

But the popular beach town has gone dark - just like much of tourism-reliant Thailand - as the coronavirus has halted global travel and hammered the kingdom's flagging economy. The parliament on Sunday approved a record near-US$60 billion stimulus package to ease the impacts of the virus, which has left millions unemployed.

The EEC project has attracted criticisms in the past for a lack of transparency. Critics say it was ushered in by an army-led junta regime linked to business interests. But the government has boasted of the project's economic returns, and pointed to infrastructure projects bolstering the scheme as an overall benefit for the country.

Last year, the multi-billion-dollar construction of a high-speed rail link was approved for a consortium led by Thailand's largest conglomerate CP Group.
It is expected to connect passengers from Bangkok's two major airports to U Tapao in under an hour.

European plane maker Airbus, which is facing dire times like most of the rest of the aviation industry, is said to have pulled out of a planned joint venture with state-owned Thai Airways International that would have seen the two companies build a US$339 million maintenance facility east of Bangkok, according to a news briefing by government officials. Airbus has asked not to participate in the investment, citing the impact of the COVID-19 global pandemic situation on air travel, Deputy Secretary-General for Infrastructure in the Eastern Economic Corridor (EEC) Chokchai Panyayong told reporters in Thailand.
The project to build the maintenance, repair and overhaul (MRO) facility will continue, Chokchai said, adding that Airbus would still cooperate on technology. Rumours had been circulating for weeks that the deal was on the rocks and an Airbus spokesperson had earlier told Asian Aviation that it was “in continuing discussions” about the best way forward. But as the COVID-19 pandemic has swept the globe, killing more than 200,000 as of late April, commercial aviation has ground to a virtual halt and the entire industry – from plane makers to airports to MRO shops – are in survival mode and most expansion plans have been put on hold.
Airbus officials were said to have warned employees that deep job cuts could be in store for them as the aviation world reorients itself to a much reduced industry as long as countries maintain travel restrictions.
There is still time for Thai Airways to find a new partner as the Thai navy, which controls the site, is only just beginning construction on the facility’s hangar, which will take up to four years, media reports said. “By then, the COVID situation will have eased. There is an opportunity for either Airbus or Boeing to come in,” Chokchai said to reporters. Thai Airways itself is in a fight for survival as is said to be in discussions with its government for support. The maintenance hub is part of the government’s project around the joint civil-military U-Tapao Airport, 150 kilometres east of Bangkok.

The bidding process for the maintenance, repair and overhaul (MRO) facility at Rayong's U-tapao airport is likely to be postponed until April because Airbus failed to submit proposals for the formation of a joint venture with Thai Airways International (THAI) as scheduled on March 6.
Kanit Sangsubhan, secretary-general of the Eastern Economic Corridor (EEC) Office, said the office is scheduled to inform the EEC Policy Committee chaired by Prime Minister Prayut Chan-o-cha about the delay in the bidding process for the MRO, which is one of five infrastructure development projects in the government's flagship EEC.
He said both THAI and Airbus have been acutely affected by the coronavirus pandemic, which has crippled the aviation business worldwide.
The national carrier is expected to wait until April for Airbus's proposals, said Mr Kanit.
Airbus and THAI signed an agreement to jointly invest in the project in June last year.
The two organisations have long discussed details under the 11-billion-baht joint venture.
Four other development projects in the EEC, worth 684 billion baht in total, are a high-speed railway linking three key airports (225 billion baht); U-tapao aviation city (290 billion); the third phase of Laem Chabang seaport (114 billion); and the third phase of Map Ta Phut seaport (55.4 billion).
THAI is scheduled to open general bidding for potential investors if Airbus fails to submit an investment plan by April 20.
Mr Kanit said the pandemic will not affect the EEC's development plans because investors make long-term decisions when investing. The agency had to cancel all programmes to promote investment abroad.
Total investment applications submitted to the Board of Investment in 2019 stood at 756 billion baht, with projects increasing to 1,624.
This was 16.2% lower than 2018 applications, which were worth 902 billion baht. Of the total applications, 59% were for investments in EEC, in total worth 445 billion baht.

Source: https://www.bangkokpost.com/business/1885200/u-tapao-mro-delayed-as-airbus-misses-deadline

According to a report issued by the Malaysian Aviation Commission (MAVCOM) on February 11 titled "The Economic Impact and Implications of the Civil Aviation Authority of Malaysia's Rating Downgrade", the country's carriers could see an annual revenue at risk of as much as MYR4 billion ringgit (USD873 million) as a result of a 2018 US Federal Aviation Administration (FAA) decision to downgrade Malaysia to IASA Category 2.

A Category 2 rating means that CAAM may be deficient in one or more organisational and/or operational areas in its technical regulation role. It was reported that there were 33 issues raised in the US FAA findings on technical expertise, trained personnel, record-keeping, and/or inspection procedures.

Malaysia's airlines were subsequently banned from expanding their US networks in November last year or indeed starting new routes, affecting both direct flights operated by Malaysian carriers and those operated jointly with US airlines such as American Airlines (AA, Dallas/Fort Worth). According to the ch-aviation schedules module, the following services and codeshares are operated between Malaysia and the US:

AirAsia X (D7, Kuala Lumpur Int'l) - daily service to Honolulu (via Osaka Kansai);
Malaysia Airlines (MH, Kuala Lumpur Int'l) and American codeshare on services including those between Tokyo Narita and Dallas/Fort Worth and Los Angeles Int'l; between Seoul Incheon and Dallas/Fort Worth; Hong Kong Int'l and Dallas/Fort Worth and Los Angeles; and London Heathrow to Charlotte Int'l, Chicago O'Hare, Miami Int'l, Dallas/Fort Worth, Los Angeles, New York JFK, Philadelphia Int'l, and Raleigh/Durham.
The report estimated that the revenue at risk for the Malaysian aviation sector is MYR372 million ringgit (USD90 million) split between Malaysian carriers (MYR361 million ringgit/USD88 million) and airport operators (MYR11 million ringgit/USD2.7 million).

While this immediate impact is marginal, MAVCOM's report was concerned by the fact that other countries may undertake their own audits following the US FAA downgrade. Of particular worry are markets in China, Japan, and South Korea, which between them generated 7.1 million passengers for Malaysian airlines (11.4% of total passenger traffic) in 2018. The estimated revenue at risk for the Malaysian carriers is MYR4 billion (USD873 million) or 24% of total revenue. At the same time, the corresponding value for airport operators is MYR400 (USD97 million) or 25% of overall passenger service charge-related revenue.

MAVCOM's report also highlighted other Asian countries and their lack of success in returning to a Category 1 status in the short-term, something which Civil Aviation Authority of Malaysia (CAAM) believes can be done in 12 months. It took the Philippines six years (between 2008 and 2014) to return to Category I status, and Thailand remains at a Category 2 rating after being placed there in 2015.

The commission also suggested that "it is unclear how CAAM's organisational and/or operational deficiencies will be resolved effectively." This discord between the aviation authorities follows a decision by the Malaysian Cabinet in December to merge the country's aviation regulators into one entity, seeing MAVCOM disbanded and its responsibilities absorbed into CAAM. In conclusion, the report said: "The takeover of MAVCOM by CAAM is questionable as burdening CAAM with additional responsibilities over economic regulation will not aid its capacity to regain the Category 1 status."