Thai Airways To Put Off New Plane Purchases Due To Its Poor Financial Performance

[webfact]

Thai to put off new plane purchases

Bamrung Amnatcharoenrit

The Nation

BANGKOK: -- National carrier Thai Airways International Plc (THAI) will delay the purchase of 47 new aircraft due to its poor financial performance this year.

The purchase plan itself will still be submitted to the Cabinet for approval this month. Of the total, 38 aircraft will be bought for THAI and nine for low-cost subsidiary carrier THAI Smile. Under the revamped plan, the size and number of the new aircraft will depend on the destinations they are to serve.

The firm is shifting its focus to regional destinations in preparation for the opening of the Asean Economic Community (AEC). These routes will be covered by THAI Smile.

Chokchai Panyayong, THAI's acting president, said the purchase review was part of business strategy and investment plan flexibility to minimise losses this year.

He said that this year the firm would miss its sales-growth projection of 3 per cent to Bt200 billion.

In a recent interview, he also acknowledged that the firm would be even less likely to meet its net-profit target of Bt6 billion this year.

Local media reported last week that THAI would suffer a loss of Bt2 billion during the off-season period, which covers the second and third quarters of the year.

For the remainder of this year, he said the strategy would be more flexible to meet with the changing business environment. In particular, launches of new destinations would be studied in detail. Competition from both low-cost and full-service airlines and the number of potential passengers would also be discussed.

Chokchai has refused to drop the plan to launch a new low-cost airline. The firm is still studying the feasibility of a launch in 2013 by forming a joint venture with Nok Air, a low-cost airline in which THAI holds a 49-per-cent stake.

For THAI Smile, which marked its first flight on July 7, he said the sub-brand of THAI had received a good response from the market so far and claimed it had a cabin factor (percentage of seats sold) of 80-90 per cent.

-- The Nation 2012-07-30

[Thai at Heart]

Oh dear. Wasn't Thai Smile just canned????

Chaos reigns

[geriatrickid]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

[jalansanitwong]

Some middle east carriers have farang management with a proven track record and those airlines are doing well. This will never happen at THAI. Thai will always be run by sycophants who bow to their masters. Hundreds of Thais ncluding ex THAI execs and their families are eligible for free 1st and business class tickets.

I wouldnt be surprised if the top military brass and families travel free to Europe regularly and what about Thaksins family ?

[Sayonarax]

Aww and i wanted to fly on the A380.

[chainarong]

Regardless of the companies direction, old planes mean problems, Qantas has a similar problem, 737/400 & 767s and not making money on various international sectors, it's not easy to balance an airline company ,at any given moment you can be the best in the business and then the worst , very quickly, I always check to see what latest line of aircraft the carriers have got, so far, on International routes, for some time I've used Thai Int, that may change in the future.

Edited July 30, 2012 by chainarong

[saltandpepper]

Aww and i wanted to fly on the A380.

Singapore Airlines, Emirates can make your wish come true. For Thai, it's gonna be a long long time before you can step foot in one. Guess that there will be an extensive refurbishment of some older aircrafts..

[thaicbr]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

There can be lots of doubt when you do not have ALL the info to hand. Airlines buy new planes to save fuel and increase their presense in the arena. It is well known that TA planes are old and in need of replacing. TA's main problem is to many bosses and political intervention. They are dieing because they can't compete.

Good example of dumb bosses. Starting a new low cost airline in partnership with ..... a low cost airline that you own nearly half of. Clever

Also this is about the 3rd or 4th time the purchases have been canceled/ postponed with a large fee paid each time. Yes. Excellent business.

sent from my Wellcom A90+

Edited July 30, 2012 by thaicbr

[BirdsandBooze]

Some middle east carriers have farang management with a proven track record and those airlines are doing well. This will never happen at THAI. Thai will always be run by sycophants who bow to their masters. Hundreds of Thais ncluding ex THAI execs and their families are eligible for free 1st and business class tickets.

I wouldnt be surprised if the top military brass and families travel free to Europe regularly and what about Thaksins family ?

Back in England I have a Thai friend who lives with her mother in London. Her sister works for Thai Airways, entitling my friend and her mother to 6 free flights each per year. That's a very expensive perk offered by the company.

[cooked]

Some middle east carriers have farang management with a proven track record and those airlines are doing well. This will never happen at THAI. Thai will always be run by sycophants who bow to their masters. Hundreds of Thais ncluding ex THAI execs and their families are eligible for free 1st and business class tickets.

I wouldnt be surprised if the top military brass and families travel free to Europe regularly and what about Thaksins family ?

AND 'certain people' treating Thai Airways as their personal, free taxi service.

[tartempion]

Aww and i wanted to fly on the A380.

This has nothing to do with the 6 A380's ordered, #1 to be delivered this August, two more this year and the 3 remaining next year.

They will fly daily to Frankfurt as of December and London somewhere next year

[thaicbr]

Aww and i wanted to fly on the A380.

This has nothing to do with the 6 A380's ordered, #1 to be delivered this August, two more this year and the 3 remaining next year.

They will fly daily to Frankfurt as of December and London somewhere next year

Are you sure?

sent from my Wellcom A90+

[SuneeTH]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

[geriatrickid]

Some middle east carriers have farang management with a proven track record and those airlines are doing well. This will never happen at THAI. Thai will always be run by sycophants who bow to their masters. Hundreds of Thais ncluding ex THAI execs and their families are eligible for free 1st and business class tickets.

I wouldnt be surprised if the top military brass and families travel free to Europe regularly and what about Thaksins family ?

Back in England I have a Thai friend who lives with her mother in London. Her sister works for Thai Airways, entitling my friend and her mother to 6 free flights each per year. That's a very expensive perk offered by the company.

Thai Airways is a state owned facility. Thai government salaries are considerably less than the private sector. One way of compensating executives is to provide them with access to seats. Believe it or not, rhe seats are capacity controlled.

In respect to Thai employees having access to "free" flights, again this is in lieu of compensation. Thai pays its personnel in foreign markets less than its competitors. BTW, the tickets are not free. Personnel have to pay the taxes due on any ticket.

For comparison purposes; Air Canada's Travel Policy provides all employees with unlimited space available travel on Air Canada and Jazz flights throughout the network. In addition, employees are granted access and preferential rates on other carriers.

British Airways is just as generous; All BA employees, whether ground staff, cabin crew or pilots, are eligible for non-contractual travel perks, which take effect six months after joining the company. Staff, and their family, or a close friend, qualify for heavily discounted air fares. For example, they can get economy tickets at 10% of the fare (subject to standby). After five years of working for BA, employees get one allocation of free standby tickets each year. Depending upon seniority, the tickets can be upgraded.

How about a deep discount airline, like Easyjet? From their first day, staff can log onto a special website to receive discounted fares to Easyjet's network across 29 countries. On average, an Easyjet employee pays £25-30 per ticket each way. The unlimited travel is extended to workers' dependents and up to three "nominated companions". The tickets are not standby and staff can book flights up to three-months in advance.

[geriatrickid]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

Unfortunately, the losses incurred are public knowledge as TG is traded on the SET. Khun Abhisit got it wrong, but then he was never known for his management capabilities.

[SuneeTH]

Some middle east carriers have farang management with a proven track record and those airlines are doing well. This will never happen at THAI. Thai will always be run by sycophants who bow to their masters. Hundreds of Thais ncluding ex THAI execs and their families are eligible for free 1st and business class tickets.

I wouldnt be surprised if the top military brass and families travel free to Europe regularly and what about Thaksins family ?

Back in England I have a Thai friend who lives with her mother in London. Her sister works for Thai Airways, entitling my friend and her mother to 6 free flights each per year. That's a very expensive perk offered by the company.

Thai Airways is a state owned facility. Thai government salaries are considerably less than the private sector. One way of compensating executives is to provide them with access to seats. Believe it or not, rhe seats are capacity controlled.

In respect to Thai employees having access to "free" flights, again this is in lieu of compensation. Thai pays its personnel in foreign markets less than its competitors. BTW, the tickets are not free. Personnel have to pay the taxes due on any ticket.

For comparison purposes; Air Canada's Travel Policy provides all employees with unlimited space available travel on Air Canada and Jazz flights throughout the network. In addition, employees are granted access and preferential rates on other carriers.

British Airways is just as generous; All BA employees, whether ground staff, cabin crew or pilots, are eligible for non-contractual travel perks, which take effect six months after joining the company. Staff, and their family, or a close friend, qualify for heavily discounted air fares. For example, they can get economy tickets at 10% of the fare (subject to standby). After five years of working for BA, employees get one allocation of free standby tickets each year. Depending upon seniority, the tickets can be upgraded.

How about a deep discount airline, like Easyjet? From their first day, staff can log onto a special website to receive discounted fares to Easyjet's network across 29 countries. On average, an Easyjet employee pays £25-30 per ticket each way. The unlimited travel is extended to workers' dependents and up to three "nominated companions". The tickets are not standby and staff can book flights up to three-months in advance.

BA, AC & EJ are all farang PRIVATE airlines that can (or must under US/EURO law perhaps). But TG is different. TG is an airline of a poor 3rd world Asian nation. Must of TG funding comes from tax payers. TG staffs should not rob the tax-payer. And please don't argue that TG is a listed company. Please refer to the shareholder list first.

http://www.set.or.th/set/companyholder.do?symbol=THAI&language=en&country=US

[slapout]

There is a lot of difference between standby for family/friends and seat assignment for business class or any other class.Weight exclusions are granted by Thai to the HI SO as well as bag count. In the past decade, the number of Thais who are using the perks allowed due to retirement, political position, etc does seemed to have increased.

Thai notes their seat occupied percentage as being high each year. How many of that group are comp or travelling free?

[Ricardo]

Oh dear. Wasn't Thai Smile just canned????

Chaos reigns

That was their other new start-up low-cost carrier, the one they can't find a partner to pay for, not Thai Smile or Nok Air, I guess if something doesn't work as-planned then they try doing it again and again !

And indeed Chokchai is quoted in the OP as refusing to be willing to drop the plan for LCC#3.

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

Perhaps DL doesn't want any competition for Thai Air Asia, just at the moment, not that he still owns part of it or anything ?

Or perhaps PTP have already spent/allocated all the money, and don't want to subsidise Thai Airways, as they continue to struggle to survive ?

But anyway, it would be easy enough to lease all the new planes, and avoid taking on new debt, as I believe they were doing with Thai Smile's A320s, rather than have to actually purchase part of the sorely-required new fleet.

One hopes this decision won't upset any commission-arrangements, regarding contracts already-signed, and underway ? Or will new arrangements now need to be negotiated ? Loads-a-Money !

[saltandpepper]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

Unfortunately, the losses incurred are public knowledge as TG is traded on the SET. Khun Abhisit got it wrong, but then he was never known for his management capabilities.

As opposed to the new PM who is a "virtuoso" in management, and will revive the Thai economy (including Thai Airways') in no time!

[SuneeTH]

Oh dear. Wasn't Thai Smile just canned????

Chaos reigns

That was their other new start-up low-cost carrier, the one they can't find a partner to pay for, not Thai Smile or Nok Air, I guess if something doesn't work as-planned then they try doing it again and again !

And indeed Chokchai is quoted in the OP as refusing to be willing to drop the plan for LCC#3.

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

Perhaps DL doesn't want any competition for Thai Air Asia, just at the moment, not that he still owns part of it or anything ?

Or perhaps PTP have already spent/allocated all the money, and don't want to subsidise Thai Airways, as they continue to struggle to survive ?

But anyway, it would be easy enough to lease all the new planes, and avoid taking on new debt, as I believe they were doing with Thai Smile's A320s, rather than have to actually purchase part of the sorely-required new fleet.

One hopes this decision won't upset any commission-arrangements, regarding contracts already-signed, and underway ? Or will new arrangements now need to be negotiated ? Loads-a-Money !

Both you and I know that Thai Air Asia was own by Thaksin.

[Familyonthemove]

Thai are just not competitive on price and with an old fleet they are not competitive on facilities either ..... sounds like the same downward spiral as Indian Airlines and other state carriers.

[edwinclapham]

Aww and i wanted to fly on the A380.

Singapore Airlines, Emirates can make your wish come true. For Thai, it's gonna be a long long time before you can step foot in one. Guess that there will be an extensive refurbishment of some older aircrafts..

Along with Malaysia commencing end of November 2012

[thaicbr]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

I think you have got the fact wrong.

Didn't mark said something that his blue eye boy had turn TG from a big looser to one of asian biggest money maker in the past 2 years, hence the sacking was unjust?

Unfortunately, the losses incurred are public knowledge as TG is traded on the SET. Khun Abhisit got it wrong, but then he was never known for his management capabilities.

Are you suggesting that TA was making profit before the guys appointment. Get real. The losses were due to restructuring which most airlines have to go through.

sent from my Wellcom A90+

[rreddin]

Aww and i wanted to fly on the A380.

Singapore Airlines, Emirates can make your wish come true. For Thai, it's gonna be a long long time before you can step foot in one. Guess that there will be an extensive refurbishment of some older aircrafts..

Unless Thai Airways Intl have cancelled the order and paid compensation to Airbus, they will be taking delivery of an A380 in the Autumn. This photograph, taken in June at the Airbus facility in Hamburg, shows the aircraft after it had been painted and the cabin fitted out. So, your dream might yet come true.

[animatic]

And the European Monetary Crisis is not effecting Thailand.

Right, and here's that bridge in Brooklyn you wanted,

you provide the toll booth.

[Ricardo]

Both you and I know that Thai Air Asia was own by Thaksin.

Yes, Tony F decided that it would make sense to have the Thai-PM of-the-day as major local-partner, in order to start-up his Thai subsidiary. Which says a lot about how Thai business works.

But then Shin Corp was sold to Temasek, so the question is now, was any part of the S-family's shareholding retained, under a nominee's name or whatever ? I don't know, but would not be surprised, if an on-going relationship were to be revealed.

[wkbglobal]

Even with older aircraft Thai could compete but they need to raise their game considerably and the supposedly "famous" service was below par. Having not flown with Thai for a long time I recently took their flight (Business) from London to Chengdu via Bangkok for convenience of transfer in Bangkok. I was quite looking forward to it but once again was disappointed. The lounge facilities at Heathrow were very poor. The customer service on the sector from London to Bangkok was very poor considering the price of the ticket (£1700 one way). I thought we may have been in luck for some full flat beds but unfortunately not yet installed. In-flight entertainment was better than previous. Run out of breakfast choice, take it or leave it - I wouldn't mind but the Business class was only half full. The flight to Chengdu was slightly better than the London one only because I found the older Business seat were much more comfortable. Not much had changed from when I made the decision to not use them previously and I felt I was more of an inconvenience to them than a paying guest. Maybe in another 5 years I will try it again, but for now my recent experiences with EVA and Etihad put them way ahead on customer service and pricing. Even my Thai girlfriend was disappointed when she flew with Thai again and previously she was very vocal in her support.

[ExpatJ]

The big problem for Thai is they are losing the battle for business class passengers where the biggest profits are to be made for any airline. Thai are losing because 1) their business class stewardesses are far, far older (55-60 years old ++) and less service orientated than their competitors on Singapore or Cathay or Air Asia who are younger, hotter and provide better, friendlier service (bear in mind that most bizz class passengers are middle aged men who of course prefer young and hot to old and grumpy airline crew). 2) old planes with poor inflight facilities.

[Katipo]

Can't blame an airline for recognizing that it cannot afford new equipment. It seems to me that the previous CEO was intent on the equipment purchase that would taken on so much debt that the airline would have collapsed, Can there be any doubt now that the airline did the right thing in sacking him?

While I see your point, one of Thai's biggest problems is it's aging fleet. Competing airlines offer customers offer newer more modern planes. We have a Catch 22 situation here.

[marstons]

Aww and i wanted to fly on the A380.

Emirates will have 90 when fleet is complete, they have quite a few coming through BKK already. But they do have foriegn management and take advise and act upon it accordingly. Where as Thai will just muddle on changing from one know nothing President to another.

A380 well worth the experience, you can actually prebook seat and get to turn left upon entering the plane in economy, way more quiter.