TRIS Rating Assigns “A/Stable” Rating to Senior Unsecured Debt Worth Up to

TRIS Rating affirms the company rating on Thai Airways International PLC (THAI) and the ratings on THAI’s outstanding senior unsecured debentures at “A”. At the same time, TRIS Rating assigns the rating of “A” to THAI’s proposed issue of up to Bt7,000 million in senior unsecured debentures. The proceeds from the new debenture will be used to refinance maturing debts and reserve for investments.

The ratings reflect THAI’s position as the leading international passenger airline in Thailand, plus the benefits of being a member of Star Alliance, the world's largest airline alliance. The ratings are enhanced from THAI’s stand-alone credit profile to reflect its status as a state enterprise and the flag carrier of Thailand. TRIS Rating believes that the government will continue to provide strong support for THAI on a timely basis, especially if any financial difficulties arise at the airline. The ratings, however, are constrained by THAI’s high financial leverage, high operating costs, and vulnerability to unforeseen event risks, and fuel price fluctuations.

THAI’s operating performance improved in the first quarter of 2018. The company’s revenue was Bt52,908 million, a 7.3% increase from the same period last year. Meanwhile, the operating profit margin improved to 22.9% from 20.5% as its non-fuel cash cost increased by 4.7% from the same period of the previous year.

THAI’s capital structure remains weak. The debt to capitalization ratio remained high at 87% as of March 2018. THAI has plans to renew the existing fleet of aircraft, which entails large capital expenditures. As a result, the capital structure is expected to stay at this level during 2018-2020

RATING OUTLOOK

The “stable” outlook reflects the expectation that THAI’s operating performance will improve as planned and the government will continue to provide financial support on a timely basis.

RATING SENSITIVITIES

The ratings and/or outlook are unlikely to be upgraded in the near term. However, if THAI’s operating performance improves significantly or if the debt to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio stays below 5 times on a sustained basis, the ratings and/or outlook could be revised upward.

The ratings could be lowered if the operating profit margin deteriorates significantly or if TRIS Rating believes that the level of government support will be reduced.

Thai Airways International PLC (THAI)

Company Rating: A

Issue Ratings:

THAI188A: Bt1,250 million senior unsecured debentures due 2018 A

THAI189A: Bt1,000 million senior unsecured debentures due 2018 A

THAI192A: Bt1,000 million senior unsecured debentures due 2019 A

THAI192B: Bt1,200 million senior unsecured debentures due 2019 A

THAI19OA: Bt1,500 million senior unsecured debentures due 2019 A

THAI19DA: Bt1,230 million senior unsecured debentures due 2019 A

THAI19DB: Bt500 million senior unsecured debentures due 2019 A

THAI204A: Bt1,500 million senior unsecured debentures due 2020 A

THAI206A: Bt1,000 million senior unsecured debentures due 2020 A

THAI208A: Bt1,250 million senior unsecured debentures due 2020 A

THAI209A: Bt1,500 million senior unsecured debentures due 2020 A

THAI212A: Bt1,000 million senior unsecured debentures due 2021 A

THAI215A: Bt833 million senior unsecured debentures due 2021 A

THAI215B: Bt2,167 million senior unsecured debentures due 2021 A

THAI21DA: Bt1,340 million senior unsecured debentures due 2021 A

THAI21DB: Bt500 million senior unsecured debentures due 2021 A

THAI222A: Bt2,000 million senior unsecured debentures due 2022 A

THAI224A: Bt2,000 million senior unsecured debentures due 2022 A

THAI226A: Bt1,000 million senior unsecured debentures due 2022 A

THAI229A: Bt2,500 million senior unsecured debentures due 2022 A

THAI22OA: Bt1,500 million senior unsecured debentures due 2022 A

THAI232A: Bt1,200 million senior unsecured debentures due 2023 A

THAI238A: Bt1,500 million senior unsecured debentures due 2023 A

THAI23DA: Bt1,000 million senior unsecured debentures due 2023 A

THAI242A: Bt1,000 million senior unsecured debentures due 2024 A

THAI243A: Bt1,500 million senior unsecured debentures due 2024 A

THAI246A: Bt1,000 million senior unsecured debentures due 2024 A

THAI24DA: Bt1,430 million senior unsecured debentures due 2024 A

THAI252A: Bt1,000 million senior unsecured debentures due 2025 A

THAI254A: Bt2,300 million senior unsecured debentures due 2025 A

THAI259A: Bt3,000 million senior unsecured debentures due 2025 A

THAI26DA: Bt3,000 million senior unsecured debentures due 2026 A

THAI276A: Bt3,000 million senior unsecured debentures due 2027 A

THAI282A: Bt2,400 million senior unsecured debentures due 2028 A

THAI28DA: Bt2,000 million senior unsecured debentures due 2028 A

THAI326A: Bt2,000 million senior unsecured debentures due 2032 A

THAI332A: Bt1,200 million senior unsecured debentures due 2033 A

Up to Bt7,000 million senior unsecured debentures due within 15 years A

Rating Outlook: Stable

TRIS Rating Co., Ltd./www.trisrating.com

Contact: santaya@trisrating.com, Tel: 0-2098-3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand

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TRIS Rating Assigns “A/Stable” Rating to Senior Unsecured Debt Worth Up to Bt7,000 Million of “THAI”