THAI could lease rather than purchase more aircraft

[webfact]

THAI could lease rather than purchase more aircraft

By THE NATION

 

THAI president Sumeth Damrongchaitham

 

Overall operations at Thai Airways International (THAI) will not be affected by its board’s demand that plans to procure new aircraft be reviewed, THAI president Sumeth Damrongchaitham said on Thursday (September 26).

 

THAI management will next month submit to the board a proposal to lease three Boeing 777-300ER aircraft to support operations for six years, he said.

 

If approved, the leasing process would begin immediately. No Cabinet endorsement would be required.

 

Unless unforeseen obstacles arise, the leasing procedure would likely take four months, with the jets delivered beginning early next year.

 

The THAI board on Tuesday asked management to review plans to procure 38 more aircraft worth a combined Bt156 billion.

 

The directors cited a “fast-changing situation” in asking for a fresh plan within the next six months.

 

Source: https://www.nationthailand.com/business/30376788

 

-- © Copyright The Nation Thailand 2019-09-27

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[GordonP]

Give Thomas Cook a call. 

[Krungbin]

Rather than debating about buying and/or leasing, TG's management should first have a serious look at Singapore Airlines and the method they use to manage their fleet... I can assure them that there is/are very interesting lessons to be learned!

[Chazar]

Genius who would of thought of  that!

[Bob12345]

17 minutes ago, Krungbin said:

Rather than debating about buying and/or leasing, TG's management should first have a serious look at Singapore Airlines and the method they use to manage their fleet... I can assure them that there is/are very interesting lessons to be learned!

You make me curious, any links you would recommend to learn more?

[Krungbin]

33 minutes ago, Bob12345 said:

You make me curious, any links you would recommend to learn more?

With pleasure.  You can pm or contact me whenever you want.

[Airalee]

As the old saying goes...

 

”If it floats, flies or *****, rent it”

[natway09]

Nearly every airline in the world leases !!!

Slow learners ??

[tlandtday]

yeah but a big purchase gives a big kickback and a lease not so much so better to go with the purchase:)

[Sydebolle]

Not an option = envelopes too small ........

[tomazbodner]

A380 are really cheap now (not like TG can fill them), but for efficient aircraft, they are not so easy to come by. Leasing companies aren't charity and squeeze as much as they can out of their lease on most popular models.

[Cake Monster]

2 hours ago, natway09 said:

Nearly every airline in the world leases !!!

Slow learners ??

With their track record of Financial losses, a Lease deal would probably not be entertained.

[Srikcir]

Leasing the aircraft -

From the perspective of THAI management a good option as long as it's not a lease-to-own.

As there's no ownership such as a capital asset, there's no liability for financial purposes. Lease payments are just operating expenses. The aircraft leases are reported in the financial statement as a footnote.

However -

Does THAI qualify for leasing the aircraft (say from the manufacturer) having a history of significant operating losses? The lessor may require a lease guarantor and that would likely be the majority THAI stockholder - the Thai government. In effect THAI's lease of the aircraft in the event of lease payment default would amount to government subsidies in the form of lease payments. Ultimately, it is the Thai taxpayer that pays for government subsidies.

From the perspective of the Thai taxpayer -

THAI leasing the aircraft is not a sensible option.

The Thai government should (while the baht is "hot") sell its majority stake in THAI and rid Thai taxpayer concerns of about THEIR continued costs in the airline.

 

[Krungbin]

3 hours ago, Srikcir said:

Leasing the aircraft -

From the perspective of THAI management a good option as long as it's not a lease-to-own.

As there's no ownership such as a capital asset, there's no liability for financial purposes. Lease payments are just operating expenses. The aircraft leases are reported in the financial statement as a footnote.

However -

Does THAI qualify for leasing the aircraft (say from the manufacturer) having a history of significant operating losses? The lessor may require a lease guarantor and that would likely be the majority THAI stockholder - the Thai government. In effect THAI's lease of the aircraft in the event of lease payment default would amount to government subsidies in the form of lease payments. Ultimately, it is the Thai taxpayer that pays for government subsidies.

From the perspective of the Thai taxpayer -

THAI leasing the aircraft is not a sensible option.

The Thai government should (while the baht is "hot") sell its majority stake in THAI and rid Thai taxpayer concerns of about THEIR continued costs in the airline.

 

Valid point. But there is a better solution... that ends up as a lease, I agree.  This stated, regardless whether the Thai Baht is "hot" or not, I do not think that the Thai government will ever agree to sell the majority stake it has in the airline...