Problems Loom In Wake Of Sacking At THAI

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COMMENT

Problems loom in wake of sacking at THAI

Achara Deboonme

The Nation

BANGKOK: -- Thai Airways International Chairman Ampon Kittiampon owes explanation to the general public over the board's decision on Monday and leaving the press conference to acting president Chokchai Panyayong will only worsen the sentiment.

THAI calls for a press conference today, to reveal the hidden reason behind the premature termination of President Piyasvasti Amranand’s employment contract. Ampon was expected to chair the event, but it was announced later that Chokchai would handle it. A source said that it could involve differing opinions of the board and the management over THAI's pending acquisition of 38 aircrafts.

It is unfortunate that Ampon, as chairman of the board, avoids meeting the press. Yet, wherever he goes, if Chokchai could not clearly satisfy the media, Ampon would be kept asking these three main questions.

Without the clear answer, he and other 13 directors would remain criticised as political appointees who do not serve state enterprises they supervise. More importantly, without clear answers, they are setting a poor new management standard for state enterprises as a whole.

The press conference will be held after the board unanimously agreed to dismiss Piyasvasti, who would complete his term in less than a year. The premature dismissal resulted in a compensation of Bt5.94 million that THAI must pay to Piyasvasti.

Rumour has it for some time that he would be dismissed after Pheu Thai Party formed the government, but the possibility was in doubt as Piyasvasti took office in October 2009 during the Democrats-led government under a special term to ensure no political meddling. He is entitled to a compensation package worth 6 months of salary in light of premature dismissal, and he is subjected to similar compensation if leaving before the term ends. More importantly, Piyasvasti, the second outsider chief, has won respects from employees and investors over his strategies that financially revived THAI and sustain the airline's growth amid fierce competition and higher fuel prices.

Given Piyasvasti's 31-month track record, "Lack of unity in communications with the board" sounded a lame reason to back the board's decision on Monday. Thus, here is the first question for Ampon: What's the exact meaning of the reason? Or is this just a reason to back a politically-motivated action?

If it is not to back a politically-motivated action, this will lead to the second question: What’s the weight of "communications with the board" in the key performance index (KPI) for Piyasvasti? Given Ampon's reason on the day, it seems state enterprises' bosses now have to take it as a priority to forge efficient communications with the board of directors - mostly constituting of political appointees, rather than the performance.

It is true that state enterprises are set up to implement the government's policies. State-owned banks are designed to accommodate the government's grand economic policies. PTT's mission is to ensure energy security. Set up in 1959, THAI's objective is to safeguard domestic sky and compete against foreign players in the international skies.

Through the long history, THAI has welcomed 15 presidents. As witnessed, some presidents who answered only to the board not the overall benefits of the airline had led the carrier to the abyss. At one point, without the government's loan guarantee, THAI could not seek financing for its own aircrafts.

Given the long history of such inefficiency, is Ampon serious in putting "communications with the board" before the airline's performance? Without clear KPI on how to evaluate the communications efficiency, it seems he is setting a precedent cause for the THAI board in the future as well as the boards of other state enterprises on how to sack capable chiefs.

Lack of explanation led to the third question involving the appropriateness of the board's decision to sack Piyasvasti and pay him the compensation.

As it seems Piyasvasti displeased only the board of directors, not other stakeholders who range from employees, stock investors and the general public through the 2 years and 7 months in office, why THAI - which also belongs to other stakeholders - have to shoulder the extra cost?

The amount is tiny, compared to the Bt6 billion earning target this year. But if a tiny pay can be made without a good reason, who can guarantee that it would not lead to something bigger? In time, this will ruin THAI's image. History showed that as THAI leaders were irresponsible for stakeholders' interests, it was not only them that were punished. When THAI showed losses, other stakeholders including taxpayers suffered.

As Piyasvasti is leaving, the first sign of old bad things at THAI emerged. Agreeing to benefits cuts to assist Piyasvasti's goal in turning around the airline, the labour union is now pressuring for the return of all benefits. It is not difficult to imagine that without a frugal boss like Piyasvasti, soon we have heard about lavish meals served during the board's meetings. More are to come when corporate governance is breached.

-- The Nation 2012-05-25

[waza]

The corruption is spreading. The truth is he isnt red or PTP and he has created a profit that need plundering.

[geriatrickid]

The President and Chairman of a company answer to the Board of Directors. It is called corporate governance. Senior executives get sacked on a regular basis. There are times when the the executive refuses to follow the guidance of the board. In such cases, the executive gets sacked. The board is privy to inside information in respect to the conduct and behaviour of an executive and often the information is not made public for some very good reasons. An example of this can be conflict of interest allegations.

And before anyone starts finger pointing at political interference, keep in mind that the dispute is allegedly the result of the executive not accepting that the government of Thailand has some say in the purchase of a multibillion baht equipment order. Keep in mind that it is the Thai government that guarantees the financial stability of Thai Airways and it is the Thai government that provides the indirect subsidies and that provides the preferred treatment of Thai Airays operations.

Also keep in mind that the board of directors is comprised of several people closely associated with the heavy hitters in the Democrat party and several of whom served under both the previous Democrat administration and the previous military junta. It is easy to point a finger at the current government, but the board of directors are hardly PTP loyalists. For example, is anyone really going to make the case that Dheerasak Suwannayos the MD and President of Thailand's Islamic Bank is a backer of the PTP, particularly when the muslim population of the South are strong supporters of the Democrats? How about Apiporn Pasawat? He is employed by entities that come under the Royal Household investments. I suggest that people consult the biographies of the BOD. These are not incompetents and are drawn from Thailand's business elite. Some of the BOD are well versed in corporate governance and understand concepts such as conflicts of interest.

Edited May 25, 2012 by geriatrickid

[geriatrickid]

The corruption is spreading. The truth is he isnt red or PTP and he has created a profit that need plundering.

You are good at making false accusations. When you have some factual knowledge come back and offer your definitive statement.

[Thai at Heart]

"communications with the board" before the airline's performance?

Obviously this actually means he wasn't listening to what the Board wanted him to do.

Apparently, the purchase of a total amount of planes had been approved, half of which were to be purchased before 2018, and the issue was whether the remaining planes after 2018 needed approval. Well, they had either been approved or not.

http://www.thaiairwa...utions-2012.htm

THAI Board Resolutions 2012

ท Decommissioning of 51 aircraft and leasing aircraft to Nok Air

ท Delivery of 56 new aircraft from 2012-2018, previously approved for 26 aircraft on purchase and 30 aircraft on operating lease

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April 2011. The new aircraft would replace the decommissioned aircraft as well as support the Company's expanded flight frequency. Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. By the end of 2017, THAI will have a more efficient aircraft fleet, reduced fuel and maintenance costs, and reduced carbon emissions.

Seems it was approved by the Board already, so what is the issue? Aha, different cabinet, different decision.

O a lighter note, also hiding in the report is this chestnut.

On the products and services improvement in 2012 THAI will retrofit 16 aircraft in the current fleet that highlight Thainess.

Edited May 25, 2012 by Thai at Heart

[geriatrickid]

"communications with the board" before the airline's performance?

Obviously this actually means he wasn't listening to what the Board wanted him to do.

Apparently, the purchase of a total amount of planes had been approved, half of which were to be purchased before 2018, and the issue was whether the remaining planes after 2018 needed approval. Well, they had either been approved or not.

http://www.thaiairwa...utions-2012.htm

THAI Board Resolutions 2012

ท Decommissioning of 51 aircraft and leasing aircraft to Nok Air

ท Delivery of 56 new aircraft from 2012-2018, previously approved for 26 aircraft on purchase and 30 aircraft on operating lease

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April 2011. The new aircraft would replace the decommissioned aircraft as well as support the Company's expanded flight frequency. Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. By the end of 2017, THAI will have a more efficient aircraft fleet, reduced fuel and maintenance costs, and reduced carbon emissions.

Seems it was approved by the Board already, so what is the issue? Aha, different cabinet, different decision.

O a lighter note, also hiding in the report is this chestnut.

On the products and services improvement in 2012 THAI will retrofit 16 aircraft in the current fleet that highlight Thainess.

Where do you see that the purchases were approved? The key statement is Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. In consideration of the expected downturn in the economy, including the possible ripple effects upon Russia should the Euro crisis grow, many airlines are reconsidering or delaying purchases.

Edited May 25, 2012 by geriatrickid

[Thai at Heart]

Where do you see that the purchases were approved? The key statement is Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. In consideration of the expected downturn in the economy, including the possible ripple effects upon Russia should the Euro crisis grow, many airlines are reconsidering or delaying purchases.

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April

I couldn't really care less that they have fired him, but as I read it he was under the impression that since the plan for purchases from 2018-2024 had already been approved by Cabinet subject to approval for financing type by the Board, and the such, and from reading the other paper, the issue was that this "long" term commitment to purchases from 2018 to 2024 was going to be subject to review by "this" cabinet. I would presume that planned purchases for delivery in 2018 were starting to need to be discussed, and despite the cabinet approval last year, the Board of Thai, despite having supported the plan in 2011, now for some odd reason have backed out. That is their perogative, but nonetheless a little disappointing if you are CEO.

Its ok, I am not defending either of the actions by either side. Of course, long term planning out to 2024 should be open to review, however, this is Thailand, and if you have got it in writing that a long term plan for purchases has been approved and then it is apparently not, many CEO's would choose to fall on their sword, or in a Thai way, get fired because they get compensated.

[unanimosity]

Where do you see that the purchases were approved? The key statement is Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. In consideration of the expected downturn in the economy, including the possible ripple effects upon Russia should the Euro crisis grow, many airlines are reconsidering or delaying purchases.

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April

I couldn't really care less that they have fired him, but as I read it he was under the impression that since the plan for purchases from 2018-2024 had already been approved by Cabinet subject to approval for financing type by the Board, and the such, and from reading the other paper, the issue was that this "long" term commitment to purchases from 2018 to 2024 was going to be subject to review by "this" cabinet. I would presume that planned purchases for delivery in 2018 were starting to need to be discussed, and despite the cabinet approval last year, the Board of Thai, despite having supported the plan in 2011, now for some odd reason have backed out. That is their perogative, but nonetheless a little disappointing if you are CEO.

Its ok, I am not defending either of the actions by either side. Of course, long term planning out to 2024 should be open to review, however, this is Thailand, and if you have got it in writing that a long term plan for purchases has been approved and then it is apparently not, many CEO's would choose to fall on their sword, or in a Thai way, get fired because they get compensated.

Approved? Contracts? These are mere pauses in the negotiation.

[Thai at Heart]

Where do you see that the purchases were approved? The key statement is Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. In consideration of the expected downturn in the economy, including the possible ripple effects upon Russia should the Euro crisis grow, many airlines are reconsidering or delaying purchases.

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April

I couldn't really care less that they have fired him, but as I read it he was under the impression that since the plan for purchases from 2018-2024 had already been approved by Cabinet subject to approval for financing type by the Board, and the such, and from reading the other paper, the issue was that this "long" term commitment to purchases from 2018 to 2024 was going to be subject to review by "this" cabinet. I would presume that planned purchases for delivery in 2018 were starting to need to be discussed, and despite the cabinet approval last year, the Board of Thai, despite having supported the plan in 2011, now for some odd reason have backed out. That is their perogative, but nonetheless a little disappointing if you are CEO.

Its ok, I am not defending either of the actions by either side. Of course, long term planning out to 2024 should be open to review, however, this is Thailand, and if you have got it in writing that a long term plan for purchases has been approved and then it is apparently not, many CEO's would choose to fall on their sword, or in a Thai way, get fired because they get compensated.

Approved? Contracts? These are mere pauses in the negotiation.

Well, it all starts in Thais situation getting the cabinet to approve the plan which one would presume would be prepared by the Board only 13 months ago.

Good to see that they did put together a long term plan up to 2024. Problem is going on the average, that would be enough time for Thailand to have 2 coups. The reality is that there is absolutely no money in it in the long run and the investment needed and possible losses are enormous. You make some, you lose some and you need enormous capex. Keeping any airline profitable for any long term plan is extremely difficult. Most governments worked that out ages ago and got rid of their stakes in national airlines.

The best thing that could ever happen is that is privatised, supposing that the aim is that it aims to be a world class airline that isn't a drag on the taxpayer, but then we saw where selling a supposedly "national asset" such as a satellite got someone.

[geriatrickid]

I couldn't really care less that they have fired him, but as I read it he was under the impression that since the plan for purchases from 2018-2024 had already been approved by Cabinet subject to approval for financing type by the Board, and the such, and from reading the other paper, the issue was that this "long" term commitment to purchases from 2018 to 2024 was going to be subject to review by "this" cabinet. I would presume that planned purchases for delivery in 2018 were starting to need to be discussed, and despite the cabinet approval last year, the Board of Thai, despite having supported the plan in 2011, now for some odd reason have backed out. That is their perogative, but nonetheless a little disappointing if you are CEO.

Its ok, I am not defending either of the actions by either side. Of course, long term planning out to 2024 should be open to review, however, this is Thailand, and if you have got it in writing that a long term plan for purchases has been approved and then it is apparently not, many CEO's would choose to fall on their sword, or in a Thai way, get fired because they get compensated.

I left out part of my response and I apologize as it left an overly critical impression. You are right, the President would have been peeved to see his plans gutted at the board level and I wouldn't be surprised if he told the board off. The gentleman was no pushover. Even though my earlier post may read that I support his termination, I do not, as I thought he was making an effort. Unfortunately, he carried alot of baggage that dragged him down.

[unanimosity]

Where do you see that the purchases were approved? The key statement is Details of the aircraft type and procurement methods will be proposed to the THAI Board of Directors for approval. In consideration of the expected downturn in the economy, including the possible ripple effects upon Russia should the Euro crisis grow, many airlines are reconsidering or delaying purchases.

Furthermore, THAI will continue to pursue the acquisition of 38 New Generation aircraft according to the 2018-2024 plan that was approved by the Cabinet on 20 April

Well, it all starts in Thais situation getting the cabinet to approve the plan which one would presume would be prepared by the Board only 13 months ago.

Good to see that they did put together a long term plan up to 2024. Problem is going on the average, that would be enough time for Thailand to have 2 coups. The reality is that there is absolutely no money in it in the long run and the investment needed and possible losses are enormous. You make some, you lose some and you need enormous capex. Keeping any airline profitable for any long term plan is extremely difficult. Most governments worked that out ages ago and got rid of their stakes in national airlines.

The best thing that could ever happen is that is privatised, supposing that the aim is that it aims to be a world class airline that isn't a drag on the taxpayer, but then we saw where selling a supposedly "national asset" such as a satellite got someone.

2024 is a long time off. Do you suppose one day you'll see a 767 seized at Sea Tac Airport on behalf of Boeing over nonpayment? Of course, if it is at Sea Tac it might be on behalf of Microsoft over nonpayment for all the operating systems in use.

Do you think it's possible that keeping it state owned might simplify the comings and goings of people and dead weight that would not look so good in the light of day?

Do you think it is possible that people may be making money off it losing money, as budgetary losses don't seem to require the same scrutiny and accountability as revenue distribution?

[Tep]

And before anyone starts finger pointing at political interference, keep in mind that the dispute is allegedly the result of the executive not accepting that the government of Thailand has some say in the purchase of a multibillion baht equipment order. Keep in mind that it is the Thai government that guarantees the financial stability of Thai Airways and it is the Thai government that provides the indirect subsidies and that provides the preferred treatment of Thai Airays operations.

The Thai government does not provide guarantees for commercialised state enterprises and certainly not for listed state companies. From memory and unless the law has changed, the budget procedures act only requires government guarantees for enterprises where the government holds 75% of shares or more. The last guarantee that I can remember was for a World Bank loan to EGAT in the late 90's. The Ministry of Finance does offer a guarantee for state enterprise borrowing for a fee now but I don't know how many have taken up this facility. Further, there are no subsidies direct or indirect provided by the government to THAI. As a publicly llisted company it it required to disclose its finances and this would include subsidies under GAAP reporting standards. It was the case many years ago that THAI was asked to maintain non commercial routes but this was addressed starting in the early 2000's under then President Bhisit with the allocation of such routes to feeder airlines. In terms of government approval for state enterprise borrowing, it is only required in the case of foreign borrowing. Boards have the authority to borrow domestically. However, in practice, with many large and sensitive state enterprises, requests for borrowing are submitted to Cabinet for ackknowledgement, if not consideration. Dr. Piyavasti has extensive experience with this. I can't speculate on his reasons for this particular situation.

[Thai at Heart]

I couldn't really care less that they have fired him, but as I read it he was under the impression that since the plan for purchases from 2018-2024 had already been approved by Cabinet subject to approval for financing type by the Board, and the such, and from reading the other paper, the issue was that this "long" term commitment to purchases from 2018 to 2024 was going to be subject to review by "this" cabinet. I would presume that planned purchases for delivery in 2018 were starting to need to be discussed, and despite the cabinet approval last year, the Board of Thai, despite having supported the plan in 2011, now for some odd reason have backed out. That is their perogative, but nonetheless a little disappointing if you are CEO.

Its ok, I am not defending either of the actions by either side. Of course, long term planning out to 2024 should be open to review, however, this is Thailand, and if you have got it in writing that a long term plan for purchases has been approved and then it is apparently not, many CEO's would choose to fall on their sword, or in a Thai way, get fired because they get compensated.

I left out part of my response and I apologize as it left an overly critical impression. You are right, the President would have been peeved to see his plans gutted at the board level and I wouldn't be surprised if he told the board off. The gentleman was no pushover. Even though my earlier post may read that I support his termination, I do not, as I thought he was making an effort. Unfortunately, he carried alot of baggage that dragged him down.

Well, I think the issue shows that running a supposedly "commercial" enterprise like Thai Airways with such a chequered history of political appointees to the board, (Air Vice Marshalls, as though being in the airforce qualifies you to oversee an airline), and the ever changing face of politics means that you probably can't plan further than a few years ahead for anything. This hampers Thai massively, and I don't realistically think that most of the blame for the situation that Thai is in today sits with the successive governments and dead weight board members and politically influenced decision making above CEO level.

As people have written elsewhere, he seemed on paper to be a very capable bloke, and things may have been about to turn at Thai, maybe not, but all anyone can hope is they find an equally or better qualified guy, but if the boss of the company's priorities is to keep the politicians happy instead of making the best decisions for the company, then it will never get any better. I fear that a lot of people saw the large amount of money Thai was about to invest and are waiting for some brown envelopes to smooth the decision making process. Lets see.

[thaihome]

..... Most governments worked that out ages ago and got rid of their stakes in national airlines.

Actually there are few countries in the world that don't have stakes in one or more airlines.

Amazing list..

http://www.icao.int/sustainability/Documents/PrivatizedAirlines.pdf

[Thai at Heart]

..... Most governments worked that out ages ago and got rid of their stakes in national airlines.

Actually there are few countries in the world that don't have stakes in one or more airlines.

Amazing list..

http://www.icao.int/...zedAirlines.pdf

Maybe, I should have phrased it a little differently. Most sensible governments......

[animatic]

The corruption is spreading. The truth is he isnt red or PTP and he has created a profit that need plundering.

Piyasvasti's wife is a party list Democrat.

Enough reason alone to remove his snout from the trough,

and slide in TWO Thaksin alies onto the board the next day.

Transparently political, no matter what window dressing they say.

Shinawatra Clan Power Grab on yet another day.

Edited May 25, 2012 by animatic

[h90]

The President and Chairman of a company answer to the Board of Directors. It is called corporate governance. Senior executives get sacked on a regular basis. There are times when the the executive refuses to follow the guidance of the board. In such cases, the executive gets sacked. The board is privy to inside information in respect to the conduct and behaviour of an executive and often the information is not made public for some very good reasons. An example of this can be conflict of interest allegations.

And before anyone starts finger pointing at political interference, keep in mind that the dispute is allegedly the result of the executive not accepting that the government of Thailand has some say in the purchase of a multibillion baht equipment order. Keep in mind that it is the Thai government that guarantees the financial stability of Thai Airways and it is the Thai government that provides the indirect subsidies and that provides the preferred treatment of Thai Airays operations.

Also keep in mind that the board of directors is comprised of several people closely associated with the heavy hitters in the Democrat party and several of whom served under both the previous Democrat administration and the previous military junta. It is easy to point a finger at the current government, but the board of directors are hardly PTP loyalists. For example, is anyone really going to make the case that Dheerasak Suwannayos the MD and President of Thailand's Islamic Bank is a backer of the PTP, particularly when the muslim population of the South are strong supporters of the Democrats? How about Apiporn Pasawat? He is employed by entities that come under the Royal Household investments. I suggest that people consult the biographies of the BOD. These are not incompetents and are drawn from Thailand's business elite. Some of the BOD are well versed in corporate governance and understand concepts such as conflicts of interest.

"The President and Chairman of a company answer to the Board of Directors"

"the government of Thailand has some say in the purchase of a multibillion baht equipment order."

a bit contradicting??

[waza]

The corruption is spreading. The truth is he isnt red or PTP and he has created a profit that need plundering.

You are good at making false accusations. When you have some factual knowledge come back and offer your definitive statement.

Yer I see your opinion is chock full of facts and referenced quotes, I could quiet easily pick it apart but that would be stroking my ego. like me its just an opinion and has the same varacity but I respect it as your opinion. Please try to accept that other have a right to express themselve even if you dont agree with what they say. PS; your making accusations it up to you to prove I am wrong, come back when you have the facts.

Edited May 25, 2012 by waza

[tinfoilhat]

the nation should stop using google translate

[koosdeboer]

The President and Chairman of a company answer to the Board of Directors. It is called corporate governance. Senior executives get sacked on a regular basis. There are times when the the executive refuses to follow the guidance of the board. In such cases, the executive gets sacked. The board is privy to inside information in respect to the conduct and behaviour of an executive and often the information is not made public for some very good reasons. An example of this can be conflict of interest allegations.

And before anyone starts finger pointing at political interference, keep in mind that the dispute is allegedly the result of the executive not accepting that the government of Thailand has some say in the purchase of a multibillion baht equipment order. Keep in mind that it is the Thai government that guarantees the financial stability of Thai Airways and it is the Thai government that provides the indirect subsidies and that provides the preferred treatment of Thai Airays operations.

6

Also keep in mind that the board of directors is comprised of several people closely associated with the heavy hitters in the Democrat party and several of whom served under both the previous Democrat administration and the previous military junta. It is easy to point a finger at the current government, but the board of directors are hardly PTP loyalists. For example, is anyone really going to make the case that Dheerasak Suwannayos the MD and President of Thailand's Islamic Bank is a backer of the PTP, particularly when the muslim population of the South are strong supporters of the Democrats? How about Apiporn Pasawat? He is employed by entities that come under the Royal Household investments. I suggest that people consult the biographies of the BOD. These are not incompetents and are drawn from Thailand's business elite. Some of the BOD are well versed in corporate governance and understand concepts such as conflicts of interest.

The great defender, boring.

[Heng]

Big deal, so there will another guy sitting in 1A.

:-)

[bigbamboo]

Ducking the press when you haven't got an answer must be part of the Thainess we hear so much about.... and it appears to be catching!

[TheCure]

Big deal, so there will another guy sitting in 1A.

:-)

Yep, me

[geriatrickid]

And before anyone starts finger pointing at political interference, keep in mind that the dispute is allegedly the result of the executive not accepting that the government of Thailand has some say in the purchase of a multibillion baht equipment order. Keep in mind that it is the Thai government that guarantees the financial stability of Thai Airways and it is the Thai government that provides the indirect subsidies and that provides the preferred treatment of Thai Airays operations.

The Thai government does not provide guarantees for commercialised state enterprises and certainly not for listed state companies. From memory and unless the law has changed, the budget procedures act only requires government guarantees for enterprises where the government holds 75% of shares or more. The last guarantee that I can remember was for a World Bank loan to EGAT in the late 90's. The Ministry of Finance does offer a guarantee for state enterprise borrowing for a fee now but I don't know how many have taken up this facility. Further, there are no subsidies direct or indirect provided by the government to THAI. As a publicly llisted company it it required to disclose its finances and this would include subsidies under GAAP reporting standards. It was the case many years ago that THAI was asked to maintain non commercial routes but this was addressed starting in the early 2000's under then President Bhisit with the allocation of such routes to feeder airlines. In terms of government approval for state enterprise borrowing, it is only required in the case of foreign borrowing. Boards have the authority to borrow domestically. However, in practice, with many large and sensitive state enterprises, requests for borrowing are submitted to Cabinet for ackknowledgement, if not consideration. Dr. Piyavasti has extensive experience with this. I can't speculate on his reasons for this particular situation.

With all due respect, I disagree in respect to the issue of support and subsidies. Please go to the Ministry of Transport website. Thai Airways is listed as a State Enterprise. When an entity is classified as such, it benefits from its association with the national government.

You are correct when it comes to direct subsidies, but national airlines receive indirect support and it is common in most countries. This is reflected in such aspects as;

1. Labour code and practices. Examples in Thailand are the approach to the Thai pilots and FAs and discriminatory hiring practices. Look at the age and gender bias shown for FA hiring. In Canada when AC had labour unrest, the government forced the workers to go back and ruled the strike illegal. BA has received similar support in the past. Thailand's government would not intervene in a Thai Air Asia labour dispute, but it would with a TG labour dispute.

2. Landing slot allocation and transfer bureaucracy. Would you disagree that TG receives preferential treatment? Look at the behaviour on the DM to BKK operational transfer. Look at arrival times for TG's competitors. it is very difficult to compete with TG when you can't get the right arrival times to allow for connections. look at how easy it is to transfer from a TG international or alliance partner to TG domestic flight at BKK. Now try and do the same with non TG flights.

3. Government Travel Policy: The Thai government travel policy has always been skewed in favour of the selection of TG over competitors.

4. Indirect Financial Support: The approval of start up and the operation of LCCs has favoured TG. The government subsidizes the upkeep and infrastructure at airports. The decision on which airports to prioritize is influenced by TG traffic. The most extreme example in the west is the subsidies the USA gives to various airports that indirectly support the operation of some carriers. Look at the investment in the terminals at HKT. The terminal that primarily services TG flights received priority over the LCC terminal.

Thai had a virtual monopoly on catering. This was one of the big moneymakers for TG. Bangkok Air Catering made a breakthrough in 2007 and has received strong support from its clients since then, but it has been a tough fight. If it had not been for this company, TG's catering quality would have continued to move toward the fish purees and fried glop.

Yes, TG is subject to specific rules and regulations as a public company when it comes to borrowing. However, I think one would have to be naive to think that Boeing and Airbus do not take into account that the ultimate backer of TG is the Thai government since TG is a State Enterprise. There is no way that Thailand would allow TG to fail. It is not written anywhere, but there are enough hints and nudges given to make that clear. TG benefits from the same tacit support that Qatar and Emirates receive from their respective national governments although TG doesn't get quite the same break on jet fuel taxes.

Yes, you are correct that on the surface TG doesn't receive direct subsidies, but as per the above, the government of Thailand favours TG over other airlines.

[geriatrickid]

The great defender, boring.

Was the reality of corporate board governance too difficult of a subject for you to understand?

[somtumlion]

SSDD - Nothing new hear - power people playing power games.

[Tep]

Yes, you are correct that on the surface TG doesn't receive direct subsidies, but as per the above, the government of Thailand favours TG over other airlines.

You originally linked the idea of the Government's backing of THAI to your argument that this entitled them to dismiss the CEO at will. You justify this as an element of corporate governance. I am not sure if I agree with this. Certainly the government, as 'owner' of the majority interest in THAI can exercise its interest in Board appointments according to due process at AGM's etc. I wonder at investor reaction to cases where large shareholders are able to dismiss CEOs and the impact of this on corporate development. I any case, my issue with your statements is about subsidies and support from the government. I think these issues are certainly relevant to corporate governance whether or not I believe they are relevant to the termination of Dr. Piyasvasti's employment.

You make the point about labour practices. I don't have the knowledge to argue with you about international practices. What I can say is that any labour dispute involving a state enterprise in Thailand, including THAI would be governed by the state enterprise labour relations law. This law would guide the way in which any government agency would engage on the issues. I suspect you are correct that the same situation would not arise with another Thai private airline but I don't see this as subsidisation or even implicit support as the guiding laws and regulations are public.

I also don't disagree with you about the benefits to THAI from slot allocation. However, is this not determined by AOT, another listed state company? I am not sure if such issues are submitted to the Civil Aviation Board as regulator but they would be guided I think by AOT. As AOT PLC, they now have to treat all customers (airlines) on a level playing field. I think that the complexity of the relationship between THAI, AOT, CAB etc make it difficult to state categorically that the government directly supports THAI through favourable slot allocation etc.

You are correct about government travel policy. All government officials are required to fly THAI unless other carriers can be shown to be cheaper. THAI has a government relations office to make bookings. The government fares used to be cheaper but that changed long ago I think. I don't know the numbers but given THAI's load factor is generally around 70 - 80% in economy is primarily comprised of international tourists, I don't think government employee travel has a huge impact on the bottom line. I may be wrong. The policy is outdated but is unlikely to change. Many government officials are more comfortable flying THAI for a number of reasons.

For your argument on investment - as this relates to airports, investment is undertaken by AOT for the national and 4 regional airports and through the Department of Civil Aviation for the provincial airports (many of which THAI longer flies to) and I think my earlier comment applies here. I remember working on the 4 concessions for Suvannabhumi Airport (catering, fuel etc) when the procurement for this was done in the early 2000's and THAI was awarded a number of these concessions by government policy with the rest being bid to private contractors, so you are correct in this regard. However, I would not see that as a subsidy. Policy directed intervention yes.

There are many other examples that can be given. However I think that good corporate governance means that there should not be such things as implicit guarantees or nudges and winks. Investors can really price these things very well and THAI needs the capital markets as do the other state enterprises. Different governments may have different views on the notion of support and its quid pro quo however I do believe that intervention at management levels of listed state companies is not a positive development. Not that any government intervention has been proved in this case. The political economy is very real in Thailand, as it is in other countries but many people including Dr. Piyavasti, Dr Areepong (the man who appointed him) and Mr. Amporn (the man who fired him) have worked hard to increase transparency and accountability with varying degrees of success.

[Skywalker69]

The corruption is spreading. The truth is he isnt red or PTP and he has created a profit that need plundering.

You nailed it waza.