THAI to lease, sell aircraft to turnaround after big losses in 1H

[webfact]

THAI to lease, sell aircraft to turnaround after big losses in 1H

By The Nation

 

THAI's president Sumeth Damrongchaitham speaks to the press on Tuesday. – The Nation

 

Thai Airways International (THAI) will consider leasing out three new aircraft and selling four existing aircraft to boost its revenue for the rest of this year after the carrier reported a net loss of Bt6.43 billion in the first half of this year, the company’s president Sumeth Damrongchaitham said on Tuesday.

 

“We expect our total revenue in the second half of this year to be better than the first half, when the baht depreciates now that the Monetary Policy Committee has cut the policy interest rate by 0.25 per cent early this month and September, high season for tourists, arrives,” he said. 

 

The national carrier is planning to boost the number of aircraft leased to European airlines by three and sell four existing airplanes and will propose this plan to its board soon. 

 

The airline will also buy foreign exchange after sustaining losses of 5 per cent when the baht appreciated in the first half of this year compared to the end of last year. 

 

“If we don’t do anything, we will suffer high losses for the rest of this year. We believe our business strategy will reduce our losses in the rest of this year,” he said. 

 

As for the plan to buy 38 new aircraft worth Bt156 billion, it needs to be reconsidered because the government has insisted that the funding for the purchase must come from the company, he said. 

 

Sumeth added that the airline has also announced its cost-saving schemes such as SaveTG Co-Creation, which reduces its management cost without having an impact on its service quality. 

 

The airline is also collaborating with other organisations to reduce its cost by following a zero-waste management policy. THAI is also planning to introduce new direct flights to Sendai, Japan in the last quarter of this year. 

 

THAI is also focusing on digital marketing to boost customers and reduce costs, and is cooperating with its business partners and subsidiary ThaiSmile to provide services and increase its income, he said.

 

Source: https://www.nationthailand.com/business/30374710

 

-- © Copyright The Nation Thailand 2019-08-14

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[Fex Bluse]

32 minutes ago, webfact said:

As for the plan to buy 38 new aircraft worth Bt156 billion, it needs to be reconsidered because the government has insisted that the funding for the purchase must come from the company, he said.

Of course they have, now that they are rumored to be on the brink of insolvency, scrounging around for money wherever they can find it, often through new taxes.

[Oziex1]

Any talk of revising the business model that has created this situation? 

[GinBoy2]

14 minutes ago, Oziex1 said:

Any talk of revising the business model that has created this situation? 

Oh come on. You know better than to ask a rhetorical question like that! LOL

[gunderhill]

2 hours ago, webfact said:

to be better than the first

meaningless  could be  just 1  satang  better  to  pass  this "test"

[PatOngo]

Until the current 51% stakeholder sells to private enterprise and the hiso free shuttle service is discontinued there is no hope!

[RotBenz8888]

3 hours ago, webfact said:

leasing out three new aircraft and selling four existing aircraft

Burkina Faso might look in to it 

[legend49]

2 minutes ago, RotBenz8888 said:

Burkina Faso might look in to it 

Burkina Faso airlines has an efficient service to Abidjan ( i use it monthly) why would they want caste off aircraft that doesn't suit their operational requirements. there is a surplus of unwanted aircraft globally so Thai better rethink the non existent strategy.

[RotBenz8888]

8 minutes ago, legend49 said:

Burkina Faso airlines has an efficient service to Abidjan ( i use it monthly) why would they want caste off aircraft that doesn't suit their operational requirements. there is a surplus of unwanted aircraft globally so Thai better rethink the non existent strategy.

Ok, how about Haiti? 

[nev]

But they keep telling us Tourists are coming, The Baht is not hurting businesses.

Yes keep waiting for high season to come to pay for you 6.5 billion loss good luck with that, And the cutting of policy interest rate by 0.25% will not help one iota.

[Sydebolle]

Unlike many other things in this country - aviation is NOT restricted to "Thai Only - no alien". 
 

The loss accounts to THB 35 million a day or almost THB 1.2 million every hour, 24/7. 

Get all those clowns out of those fancy offices, review the employment conditions, the fleet compatibility and start talking to your domestic neighbours (FD, PG, DD, SL etc.) and regional competitors about making all this as lean as 30 years ago. 

Everything else will not work - but yes, it is unpopular for Khon Thai to admit, that they failed and that they cannot handle it.

[Cadbury]

5 hours ago, webfact said:

THAI to lease, sell aircraft to turnaround after big losses in 1H

Iv'e got a better idea. Why not lease Thai Airways lock, stock and barrel. Or better still, sell it for the value of the debts and leases. The directors and senior management have no value and can be written off.

[Paul Henry]

All Thai are doing is rearranging the deckchairs on the Titanic. No real strategic mid to longterm business plan.

[Srikcir]

6 hours ago, webfact said:

The airline will also buy foreign exchange after sustaining losses of 5 per cent when the baht appreciated in the first half of this year compared to the end of last year. 

Incompetence.

For at least the last three years the baht has been considered over-valued, only to worsen with each year.

When one operates an international enterprise that requires a mix of foreign currencies, it's almost SOP to have a foreign exchange hedge. https://en.wikipedia.org/wiki/Foreign_exchange_hedge

It basically smooths out fluctuations in drastic currency value changes with a diverse currency pool, ie., including stable currencies such as the USD.

Even BOT recently urged hedging to counter an unpredictable baht.

https://www.nationthailand.com/business/30374532

The admission that THAI will NOW buy into a foreign exchange hedge means that it negligently failed to do so for the last four years when it had clear signs that such a hedge was required in light of BOT refusing to cut interest rates until recently and THAI continued massive operating losses.

[marko kok prong]

They have been in crisis now for two or three years,my only surprise is they are still operating,with these sort of losses,if it continues,they will go under, unless the Govt bail them out,which from the report seems unlikely.

[sammieuk1]

Customer service karma may the losses continue and at a faster rate???? 

[Blue bruce]

Why don't they hire am experienced and competent president and staff who know how to run an airline

This airline is run on nepotism.

 

 

[Oztruckie]

Maybe they could have a look at the Qantas setup from not very long ago,they were in the red at some extremely high level,can't remember the numbers,but now their back in the black with a good share price,Emirates got a high level desk jockey from Qantas few years to assist in running their business and look at them now,but this is TIT,as we know Thais know better.

[ThomasThBKK]

2 hours ago, marko kok prong said:

They have been in crisis now for two or three years,my only surprise is they are still operating,with these sort of losses,if it continues,they will go under, unless the Govt bail them out,which from the report seems unlikely.

 

Well, it's defacto the national carrier. Loss of face more important than loss of money.

I think other airlines a la Nok Air are also struggeling, but it's kinda a worldwide thing - Ryan Air is also closing down shop in many european destionations a la teneriffe.

[Searat7]

Plane spotters.net shows the following 

 

Active fleet - planes stored

B747    1

B777    1

B787    1

 

inactive fleet- planes stored

A300.   2  (plus 2 preserved whatever that means)

A340.   9. (Was 10 but RTAF took one)

A330.   8

B737.    3

B747.    8

 

if this is accurate they need to address this problem before purchasing new planes. I note the article does not list any plane by model. 

[webfact]

Thai airways reports loss of 122% in Q2

 

   

BANGKOK,14th August 2019 (NNT) - Thai Airways reports the loss of 6.8 billion in the second quarter of 2019

 

Thai Airways has sent a filing to the Stock Exchange of Thailand, reporting a net loss of 6.8 billion baht in the second quarter of 2019, equaling 122% compared to last year, while its year-on-year revenue decreased by 10%.

 

Mr. Sumeth Damrongchaitham, The airline’s President, said the factors include the strongest Thai baht in 7 years, leading to a difficult competitive environment due to its inability to reduce the ticket price. The 5% increase in the value of the Thai baht since beginning of the year also cost the national carrier lose 5%

 

Additionally, the airline’s revenue is affected by the conflict between India and Pakistan, which means the airline lost a number of Pakistani passengers, reducing number of Chinese tourists due to the Yuan appreciation compared to Thai baht, reflecting a change of destination choice from Thailand to other countries such as Japan, South Korea and Vietnam.

 

For external factors, Mr. Sumeth blamed the 12 aircraft grounded for maintenance, which leads to a decrease in the number of flights.

 

However, the Airline plans to open a new route to Sendai city in Japan, as the Japanese market accounts for one third of the total revenue of the carrier.

 

-- © Copyright NNT 2019-08-14

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[Wiggy]

36 minutes ago, webfact said:

For external factors, Mr. Sumeth blamed the 12 aircraft grounded for maintenance, which leads to a decrease in the number of flights.

And of course, this isn’t part of the normal operation of an airline is it? What a ridiculous statement. So does this mean that in order to make a profit the airline shouldn’t maintain its aircraft? Scary. Lol. 

[mike324]

For the amount of tourists that has been arriving in the past decade yet they can't turn a profit.... truly incompetent. Its not as if THAI airway fares are overprice, if you buy it outside of Thailand THAI prices are competitive, this is the same for any airlines (lets not talk about how much it cost to fly THAI from Thailand to another destination).

[mikebell]

6 hours ago, marko kok prong said:

unless the Govt bail them out,which from the report seems unlikely.

Thai Gov will definitely bail them out with tax-payers' money.  The hi-sos need free tickets to every where; it's a perk of the job.

[nong38]

Swallow the pill, sell all the assets and remove Thai Airways from the earth, problem is solved, pride costs too much!

[trainman34014]

Now the biggest loss making Airline in Aviation History.  For a country that worries so much about its 'Face', they sure know how to make themselves a complete laughing stock !

[SOUTHERNSTAR]

With 14000 surplus employees any turn around plan without immediate job cuts is useless.

Sent from my SM-A730F using Thailand Forum - Thaivisa mobile app

[dcnx]

16 hours ago, Oziex1 said:

Any talk of revising the business model that has created this situation? 

It’s not their fault. Don’t be silly.

[tso310]

Fully expect an order for some Concordes and naturally Boeing Maxs. If there is one thing you can definitely predict in Thailand its THAI's continuing spiral downwards.

[Darkside Gray]

It must be one of the only asian airlines that is not making a profit due to poor management.