Thai budget carriers' losses mount, shares tumble

[snoop1130]

Thai budget carriers' losses mount, shares tumble

 

FILE PHOTO: A Nok Air aircraft, painted like a duck, prepares to take off at Don Mueang International Airport in Bangkok, Thailand, June 29, 2016. Picture taken June 29, 2016. PREUTERS/Chaiwat Subprasom/File Photo

 

BANGKOK (Reuters) - Thailand's low-cost carriers saw share prices falling nearly 7 percent in morning trade in Bangkok on Friday after they reported losses due to tough competition and higher fuel costs.

 

Asia Aviation Pcl <AAV.BK>, AirAsia Group Bhd's <AIRA.KL> partner in Thai AirAsia, reported a loss of 306 million baht ($9.21 million) for its April-June period versus a profit of 170 million baht a year ago, sending its shares down over 4 percent.

 

Losses at rival Nok Air Pcl <NOK.BK> widened to 830 million baht in the quarter versus losses of 650 million baht a year ago. Nok's share prices were trading 7 percent lower.

 

Despite Thailand's tourism boom, its airlines have struggled due to higher jet fuel prices, a drop in passengers from off-peak travelling and stiff competition.

 

The country expects tourist arrivals to reach 37.5 million this year, up 6 percent from 2017.

 

Nok Air, the budget arm national carrier Thai Airways International Pcl <THAI.BK>, saw revenue dropping 1 percent to 3.35 billion baht.

 

Thai AirAsia is planning to add more routes between India and Southeast Asia in the next quarter to minimise the risk of depending on a major customer base in the region, the airline said.

 

"Higher fuel costs have been a challenge with fuel being a major operating cost for any airlines," Thai AirAsia Chief Executive Santisuk Klongchaiya said in a statement.

 

Analysts say tourist seasonality next quarter should help recovery and that plans to introduce a fuel surcharge could partly offset higher jet fuel prices.

 

-- © Copyright Reuters 2018-8-10

[Srikcir]

17 hours ago, snoop1130 said:

"Higher fuel costs have been a challenge with fuel being a major operating cost for any airlines,"

Which only leaves losses due to tough competition.

Solution: wait until there's more customers flying.

17 hours ago, snoop1130 said:

tourist seasonality next quarter should help recovery

Solution: higher ticket costs!

17 hours ago, snoop1130 said:

introduce a fuel surcharge could partly offset higher jet fuel prices.

Thai AirAsia Chief Executive Klongchaiya should consider moving to a different industry.

[from the home of CC]

If their business plan didn't include fluctuating fuel costs that's on them.

[Vacuum]

12 minutes ago, Srikcir said:

Solution: higher ticket costs!

But then it wouldn't be "budget" anymore.

[Mitker]

I fly domestic here at more than double the price for similar low cost (Ryanair) fares in Europe

wages are far lower here (pilots, crew, maintenance, ground services..)

regulations are sure quite stricter in the West

Ryanair is a very profitable and expanding company while Air Asia, Nok Air... lose money

 

Can somebody explain me?

 

 

[overherebc]

8 minutes ago, Mitker said:

I fly domestic here at more than double the price for similar low cost (Ryanair) fares in Europe

wages are far lower here (pilots, crew, maintenance, ground services..)

regulations are sure quite stricter in the West

Ryanair is a very profitable and expanding company while Air Asia, Nok Air... lose money

 

Can somebody explain me?

 

 

Ryanair??

Have you been watching UK news lately? Hundreds, yes, hundreds of flight cancelled due to industrial action.

[overherebc]

45 minutes ago, overherebc said:

Ryanair??

Have you been watching UK news lately? Hundreds, yes, hundreds of flight cancelled due to industrial action.

Google  Cheap Flights Fascinating Aida. ???

[quadperfect]

Well this explains the higher priced ticketts lately. But

I have zero sympathy and with a 10 percent processing fee on my credit card from airasia someone is making a killing.

and i am no longer paying this fee. So they are losing 1 more passenger.

[LomSak27]

On the routes I fly, Thai lion is undercutting both Air Asia and Nok. They a re doing this to get a market share so likely not making a profit on it. How long they can do this remains to be seen.

I like having more options so hope Nok can stay in the game. 

 

[Mitker]

5 hours ago, overherebc said:

Ryanair??

Have you been watching UK news lately? Hundreds, yes, hundreds of flight cancelled due to industrial action.

Sure, I've seen that.

(And to be clear I would also add that I'm certainly not a fan of the company and mostly of his boss who shows a highly despicable mentality)

 

But the fact is that during the last decades, it's thanks to its profitability that the company has been continuously able to cannibalize the air transport in Europe (there the main reason I fly with them: they're now the only left on many destinations)

 

They're going into trouble now (it's recent) for the disdain with which they treat their staff (for a long time indeed). The same old arrogance of its boss

 

But my point is that economically, they've made a awful lot of money all along the years

Notwithstanding the fact that they had to follow the European regulations in term of wages and social security benefits that I suspect are much higher than here. Fuel is not cheaper there neither.

 

But even so they charge 1/2 price of Thai low cost airlines and I don't think they would have to double that to treat correctly their staff while remaining profitable. So there's something missing in the equation.

Edited August 11, 2018 by Mitker
spelling

[AdamTheFarang]

"a drop in passengers from off-peak travelling" - how can this be so as all I hear is record numbers every year from the various people in TOT etc This must be a misunderstanding but by who? 

[jimmynewbie]

Thai airasia is overpriced, i use Malaysian airasia very cheap flights and good prices.

Could be tax etc.. (thai greediness) thai airways is terrible very expenisve and over rated like many other national carriers ie BA

Ryan air is going to go bust! Not just strikes of pilots, but cancelled flights for 3 days for no reasons? they blamed weather but only Ryanair was affected.

Easy Jet will clean up!

[SamuiRes]

It is not just budget airlines. Bangkok Air, who are hardly budget, have seen their share price drop by about 50% since their Public Offering.

[jimmynewbie]

Good Bangkok air are overpriced too, BKK to Samui one of most expensive in the world!

[Lacessit]

I forget who it was that advised owning shares in an airline was a guaranteed way to lose money.

Every time I compare fares of the various carriers within Thailand, Air Asia always quotes the lowest, although one has to be careful navigating the sneaky add-ons.

One anomaly appears to be the Chiang Mai/Chiang Rai routes. Even though it's another 200 km from Bangkok, airfares to Chiang Rai seem to be cheaper than the corresponding airfare to Chiang Mai.

[Stargeezr]

Airline losses are not real money losses. The Airline has a forecast of how much profits it

will make in a quarter, and if they do not reach this forecast amount, then they claim a loss.

  Do not feel sorry for these companies and their losses, it is just like Fake News.

 

[AdamTheFarang]

1 minute ago, Stargrazer9889 said:

Airline losses are not real money losses. The Airline has a forecast of how much profits it

will make in a quarter, and if they do not reach this forecast amount, then they claim a loss.

  Do not feel sorry for these companies and their losses, it is just like Fake News.

 

Are you sure this is entirely accurate. Are you a Thai accountant?

[Airalee]

I wonder what will happen if the Chinese airlines are ultimately able to muscle their way in to  “domestic routes” in other Asian countries.  They (The Chinese Airlines) are already gobbling up international routes by offering cut rate fares that are only possible with the huge government subsidies.  

[Stargeezr]

I only worked at airports for just over 32 years.

Edited August 15, 2018 by Stargrazer9889
error in message

[simoh1490]

21 minutes ago, Stargrazer9889 said:

I only worked at airports for just over 32 years.

There's a world of difference between economics/finance and baggage handling, financial forecasts do not form the basis of balance sheet loss!