April 27, 2020 / 1:31 PM / a month ago

Thai Airways to press ahead with maintenance facility after Airbus withdraws

BANGKOK (Reuters) - State-owned Thai Airways International Pcl (THAI.BK) will press on with a project to build a $339 million (273 million pounds) maintenance facility east of Bangkok after partner Airbus (AIR.PA) dropped out due to the coronavirus outbreak, a senior official said on Monday.

FILE PHOTO: Thai Airways airplanes are parked at the tarmac of Suvarnabhumi Airport in Bangkok, Thailand March 25, 2020 REUTERS/Jorge Silva

Airbus has asked not to participate in the investment, citing the impact of the COVID-19 situation on air travel, Deputy Secretary-General for Infrastructure in the Eastern Economic Corridor (EEC) Chokchai Panyayong told a news briefing.

The project to build the maintenance, repair and overhaul (MRO) facility is a necessity for Thai Airways and so it will move forward, either on its own or with a partner, Chokchai said, adding that Airbus would still cooperate on technology.

The European planemaker on Monday issued a bleak assessment on the impact of the coronavirus, telling the company’s 135,000 employees to brace for potentially deeper job cuts.

Some 2.97 million people are reported to have been infected by the novel coronavirus globally and 205,948 have died, according to a Reuters tally.

“We are in discussions with our partners in Thailand regarding the most suitable way forward for all parties,” Airbus said in an e-mail to Reuters about the maintenance project.

“The content of discussions with partners and customers alike remain confidential.”

There is still time for Thai Airways to find a new partner as the navy is only just beginning construction on the facility’s hangar, which will take up to four years.

“By then, the COVID situation will have eased. There is an opportunity for either Airbus or Boeing to come in,” Chokchai said.

The facility was estimated to cost 11 billion baht ($338.9 million), of which about 7 billion baht would come from the navy’s budget.

Thai Airways was also in separate discussions with the government for liquidity support.

Thailand on Monday extended a ban on incoming passenger flights until May 31. The Southeast Asian country has reported 2,931 cases and 52 fatalities from the coronavirus.

The maintenance hub is part of the government’s project around the joint civil-military U-Tapao Airport, 150 kilometres east of Bangkok.

The government expects to sign a 290 billion baht agreement with BBS Joint Venture next month for the development of the airport and aviation city, EEC Secretary-General Kanit Sangsubhan said.

The group, selected in February, comprises Bangkok Airways Pcl (BA.BK), train operator BTS Group Holdings Pcl (BTS.BK) and Sino-Thai Engineering and Construction Pcl (STEC.BK).

It has chosen Japan’s Narita International Airport Corporation as U-Tapao’s operator.

Reporting by Chayut Setboonsarng and Orathai Siring; Editing by Jan Harvey

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