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

The Central Bankruptcy Court decided that the airline can proceed with its plan to rehabilitate its debt. The company, which had total liabilities of 332.2 billion baht (S$14.5 billion) at the end of June, faces one of its biggest challenges in its 60-year history as the pandemic hits the country’s tourism-dependent economy.

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 and Avianca Holdings, Latin America’s second-largest airline, have gone into administration or sought bankruptcy protection.

Industry strains have been mounting in Asia, with Singapore Airlines eliminating about 20 per cent of its workforce. Thai Airways creditors are likely faced with a protracted process: the company is estimating that the rehabilitation could take as long as seven years.

The court ruling may allow Thai Airways to start talks soon with debt-holders on the terms of restructuring the dues.

“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 further 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 per cent of Thai Airways, according to an August filing.

The airline had defaulted on loans and bonds totaling 85 billion baht, or 33.1 per cent 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 canceled scheduled flights from April to comply with government rules to contain the pandemic.