THAI needs to modify its rehabilitation plan to survive: Sumet

[snoop1130]

THAI needs to modify its rehabilitation plan to survive: Sumet

By The Nation

 

 

Thai Airways (THAI) needs to modify its rehabilitation plan if it is to survive in the face of tight competition, especially since it still has a total debt of over Bt2.45 billion and losses of more than Bt20 billion, despite being able to reduce its debts by Bt48 billion over the past five years.

 

The airline’s president Sumet Damrongchaitham said the first step will be to restructure THAI’s management and finances as well as reconsider its plan to spend Bt1.5 billion on 38 new aircraft. 

 

He said the biggest problem is that THAI has low capital but a high D/E (debt/equity) ratio of eight times debt to equity. In order to maintain its competitiveness, the carrier will have to reduce its debts versus assets and boost its working capital with support from the ministries of Transport and Finance. Hence, it plans to borrow approximately Bt3.2 billion in fiscal 2020 in line with the budget limit set by the Office of Public Debt Management. This loan will be taken to support the airline’s investments as well as for its working capital, to update equipment and maintain existing aircraft, but will not be used to repay old debts.

 

THAI is also concerned about maintaining its liquidity because at the end of June this year, its revolving credit line stood at 13.4 per cent of the total revenue forecast for 2019. 

 

Sumet said that though the original rehabilitation plan has a set framework, the situation has now changed due to the appreciation of the baht, so in order to achieve goals, the work method has to be redesigned, such as finding a way to procure more passengers. “We are now in the process of analysing new markets,” he said. 

 

Meanwhile, THAI’s board chairman Aek-Niti Nitithan-Praphas also said the board is reconsidering plans to procure a new fleet taking into consideration the state of the global and domestic economies as well as the US-China trade war. 

 

The growth of the tourism industry and THAI’s financial status needs to be reviewed in line with strong competition and routes that are no longer popular. It’s better to carefully revise the plan instead of exposing the airline to greater risk, he said, adding that the target should be reduce THAI’s expenses by 20 per cent. 

 

Meanwhile, THAI aims to boost the sale of tickets, find ways of increasing online shopping of duty-free goods and reducing unnecessary expenses by 10 per cent without affecting the quality of service in the last three months of the year. The airline is also negotiating the option of cutting down overtime expenses and is looking into curbing losses incurred by THAI Smile by increasing its flying hours to 10.5 hours daily. These steps are expected to help the airline reach breakeven point in the short term. 

 

The airline is also considering long-term goals such roping in more passengers by offering greater benefits to Royal Orchid Plus members, focusing on digital marketing, retiring non-performing assets as well as increasing revenue from related businesses such as kitchens and aircraft repair centres.

 

Source: https://www.nationthailand.com/news/30377417

 

-- © Copyright The Nation Thailand 2019-10-15

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[RotBenz8888]

Well, they can't save more on the food, as it cant get cheaper than it is. I suggest they give up as sell the damn company to someone ready to take some responsibility.

[PatOngo]

28 minutes ago, snoop1130 said:

He said the biggest problem is that THAI has low capital but a high D/E (debt/equity) ratio of eight times debt to equity.

In all honesty, how were those debts acquired?

[Cadbury]

29 minutes ago, snoop1130 said:

THAI needs to modify its rehabilitation plan to survive

Out of all that wishful thinking there is not one word mentioned about getting rid of the management deadwood; and there must be plenty of them from the top down.

They are like maggots feeding from a dead carcass.

[PatOngo]

How can an airline within a country of 68 million get to such a state? Meanwhile, not too far away in a country of 26 million: The Qantas Group has achieved an Underlying Profit Before Tax of $1.30 billion and a Statutory Profit Before tax of $1.27 billion for the Financial Year 2019.

 

 

Edited October 15, 2019 by PatOngo

[PatOngo]

 Beggars belief!

 

 

Edited October 15, 2019 by PatOngo

[TallGuyJohninBKK]

44 minutes ago, snoop1130 said:

reducing unnecessary expenses by 10 per cent without affecting the quality of service in the last three months of the year.

 

How about reducing unnecessary expenses by 100%, since by definition they are "unnecessary."

 

...unless something is getting lost in translation by The Nation.

 

[tso310]

As I put in another thread, 40% less aircraft than Singapore and 40% more staff. Think of the number of staff freebies tickets that are on the money earning flights to Europe.

[TallGuyJohninBKK]

8 minutes ago, Cadbury said:

Out of all that wishful thinking there is not one word mentioned about getting rid of the management deadwood; and there must be plenty of them from the top down.

They are like maggots feeding from a dead carcass.

 

There was a very brief reference... Maybe you didn't catch it...  

 

Quote

retiring non-performing assets

 

[TallGuyJohninBKK]

Just now, tso310 said:

As I put in another thread, 40% less aircraft than Singapore and 40% more staff. Think of the number of staff freebies tickets that are on the money earning flights to Europe.

 

How much fuel could they save if they simply stopped all the flight attendants from sneaking back imported luxury goods hidden within their clothing and bags?  

 

Edited October 15, 2019 by TallGuyJohninBKK

[tso310]

Sometime in the past, many years ago, there was a thread about the number of young thai Thai employees that one could see wandering around swampy with a clipboard and taking notes. No one ever discovered why. Must check again. Probably moved with the times and now using the most expensive Ipads.

[realfunster]

49 minutes ago, snoop1130 said:

Thai Airways (THAI) needs to modify its rehabilitation plan if it is to survive in the face of tight competition, especially since it still has a total debt of over Bt2.45 billion and losses of more than Bt20 billion, despite being able to reduce its debts by Bt48 billion over the past five years.

 

I assume this is supposed to be debts of Bt 245 billion ?

 

 

56 minutes ago, snoop1130 said:

The airline’s president Sumet Damrongchaitham said the first step will be to restructure THAI’s management and finances as well as reconsider its plan to spend Bt1.5 billion on 38 new aircraft

38 new aircraft for USD 50m ?

 

As usual in a Thai press report, few of the numbers actually make any sense or stand up to more than half a second of critical thinking...

[Cadbury]

12 minutes ago, TallGuyJohninBKK said:

 

There was a very brief reference... Maybe you didn't catch it...  

 

 

I did catch that but couldn't bring myself to believe they were referring to all the useless luminaries and freeloaders; and I still can't.

I thought they were were referring to ancillary services like the mothering of VIP passengers through immigration, aircraft washing, ramp services and even cargo services. But perhaps you are right.

[Isaanbiker]

He said the biggest problem is that THAI has low capital but a high D/E (debt/equity) ratio of eight times debt to equity.

 

    I doubt that. The biggest problem is the corruption where all people take what they think they deserve.

 

Have a look at the management first. 

 

_{Sumeth is listed on the website of the Ministry of Finance as president of state-owned property manager Dhanarak Asset Development Co Ltd. He was also chief operating officer of music and entertainment group GMM Grammy PCL (GRAMMY.BK).}

 

https://uk.reuters.com/article/uk-thai-airways-ceo/thai-airways-finds-new-ceo-after-almost-two-year-search-idUKKCN1IM0BQ

 

 

_{^{Investors and analysts have said potential candidates may have been deterred by the airline’s lack of independence. Its board is comprised of civil servants and former members of the air force, in a country ruled by a military junta.}}

[TallGuyJohninBKK]

11 minutes ago, Cadbury said:

I did catch that but couldn't bring myself to believe they were referring to all the useless luminaries and freeloaders; and I still can't.

I thought they were were referring to ancillary services like the mothering of VIP passengers through immigration, aircraft washing, ramp services and even cargo services. But perhaps you are right.

 

No, you're right, of course. I was just jokin' ya!  

 

But, we could wish....

 

[BobbyL]

As usual, a quick Skyscanner search for return flights to Heathrow came out at -

 

EVA - 26k

BA - 27k

THAI - 34k

[holy cow cm]

2 hours ago, Cadbury said:

Out of all that wishful thinking there is not one word mentioned about getting rid of the management deadwood; and there must be plenty of them from the top down.

They are like maggots feeding from a dead carcass.

Perhaps. But the thing about Thai Airways is, they are still the most pleasant ride domestically. I will be flying them tomorrow and my return a few days later to CM. They need to find the key and get rid of dead weight for sure. But this might just be the investors? Or bigger B.O.D?

Edited October 15, 2019 by holy cow cm

[GinBoy2]

5 hours ago, BobbyL said:

As usual, a quick Skyscanner search for return flights to Heathrow came out at -

 

EVA - 26k

BA - 27k

THAI - 34k

It's even worse than just the price.

 

My wife last night booked a ticket back to Thailand from the US to visit for the New Year.

 

Even though our local airport is served by United, a Star Alliance partner, TG won't even quote it.

 

Now with United, half the flight is on other alliance partners, notably none of it being on TG!

[scorecard]

11 hours ago, Cadbury said:

Out of all that wishful thinking there is not one word mentioned about getting rid of the management deadwood; and there must be plenty of them from the top down.

They are like maggots feeding from a dead carcass.

Noe any mention of stopping freebies.

[upena]

Filing for bankruptcy is the solution.

[steven100]

13 hours ago, snoop1130 said:

“We are now in the process of analysing new markets,” he said. 

that's thai for " I'm searching for a new job "

[tomazbodner]

12 hours ago, realfunster said:

 

I assume this is supposed to be debts of Bt 245 billion ?

 

 

38 new aircraft for USD 50m ?

 

As usual in a Thai press report, few of the numbers actually make any sense or stand up to more than half a second of critical thinking...

Was just wondering if the writer understands the difference between THB and USD... This is terribly written article full of unacceptable errors. What happened to The Nation?!

[justin case]

read between the lines, for THAI management, they did a good job, they reduced debts

 

nevermind profits

[maddermax]

The only way to get more passengers is to provide an appropriate service which is sadly lacking at present. A more modern fleet may help.

Duty free is not the way forward as most passengers do not buy the goods and it costs money to carry them.

[Sydebolle]

Well, maybe the big chief has a look on what others around him are doing. It is not the US-China trade war, nor the fuel, nor the bad spirits in the hangars and offices of TG worldwide, it is the governmental impact on this carrier. 

Marred by highly inefficient boards being posted according to political nepotism with mostly zero experience nor ability exceeding the pressing of a button for the correct floor in an elevator ....

The service sucks from A to Z, delays and cancellations are dealt with (mostly) by just walking away and despite preferential treatment Tg managed to pile up B 20 billion (THB 20'000'000'000) in losses, apart from debts left, right and centre.

Whoever lands on Suvannaphum (the preferential airport, not accessible to the low cost carriers FD, DD, SL and others) will witness a complete presentation of TG's fleet parked all over the apron any mid afternoon. Other planes can be found from Sukhabhibal 3 Road in Bangkok to the Chic Chic Market in Nong Khai; overseas presence of the fleet is evident in the boneyards to the United States of America. 

The flying hours were mentioned. I had a look (www.flightradar24.com) on what those other Thai airlines are doing with their aircraft on a randomly chosen plane): 

10h 45m Nok Air on 14th October (HS-DBY) 10h 45m
13h 40mThai Lion Air on 14th October (HS-LTM) 13h 40 
11h 21m Air Asia on 13th October (HS-CBE) (14th October incomplete data). 

Quite obviously TG should fare much - by average - and achieve  considerably higher flying hours; having long haul flights increase the utilization hours a lot. A "Europe Turn-Around" flight can clock easily 20 hours in a full day of 24 hours. Maintenance and ground time on almost exclusively short-haul carriers is higher, to start with.
And, as the saying goes: An airplane not flying is a costly airplane. 

Best is to close TG and open the skies of Siam to operators of much more professionalism, to be privately financed and - by all means - zero intervention by all those funny governments which allowed those little hands in all TG tills for the last 27 years of the airline's suffering. 

Darwin already said it, not the richest, smartest, most beautiful or quickest will survive - that trophy goes to the most flexible, attentive player in the pit - go figure! 

I - for one - assume that nothing whatsoever will happen (except sending the present board off the duty stage with some golden parachutes). A new set of "professionals" will take over and the endless saga of TG will just go into the next season with new sequels .......... 
Until that changes I shall resort to alternative operators in the air which offer more flight, seat comfort and service for - well, here you go - less money. If Finnair, Air France, Swiss - just to name a few - can manage it should be no rocket science for those carefully chosen top shots on the TG board and all their Pi & Nong underlings ..........

 

Edited October 16, 2019 by Sydebolle

[AussieinThaiJim]

A complete overhaul of the Thai airlines is necessary along with a clear strategy for the future. Thai needs to decide if it’s in the low cost game or not. Structure accordingly. Time to reduce headcount in management by 40% just like qantas and others!

Either get your act together or it will become such a debt burden it will have to close!

Edited October 16, 2019 by Jim Spencer
Spelling

[RichardColeman]

13 hours ago, snoop1130 said:

The airline is also considering long-term goals such roping in more passengers

That would work

[munchlet]

The solution is so simlle. It's one word.

 

Privatisation!!!! 

 

No government has any business being in business. Airlines don't need to have their plans approved by politicians. Name me a state airline that makes money? They are all massive focuses for jobs for the girls and boys. 

 

It will NEVER get better. I was involved in underwriting the stock when it was listed almost 30 years ago. It was a bad idea then, its a bad idea now. 

 

Sell it!!! Give it away!! Close it down. As long as it is owned and controlled by the state, it will be a licence to fleece the taxpayer. 

[drgoon]

I gave up on Thai travelling from NZ...   frequent flyer miles that I had accumulated, there were many, were unable to be used from NZ to anywhere. The aircraft were old, the seats uncomfortable, the food average at best and the fares expensive.

 

The only redeeming factor was that they were the only direct flight.

[SOTIRIOS]

...rehabilitation is a fitting word word...

 

...but pretending it's a separate entity that is responsible is ludicrous...

 

...it has been 'bled to death' by those that have been running it....

 

...like some out of control alcoholics or drug addicts...

 

...rehabilitation is a fitting word...

 

....but should be applied to those in control.. those 'calling the shots'....all these years...

 

...but that will never happen...

 

...they will never let go of the cash cow ...never take responsibility or blame...

 

...as you see...their plan is....more debt to pay for the debt.....

 

...lucky them.....