webfact Posted September 16, 2013 Share Posted September 16, 2013 Some THAI directors worried Saudi prince's offer for Airbus too lowVIPAPORN JITSOMBOONTHE NATIONBANGKOK: -- THAI AIRWAYS International's board of directors is split over the sale of an Airbus A340-500 to a Saudi prince, as some have expressed concern that the offer is only about a third of the aircraft's book value.Prince Faisal Al Saud placed an order for one of four aircraft up for sale via AvCon Worldwide, offering to pay US$23.5 million (Bt744 million) for the plane. A $2.5-million deposit was placed. But the book value as of June was $67.07 million.A source at THAI said the proposal was submitted for the board's consideration about two months ago. Some directors were concerned that the low price would result in the immediate loss of Bt4 billion from the sale of the four planes and could spark an investigation. Others said the sale would benefit THAI in the long term, as the planes are now parked idly at Don Mueang Airport.The source noted that delaying the sale would cost the airline Bt1.3 billion a year in depreciation. By 2018, that would add up to Bt6.8 billion.Only the plane Prince Faisal made the offer on was free of financial burden, while THAI is paying the lease on the other three."The best way is to sell them off, as their value will drop every year because of low demand. Singapore Airlines recently converted a similar plane to be completely business-class, but the strategy did not work out. The plane was then sold back to the manufacturer in return for new aircraft," said the source, who asked not to be named.He added that the Saudi prince planned to refurbish the plane as his private jet. He is pushing for a quick decision, as he has scheduled the refurbishment period at Sabena Technics in France, which specialises in the overhaul of old aircraft.THAI president Sorajak Kasemsuvan said AvCon recently requested confirmation of the sale."We'll resubmit this proposal to the board for consideration. For now, it remains undecided whether THAI will sell the plane to Avcon or not. THAI will choose the best solution," he |said.He also noted that if THAI opted not to sell the plane, the deposit of $2.5 million would be returned to AvCon.The Airbus A340 is a long-range four-engine wide-body commercial passenger jet. It is used on long-haul, trans-oceanic routes but as engine reliability improves, airlines have been phasing out this type in favour of more economical twinjets. Airbus Industrie itself announced in November 2011 that the A340 programme had been terminated because of the lack of new orders. According to the THAI source, the first three aircraft were delivered in 2005 and the last in 2007. As such, their prices differed.While the book value of the first three as of June was $55.75 million, the fourth was valued at $67.07 million. This is against the market prices of $55.6 million and $66.9 million respectively, the source said.THAI introduced the airliner into its fleet in May 2005, for the Bangkok-New York route. The direct-flight service was halted three years later because of combined losses of more than Bt7 billion. In May 2012, THAI decommissioned the four aircraft and began looking for buyers. The planes have been used only on special occasions since, such as some government overseas trips.Few buyers exist, though, because of the A340's high fuel consumption.-- The Nation 2013-09-17 1 Link to comment Share on other sites More sharing options...
Popular Post theblether Posted September 16, 2013 Popular Post Share Posted September 16, 2013 Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. 3 Link to comment Share on other sites More sharing options...
Popular Post saakura Posted September 16, 2013 Popular Post Share Posted September 16, 2013 The entire story reeks of corruption, right from the procurement, decommissioning, book value and the sale. 11 Link to comment Share on other sites More sharing options...
MB1 Posted September 16, 2013 Share Posted September 16, 2013 (edited) Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. I'd have thought that after the recent crash of a Thai airways plane, they'd be jumping for joy that someone wants to buy one and take the cash on offer.... Few buyers exist, though, because of the A340's high fuel consumption. I doubt that's going to bother a Saudi Prince.... Edited September 16, 2013 by MB1 Link to comment Share on other sites More sharing options...
Popular Post lujanit Posted September 16, 2013 Popular Post Share Posted September 16, 2013 Book value and market value are two entirely different things. In the end the sale price achieved is only worth what the market will pay. 11 Link to comment Share on other sites More sharing options...
Popular Post ChrisY1 Posted September 17, 2013 Popular Post Share Posted September 17, 2013 Definately something not right here as usual.....someone didn't get their right cut?? 5 Link to comment Share on other sites More sharing options...
Popular Post wolf5370 Posted September 17, 2013 Popular Post Share Posted September 17, 2013 First rule of business, something's worth exactly what someone is willing to pay for it - no more, no less. Book price can be anything, it matters not a jot. If no one else is interested, then the Prince's valuation is the only valuation. Either sell it, use it or scrap it - not hard to see which offers the best return. 7 Link to comment Share on other sites More sharing options...
negreanu Posted September 17, 2013 Share Posted September 17, 2013 They should be happy to be getting rid of the A340. It's a dog and airlines all want rid of them asap. 1 Link to comment Share on other sites More sharing options...
bobfish Posted September 17, 2013 Share Posted September 17, 2013 A340-500 4 BIG engines and not much capacity. Need to be a Saudi Prince to run it. Link to comment Share on other sites More sharing options...
ratcatcher Posted September 17, 2013 Share Posted September 17, 2013 If the Thai directors attitude is the same as that of Thai car dealers,then it is likely that they will try and hold out for a higher price. Fortunately for the Saudi Prince, he is in a buyers market. Hopefully the Thais will see reason and get rid of the albatross, and the other parked planes ASAP. As another poster wisely said, something for sale is only worth what someone else is willing to pay for it 1 Link to comment Share on other sites More sharing options...
NeverSure Posted September 17, 2013 Share Posted September 17, 2013 It costs much more to own a jet than it does to buy it. If the prince is willing to pay for depreciation, sky high maintenance, fuel, pilots, and all else that goes with owning and operating that plane he needs to make a good buy on it. I just don't understand why he even wants it. There are far better twins out there that can do everything this plane can do. Link to comment Share on other sites More sharing options...
bobfish Posted September 17, 2013 Share Posted September 17, 2013 It costs much more to own a jet than it does to buy it. If the prince is willing to pay for depreciation, sky high maintenance, fuel, pilots, and all else that goes with owning and operating that plane he needs to make a good buy on it. I just don't understand why he even wants it. There are far better twins out there that can do everything this plane can do. Except for sytem redundancy; engines, electrics, hydraulics, pneumatics. If he had the choice, I'm sure he'd buy a six engined one! 1 Link to comment Share on other sites More sharing options...
Popular Post mijan24 Posted September 17, 2013 Popular Post Share Posted September 17, 2013 Most comments are very pertinent - an old saying comes to mind - " a bird in the hand is worth two in the bush" also notice the four aircraft are parked at Don Muang but only the plane Prince Faisal made the offer on was free of financial burden, while THAI is paying the lease on the other three. This is a "no brainer" when you consider the outstanding lease costs - which are (?) notice not revealed TiT. 3 Link to comment Share on other sites More sharing options...
laurentbkk Posted September 17, 2013 Share Posted September 17, 2013 Maybe a good time to ask the spirits and goshts what they think about this sale? 1 Link to comment Share on other sites More sharing options...
Lobo4819 Posted September 17, 2013 Share Posted September 17, 2013 It's the same as trying to buy a house. If you are a foreigner and make a reasonable offer, they will up the price. They just don't get it. 1 Link to comment Share on other sites More sharing options...
Popular Post moe666 Posted September 17, 2013 Popular Post Share Posted September 17, 2013 Its just the Thai way rather see it sit and rot than take a lower price. 5 Link to comment Share on other sites More sharing options...
soi41 Posted September 17, 2013 Share Posted September 17, 2013 It's the same as trying to buy a house. If you are a foreigner and make a reasonable offer, they will up the price. They just don't get it. And those words of wisdom is based on buying how many houses in Thailand?? Link to comment Share on other sites More sharing options...
alanferdi Posted September 17, 2013 Share Posted September 17, 2013 Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. Please note Thai Airways, you are not selling your Toyota Camry aged 20 years for more than the value. This is an aircraft and the longer they sit around the higher people's lives are at risk. What are you waiting for? Do business stop dilly dallying and make up or your mind. Or simply leave it to rot and have a good story... Once pon a time I had 4 planes... But farang don't buy.... So I loose? Link to comment Share on other sites More sharing options...
Popular Post EvilDrSomkid Posted September 17, 2013 Popular Post Share Posted September 17, 2013 I don't understand what the fuss here is all about. The THAI directors have not exactly made rational decisions lately. Why would that suddenly change? Prince Faisal should buy another plane instead. A better one and from the US. Less hassle. 3 Link to comment Share on other sites More sharing options...
OnTheRun Posted September 17, 2013 Share Posted September 17, 2013 Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. Please note Thai Airways, you are not selling your Toyota Camry aged 20 years for more than the value. This is an aircraft and the longer they sit around the higher people's lives are at risk. What are you waiting for? Do business stop dilly dallying and make up or your mind. Or simply leave it to rot and have a good story... Once pon a time I had 4 planes... But farang don't buy.... So I loose? Thai Airways have been trying to punt the 340's for a few years now. They got offered a much higher price some time back for I think 2 of them which they knocked back saying it wasn't enough. The longer they hold the more they will lose, sometimes it's better to cut your losses and run. Link to comment Share on other sites More sharing options...
fritzzz25 Posted September 17, 2013 Share Posted September 17, 2013 First money is best money. The A345 is a fuel hog that only 34 were manufactured. Dump it and run THAI Airways. Link to comment Share on other sites More sharing options...
ginjag Posted September 17, 2013 Share Posted September 17, 2013 I don't understand what the fuss here is all about. The THAI directors have not exactly made rational decisions lately. Why would that suddenly change? Prince Faisal should buy another plane instead. A better one and from the US. Less hassle. NOTE the other 3 A340-500 aircraft are on LEASE and not used, standing idle, If we were to lease a car and let it stand in the driveway ??? we would be NUTTY. Why not use one in place of the recent crashed plane ??? If you fill these planes with passengers on long haul at Thai prices you CANNOT lose money-WORK IT OUT. Link to comment Share on other sites More sharing options...
arminbkk Posted September 17, 2013 Share Posted September 17, 2013 Well at least THAI are earning interest on that deposit. Of course it does not offset the depreciation and lease expenses. Link to comment Share on other sites More sharing options...
landslide Posted September 17, 2013 Share Posted September 17, 2013 I flew the A345 a few times on the Bangkok to Los Angeles route in Business. I really liked the plane, and the lack of a transfer back to the states. I was sorry to see it go, but economic realities rule. Link to comment Share on other sites More sharing options...
TackyToo Posted September 17, 2013 Share Posted September 17, 2013 Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. They tried to manipulate or beat market realities in the rice and rubber buiz. They probably need a third attempt to find out the Thai-Way don't work. 1 Link to comment Share on other sites More sharing options...
TallGuyJohninBKK Posted September 17, 2013 Share Posted September 17, 2013 According to the THAI source, the first three aircraft were delivered in 2005 and the last in 2007. As such, their prices differed................... THAI introduced the airliner into its fleet in May 2005, for the Bangkok-New York route. The direct-flight service was halted three years later because of combined losses of more than Bt7 billion. In May 2012, THAI decommissioned the four aircraft and began looking for buyers. The planes have been used only on special occasions since, such as some government overseas trips. Billions of baht spent to acquire and operate these jets... and THAI ends up getting only 5-7 years useful service life out of them??? Wonder if it was the "malevolent ghosts" making the airline's aircraft acquisition decisions? The whole venture seems to have ended up being a massive financial fail from start to finish. Link to comment Share on other sites More sharing options...
bkk_mike Posted September 17, 2013 Share Posted September 17, 2013 I don't understand what the fuss here is all about. The THAI directors have not exactly made rational decisions lately. Why would that suddenly change? Prince Faisal should buy another plane instead. A better one and from the US. Less hassle. NOTE the other 3 A340-500 aircraft are on LEASE and not used, standing idle, If we were to lease a car and let it stand in the driveway ??? we would be NUTTY. Why not use one in place of the recent crashed plane ??? If you fill these planes with passengers on long haul at Thai prices you CANNOT lose money-WORK IT OUT. Actually, Thai proved they could lose money with them. That's why they stopped the direct flights to New York and Los Angeles. These planes have a huge range, but with 4 engines and the fuel tanks sized to do things like fly to New York without stopping to refuel, they can't carry enough passengers to make money. That was the whole problem with them... Everybody knows that now, and if Singapore Airlines can't make money with them (business travel NY to Singapore.should have more demand than NY-BKK, there's no commercial market for these planes). They can either sell them for what they can get for them (A Saudi prince using it as a private jet doesn't care about passenger capacity), or it'll end up like the planes that Olympic Airlines ended up having to sell for scrap after earlier offers got rebuffed as they thought they'd get a better price... Link to comment Share on other sites More sharing options...
newermonkey Posted September 17, 2013 Share Posted September 17, 2013 A second hand aircraft is worth what you can sell it for, there's no point in holding on to it if no one else wants it as it will be worth only scrap value after sitting idle for a few years. Perhaps they should ask our popular monk if he is interested in a deal, as he needs to travel quite a lot and it would make a nice addition to his existing collection. Link to comment Share on other sites More sharing options...
ginjag Posted September 17, 2013 Share Posted September 17, 2013 I don't understand what the fuss here is all about. The THAI directors have not exactly made rational decisions lately. Why would that suddenly change? Prince Faisal should buy another plane instead. A better one and from the US. Less hassle. NOTE the other 3 A340-500 aircraft are on LEASE and not used, standing idle, If we were to lease a car and let it stand in the driveway ??? we would be NUTTY. Why not use one in place of the recent crashed plane ??? If you fill these planes with passengers on long haul at Thai prices you CANNOT lose money-WORK IT OUT. Actually, Thai proved they could lose money with them. That's why they stopped the direct flights to New York and Los Angeles. These planes have a huge range, but with 4 engines and the fuel tanks sized to do things like fly to New York without stopping to refuel, they can't carry enough passengers to make money. That was the whole problem with them... Everybody knows that now, and if Singapore Airlines can't make money with them (business travel NY to Singapore.should have more demand than NY-BKK, there's no commercial market for these planes). They can either sell them for what they can get for them (A Saudi prince using it as a private jet doesn't care about passenger capacity), or it'll end up like the planes that Olympic Airlines ended up having to sell for scrap after earlier offers got rebuffed as they thought they'd get a better price... Thai could not fill the aircraft on that route, if they were full at Thai prices they had to make a profit. Have to look at other maybe's --seating con fig -free seats for VIP-- They have priced themselves out of the market. Singapore airlines have money to buy newer more fuel efficient aircraft, same me with a car. But if I did not have that extra money you make the best you can, by filling the aircraft and using it on the routes that suit the aircraft. If you use a more fuel efficient aircraft but have to land and re fuel, you will use more fuel doing that than the original aircraft. Sorry bad management at Thai Airways, didn't Thai do their sums right when they leased the 3 other A340-500, to have them stand doing nowt. OVER pricing half full is stupid, lower prices full good management. Link to comment Share on other sites More sharing options...
eddie61 Posted September 17, 2013 Share Posted September 17, 2013 Just sell them and be done with it. You can't beat market realities, it's just part of the cost of doing business. oh yes you can..... if you are thai rice, rubber, corn, LPG, Diesel......and now old A340 Thai genius has beaten market forces on all of these. That is whythe country is such an industrial and educational powerhouse... 1 Link to comment Share on other sites More sharing options...
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