Thai Airways Targets Bt5 Bn Net Next Year

[webfact]

Thai Airways targets Bt5 bn net next year

BAMRUNG AMNATCHARONERIT

THE NATION

BANGKOK: -- Thai Airways International will move ahead with its core business strategy next year by looking for ways to earn more from all business units to achieve Bt5 billion in net profit.

This year, THAI will probably net about Bt3 billion, half of its previous expectation of Bt6 billion, hit by rising oil prices and a declining number of passengers.

Company president Sorajak Kasemsuvan said the national carrier's higher profit next year would come from both aviation and non-aviation operations such as ground and catering services, as well as cargo.

The company expects revenue to grow by 11-12 per cent to between Bt230 billion and Bt240 billion, from Bt202 billion this year, thanks partly to the acquisition of 17 new aircraft. The additional seats are expected to drive business growth, Sorajak said after a board meeting chaired by Ampon Kittiampon.

The board confirmed that THAI's three airline brands would each have a clear business position. Thai Airways offers premium service, while Thai Smile, which will fly throughout the region, provides more economical service.

Nok Air, held 49 per cent by THAI, is a low-cost carrier with ''quality service'', which covers part of the region. It is expected to be listed on the Stock Exchange of Thailand next year. However, THAI does not known exactly what its stake in Nok Air will be after its initial public offering.

Meanwhile, Thai Smile will be spun off as an independent company to work more effectively against the competition. Its flight frequencies, especially on routes in the two-to-three-hour range, will be increased. THAI's legal department is looking at details for the new company's establishment, and it expects to take one or two months to complete the process.

The three airlines will work on route arrangements together to secure the overall business, Sorajak said.

The cargo unit will also be in focus. Currently, it is in a loss-making position. This year's revenue is expected to be Bt24 billion to Bt25 billion, which is targeted to increase to Bt30 billion next year, which will help offset its losses.

Sorajak said he had started forming a committee to be responsible for fuel, as the cost of fuel accounts for 40 per cent of the company's operating cost. The panel will comprise fuel experts and outside executives to minimise business risk through hedging contracts.

Sorajak will meet with the company's board to present his business strategy on December 14 after being in office for a month.

In the first nine months of this year, THAI's profit before deducting currency exchange posted Bt2.64 billion. Its load factor in October was 73 per cent, below its target of 74-75 per cent.

-- The Nation 2012-11-17

[asiawatcher]

Run an economy drive based on price competitive rates for a year, back that up with better service, planes will fly at capacity and the loyalty 'base' will increase. Better to run at full capacity and gain loyalty for the future at the cost of a discounted ticket than have planes flying at 90%. Discount down slightly and pick up volume to reach the target. A simple voluntary questionnaire in flight to existing pax, may well answer some of what consumers want as well. TG may well be surprised at some of the answers. They lost me years ago but it would be nice to see if they are progressive enough to source fault and fix.

Edited November 17, 2012 by asiawatcher

[geriatrickid]

The cargo unit will also be in focus. Currently, it is in a loss-making position

Interesting. TG benefits from domestic policies that encourage its use by exporters and yet it is losing money. This suggests that either exports have fallen or the pricing is inadequate. Very curious.

[tomross46]

They will need a third set of books.

[scotto]

lower ticket prices equals more passengers and fly full planes

[Rancid]

Come on, it makes a good press release picked up by the lazy media of course. By the time they miserably fail this article will be forgotten and never thrown back in their faces.

[Payboy]

Company president Sorajak Kasemsuvan

The new rooster always crows loudest the first few weeks.

[osiboy]

it's pretty simple , ..........why would anyone want to pay 38,000B to fly thai airways when they can fly for 25,000B , as i did with Oman ? ,{recommended BTW}, It seems to be the "thai way" that when a business is struggling they put their prices UP when they should be doing the reverse and filling their aircraft ,... even if they only break-even and win the loyalty of customers gaining points with frequent flyer programms , failing to see this could be very costly IMO and they would'nt be the 1st national airline to go under

[yoshiwara]

I also used to be a loyal Thai passenger, but the abandonment of a competitive pricing policy and a shockingly bad entertainment system lost me.

With new fleet and dropping of the 747s, there goes the 34" extra legroom. They are going to have to do better than announcements to recapture market share

privatising fully the operation would help get rid of the dead hand of Thai bureaucracy and corruption but don't hold your breath.

[Payboy]

Just under a month of operation and the A380 already has engine start-up trouble yesterday as reported in the other rag.

[fish fingers]

after they ditched their last president I stopped flying Thai - just don't trust an airline that suddenly cuts its badly needed new fleet, is unrealistic about profits and doesnt seem to have a clear plan for the future.

As long as the Board get their perks its ok i guess

Eva for me from now on.

[lizardtongue]

This year, THAI will probably net about Bt3 billion, half of its previous expectation of Bt6 billion, hit by rising oil prices and a declining number of passengers.

Typical Thai style declining passengers = price increment.

I refuse to use them, EVA not the best but far better value for money than 'Silk'