Thai Airways Hits Air Pocket. Kicks President

[george]

Thai Airways hits air pocket

BANGKOK: -- Loss-making Thai Airways International Plc (THAI), one of the largest airlines in Asia, has stripped its president of power and set up a new management committee to run the company. The dramatic corporate shakeup comes just days before the national carrier is expected to post quarterly losses of about seven billion baht (US$171 million) - far worse than expected.

The Stock Exchange of Thailand, which is expected to receive Thai Airways' official quarterly report Monday, halted trading its shares for an unspecified period. Somchainuk Engtrakul, a member of THAI's board of directors and former permanent secretary at the Finance Ministry, will head the committee, while Kanok Abhiradee - the president - will keep his job in name only.

At a solemn press conference, the new committee said it would immediately implement a series of measures to turn the company's losses around. "We will try to increase revenue and maintain yields for the shareholder," said Somchainuk. "We aim to reduce expenses without compromising safety and security."

Although its planes have an average load factor of 75%, the airline blames rising fuel prices - accounting for 31% of its operational costs - for its losses. It has recently been trying to cut costs by fuel hedging - the practice of buying fuel well ahead of need at a fixed price to protect itself against sudden fuel-price rises. Kanok said that at one point, 75% of the fuel used by THAI was bought with hedging. "Hedging has been done on a daily basis, but prices are too high now to hedge," Kanok said, adding that hedging currently accounts for 16% of the fuel used by the airline.

Somchainuk also blamed the company's sluggish response to market forces for THAI's financial woes. "I don't want to call it a crisis, but it is the kind of situation that needs rapid decision making," he said. The new measures include reducing flights on unprofitable routes and focusing on niche markets, especially business travelers. "Many regional routes are not making money and we will have to reduce [the flight] frequency," said Vasing Kittikul, executive vice president in charge of commercial affairs. He said high operational costs were even preventing the new direct flights to New York from making a profit, despite planes being 85% full.

Vasing blamed early retirement packages paid to some 500 employees and wage rises - the result of a drawn-out fight between the board and the labor unions - for the airline's anticipated third-quarter losses. "We have been in the red for a few days now," said Kanok. The committee will decide his fate within three months.

Kanok, who comes from a marketing background, took over the presidency of THAI in 2002. He is credited with turning years of losses around, and the company posted a 10 billion baht net profit in 2004. He is believed to be close to Prime Minister Thaksin Shinawatra. Employees and analysts describe him as "good at marketing" and "proactive", and as someone who "always plans ahead". Some employees expressed shock at the announcement, while others said he had lost the confidence of the board. "There [has been] a lot of behind-the-scenes politics that we don't know," said an employee who wished to remain anonymous.

Somchainuk told the press that the new management committee, which includes members from outside the company, was temporary and that an announcement over the future of the committee would be made in three months. "It's not Kanok's fault alone. It's related to every function," Somchainuk said, while Kanok sat next to him. "I am not willing to take this management post for a long time. I respect shareholders and will try to manage the company with transparency."

Somchainuk insisted that recent developments would not affect plans to overhaul the airline's fleet. Asked about the rumored delays in the delivery of two Airbus A340s due to the current national account deficit, he said: "We are still studying the matter, it's not official yet." The airline took delivery of four new A340-500 airbuses in April and is expecting at least six more A340-600 planes by 2008.

Analysts predict that THAI will not be able to generate a profit in the fourth quarter if fuel prices remain at their current level. "Overall, this [has been] a bad year for Thai Airways," said Sarit Panjamanond, an analyst at KGI Securities.

--Agencies 2005-08-13

[Ricardo]

It used to be standard-practise, in the european charter-airline industry, to hedge fuel-costs several-months ahead. This news shows why we used to do that !

Edited August 14, 2005 by Ricardo

[Maestro]

Thai Airways hits air pocket

...

Somchainuk also blamed the company's sluggish response to market forces for THAI's financial woes.

...

From the part in Switzerland where I live it takes me 1 hour and 10 minutes by airport shuttle bus to go to Milan airport, from where THAI flies, 3 hours and 20 minutes to Zurich, another THAI destination. The travel agents in my area can sell me a ticket for any airline for a flight departing from Milan, except for THAI.

I wrote to the THAI office in Switzerland about it but they do not care that they lose a lot of potential passengers through Milan airport because of their unusual restriction on ticket sales.

Who can give me the email address of that Khun Somchainuk mentioned in the press clipping, who does seem to care?

[Artisi]

Unfortunately, what should be a top airline is run by idiots, ham-strung with red-tape and outdated ideas and systems. Just try booking an urgent flight on the internet using your credit card -- ha ha ha - only booking for 3 days in advance can be made - so like me - change sites to Singapore and book using your credit card - and fly next morning. No problem -- smooth as Singapore airlines

[LivinLOS]

Kanok said that at one point, 75% of the fuel used by THAI was bought with hedging. "Hedging has been done on a daily basis, but prices are too high now to hedge,"

<{POST_SNAPBACK}>

And if oil / fuel prices continue to rise so will the penalty for not hedging now.. Typical dumb statement, hedging prices will only be deduced from the market rates..

Edited August 16, 2005 by LivinLOS

[Maestro]

Who can give me the email address of that Khun Somchainuk mentioned in the press clipping, who does seem to care?

I have now found the email address of Somchainuk Engtrakul and have written to him about my little problem. Let's see what happens (but I'm not holding my breath).

[Indo-Siam]

Ah, this is clearly a wise decision (NOT). Now, you may ask, who is this Somchainuk Engtrakul?????

For a clue, read down a ways in the article referenced below, to see what tremendous success this gentleman has previously been responsibile for delivering:

http://www.thaivisa.com/forum/index.php?showtopic=21806

It boggles the mind .........

Steve

Indo-Siam

[ovenman]

Now, you may ask, who is this Somchainuk Engtrakul?????

The man with the Midas touch in reverse, or so it would seem.

[Maestro]

Ah, this is clearly a wise decision (NOT).  Now, you may ask, who is this Somchainuk Engtrakul?????

For a clue, read down a ways in the article referenced below, to see what tremendous success this gentleman has previously been responsibile for delivering:

http://www.thaivisa.com/forum/index.php?showtopic=21806

It boggles the mind .........

Hmm, we can expect more of the same then, at THAI

I tried already last week to get booked on another airline for my flight in December but they were already fully booked for that class. Therefore I now have to keep my reservation with THAI this time, probably the last time.

Another interesting point: they don't even know the price for Milan-Bangkok yet (confirmed to me in writing by THAI Italy). Perhaps they are planning to close down that highly profitable route.

[Kf6vci]

Ever heard of FUMU? Eff Up Move Up

[Ricardo]

Kanok said that at one point, 75% of the fuel used by THAI was bought with hedging. "Hedging has been done on a daily basis, but prices are too high now to hedge,"

<{POST_SNAPBACK}>

And if oil / fuel prices continue to rise so will the penalty for not hedging now.. Typical dumb statement, hedging prices will only be deduced from the market rates..

<{POST_SNAPBACK}>

Quite.

The aim is, not to obtain the cheapest price for fuel, but rather to achieve a fixed/known cost. You then set your prices to cover that cost - and achieve a targetted level of profit. Rocket-science it isn't.

[FreedomDude]

From the part in Switzerland where I live it takes me 1 hour and 10 minutes by airport shuttle bus to go to Milan airport, from where THAI flies, 3 hours and 20 minutes to Zurich, another THAI destination. The travel agents in my area can sell me a ticket for any airline for a flight departing from Milan, except for THAI.

I wrote to the THAI office in Switzerland about it but they do not care that they lose a lot of potential passengers through Milan airport because of their unusual restriction on ticket sales.

Who can give me the email address of that Khun Somchainuk mentioned in the press clipping, who does seem to care?

<{POST_SNAPBACK}>

You guys in Switzerland actually still use travel agents?? I thought everyone with a credit card used the internet to book flights. Thai Airways probably doesn't want to pay the high agent fees.

[Maestro]

You guys in Switzerland actually still use travel agents?? I thought everyone with a credit card used the internet to book flights.  Thai Airways probably doesn't want to pay the high agent fees.

You don't know my travel agent

I check it out on the Internet, email it to her, and she gets me a still better price for the same itinerary.

In the UK, now, that's an entirely different story. Don't know about the US.

[pgrin]

Thai Airways hits air pocket

BANGKOK: -- Loss-making Thai Airways International Plc (THAI), one of the largest airlines in Asia, has stripped its president of power and set up a new management committee to run the company. The dramatic corporate shakeup comes just days before the national carrier is expected to post quarterly losses of about seven billion baht (US$171 million) - far worse than expected.

The Stock Exchange of Thailand, which is expected to receive Thai Airways' official quarterly report Monday, halted trading its shares for an unspecified period. Somchainuk Engtrakul, a member of THAI's board of directors and former permanent secretary at the Finance Ministry, will head the committee, while Kanok Abhiradee - the president - will keep his job in name only.

At a solemn press conference, the new committee said it would immediately implement a series of measures to turn the company's losses around. "We will try to increase revenue and maintain yields for the shareholder," said Somchainuk. "We aim to reduce expenses without compromising safety and security."

Although its planes have an average load factor of 75%, the airline blames rising fuel prices - accounting for 31% of its operational costs - for its losses. It has recently been trying to cut costs by fuel hedging - the practice of buying fuel well ahead of need at a fixed price to protect itself against sudden fuel-price rises. Kanok said that at one point, 75% of the fuel used by THAI was bought with hedging. "Hedging has been done on a daily basis, but prices are too high now to hedge," Kanok said, adding that hedging currently accounts for 16% of the fuel used by the airline.

Somchainuk also blamed the company's sluggish response to market forces for THAI's financial woes. "I don't want to call it a crisis, but it is the kind of situation that needs rapid decision making," he said. The new measures include reducing flights on unprofitable routes and focusing on niche markets, especially business travelers. "Many regional routes are not making money and we will have to reduce [the flight] frequency," said Vasing Kittikul, executive vice president in charge of commercial affairs. He said high operational costs were even preventing the new direct flights to New York from making a profit, despite planes being 85% full.

Vasing blamed early retirement packages paid to some 500 employees and wage rises - the result of a drawn-out fight between the board and the labor unions - for the airline's anticipated third-quarter losses. "We have been in the red for a few days now," said Kanok. The committee will decide his fate within three months.

Kanok, who comes from a marketing background, took over the presidency of THAI in 2002. He is credited with turning years of losses around, and the company posted a 10 billion baht net profit in 2004. He is believed to be close to Prime Minister Thaksin Shinawatra. Employees and analysts describe him as "good at marketing" and "proactive", and as someone who "always plans ahead". Some employees expressed shock at the announcement, while others said he had lost the confidence of the board. "There [has been] a lot of behind-the-scenes politics that we don't know," said an employee who wished to remain anonymous.

Somchainuk told the press that the new management committee, which includes members from outside the company, was temporary and that an announcement over the future of the committee would be made in three months. "It's not Kanok's fault alone. It's related to every function," Somchainuk said, while Kanok sat next to him. "I am not willing to take this management post for a long time. I respect shareholders and will try to manage the company with transparency."

Somchainuk insisted that recent developments would not affect plans to overhaul the airline's fleet. Asked about the rumored delays in the delivery of two Airbus A340s due to the current national account deficit, he said: "We are still studying the matter, it's not official yet." The airline took delivery of four new A340-500 airbuses in April and is expecting at least six more A340-600 planes by 2008.

Analysts predict that THAI will not be able to generate a profit in the fourth quarter if fuel prices remain at their current level. "Overall, this [has been] a bad year for Thai Airways," said Sarit Panjamanond, an analyst at KGI Securities.

--Agencies 2005-08-13

<{POST_SNAPBACK}>

After 20 plus trips to Thailand I still get daily "Oh my Buddha" moments when I see a

Thai lady so beautiful it is almost painful to look at her. Thailand's greatest natural resource is the beauty of it's people. With this in mind I had to laugh and shake my head at this ad campaign in a major international travel magazine. Why would the twits at Thai Air use an average looking farang chick with blonde hair of all things in a full page ad trying to intice westerners to come to Thailand(so they can charge them extra .) If they wanted to show how much fun Thailand can be why not include a totally hot Thai lady teaching this farang lady a thing or two about dancing Thai style? I can get on the Skytrain any day of the week and find 10 local ladies more alluring then this blonde farang. Is this the best they can do? No wonder they are going under.

Pgrin