THAI bid to stave off cash-flow crisis

[rametindallas]

First, bring fares in line with other carriers, second, stop hiring too-good-for-this-job hi-so flight attendants, third, hire management because they know the airline business instead of hiring because they know someone, and fourth, stop buying new airplanes that you don't need.

[96tehtarp]

I like all these comments of hiring an experienced executive to run Thai.

There is not a single foreign or farang executive manager at the Thai head office, not even one.

[wvavin]

This only happened to mismanagement of the whole entity. Too many unnecessary perks, unnecessary "meetings" and EXTREMELY OVERSTAFFED!

[MickGC]

For us folks flying south Thai is a good choice. Happy to fly with them. It's the only airline with direct flights to Brisbane. Heading there next month for a couple of weeks. For that flight Thai is cheaper even than Air Asia who have a 3 hr stop over in KL and also charge extras for everything. Guess you folks flying towards Europe have a greater choice of airlines and thus lower cost fares. Hope they survive this latest crisis. Been flying with them for 30 years without a problem.

[neverdie]

There are a lot of airlines around the world struggling at the moment.

Decisions made 10 years ago & more are having an effect on them, constant mismanagement is never going to end well.

This isn't a race related problem. Have a look at Qantas, a powerhouse decades ago and has almost been brought to its knees by a couple of bad CEO's and various boardroom s full of douchebags.

Sadly aviators are often left out of the decision making process......bean counters making all the wrong decisions for all the wrong reasons.

Watch the powerhouse of Emirates & Etihad soar. I wonder what will happen with prices when there's just a few tough guys left in the game?

Sad days for aviation IMO.

[antsdancing1]

They must get not only senior management with significant airline experience but also a Board with some knowledge of the business. Just trotting out some new guy who might have run a successful business somewhere is not going to do the trick. Reading the article it is clear they really don't understand the business or the issues.

1. cutting from 24,000 employees to 18,000 in 5 years is not quick enough or deep enough. Even 180 employees/aircraft is significantly too many. Need to expedite the process, and focus on utilitization, not only of aircraft but also flying personnel. Outsource all non-value added functiions (ground handling, customer service, etc)

2. Need someone who understand fleets and financing for fleet additions, dispositions, financing arrangements, deposits, etc. Its clear they don't have that now. "The board also proposed to defer the pre-delivery payment for aircraft and rent planes instead of leasing them." Rent planes instead of leasing them? 5555

3. They have recently gutted their frequent flyer program, driving off many of their best customers. But who needs frequent flyers anyway? They aren't going to get the premium and super premium passengers they want without a competitive frequent flyer program

4. They need someone knowledgeable about revenue management setting fares. Load factor continues to drop and fare structure seems askew. The incremental cost of a passenger is very low, but it isn't reflected in their current fare structure.

5. The board doesn't seem to understand operating metrics. "Prajin said THAI would borrow Bt1 billion from Standard Chartered and between Bt5 billion and Bt7 billion from the Government Savings Bank (GSB) in a bid to maintain its ratio of cash flow to revenue at 15 per cent." Cash flow to revenue is an operating metric. Not saying they don't need to borrow, but using cash flow from financing in this ratio totally defeats the purpose of it.

They need professional help.

[up-country_sinclair]

Part of the problem is that Thais think Thai Airways is somehow special. So special that customers will pay more to fly on Thai. Unfortunately this is not the case as the balance sheet shows quite clearly.

[build6]

Agree their pricing is high - I had to make a flight from Bangkok to Singapore and I was stunned to find the Thai prices were higher than Singapore Airlines (more known for being the "premium" priced carrier?).

[Runamile]

There is so much correct here, especially around Thai's ridiculous prices and general revenue management. Ever heard of Thai holding a sale to fine-tune revenue per period?

Clearly, as so many have said, management isn't capable. However, only senior management has been talked about. My feeling is that, particularly in yield management (it may even be a case of "what's that"?) the rot goes way low. I suspect it's a bit like the hi-so attendants mentioned - you buy your way in?

Where I disagree with some commentary here is on aircraft "purchase". The key to survival of any airline at the moment is the latest, fuel-efficient, rig. Fuel is a major element in cost control. Get that wrong and you are skewered.

[ZigZagMan]

Just another state run company that is pillaged by the elite.

Auditors discovered $5 million dollars missing and were told to keep it quiet.

Guaranteed the Genersl won't be looking to carefully at those books.

[Ricardo]

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The top honcho has resigned Wednesday according to the <deleted> post.

The Bangkok post reports that Khun Prajin quit and his resignation, effective from Wednesday, will see Ariphong Phuchau, permanent secretary for energy, succeed him as acting board chairman, according to a Stock Exchange of Thailand statement.

Musical chairs?

Perhaps Khun Prajin quickly found out what a mess the business was in, realised it was beyond saving or beyond his own experience/abilities, and did the honourable thing to bail-out ? If so, that would suggest, that things are even more desperate than the OP suggests.

Possibly the government should now ask Khun Piyasvasti to return, he seemed to have some idea how to turn things round, before he was sacked (by the previous administration) ? And he was respected by the workforce, who are clearly going to have to accept some major changes, if the business is to survive.

from Wiki http://en.wikipedia.org/wiki/Thai_Airways

" 2010s: Fleet renewal and expansion

An Airbus A380 at Frankfurt in 2013.

While celebrating its 50-year anniversary in 2010, THAI, spearheaded by Piyasvasti Amranand, its president and a former energy minister, charted new plans for the airline's future, including a significant aircraft fleet renewal and an upgrade of existing services. THAI has since placed orders for a number of aircraft, including the cost-efficient Boeing 787 and Airbus A350, and it has also launched a refurbishment of its Boeing 747 and 777 cabins. Mindful of rising fuel costs, the airline have now phased-out the most inefficient aircraft, including its Airbus A340-500s. The airline has taken delivery of its first Airbus A380 aircraft in the last half of 2012, intending to eventually deploy the aircraft on its core European routes.

THAI has also resumed its network expansion with the resumption of flights to Brussels, in addition to a new non-stop flight from Copenhagen to Phuket. At the same time, the Greek debt crisis caused THAI to suspend its services to Athens.

As part of THAI's broader growth strategy in the region, THAI launched a regional carrier with light-premium services, Thai Smile which operate narrow-bodied Airbus A320-200 on regional and domestic routes. The new airline initiated commercial operations in July 2012, after its first A320s were received."

Replacing older less-efficient owned-planes with new fuel-efficient leased-aircraft is clearly a long-term 'must', if THAI can survive through the short-term, and (depending on the market for used-planes & TG's depreciation-policies) they might even make a short-term profit, if they sell for more than book-value.

The charter-airline I once worked for would 'help' their financial-results, during any slump in tourism, by selling-off a couple of wholly-owned aircraft at a profit if possible.

Or perhaps it's time to admit defeat, and offer Thai Airways to whoever wants to take it on, cue Singapore Airlines or Tony Fernandez ? And Etihad have large-shareholdings in European & South Asian airlines, might they be interested in a foothold in S.E.Asia next ? Please ... anybody ...

Edited August 15, 2014 by Ricardo

[GinBoy2]

What do ex Military, know about running an airline?

The answer to that is nothing!

There is a huge difference of being able to spend bottomless pits of government money on military 'toy's, from the business of running a profitable business. It's a horrible business to make money in, to quote Richard Branson; "the quickest way to make a Millionaire is for a Billionaire to buy an airline".

TG's many marketing faults have been discussed Ad Nauseum and nothing changes, while the likes of Thai Air Asia steadily takes the domestic low cost market, and the likes of Emirates, Etihad, EVA & China Airlines eat away at the long haul market.

The overhead issue unfortunately isn't going to be solved by disposing of a few A340-500's, which has been previously stated could have been offloaded last year, but rather take a loss, decided to keep the whole basically worthless asset on the books. Instead they left with a hodge podge of aircraft types (ever wonder why the LCC's only run a single aircraft model) some of which, the glaring example being the A380 are simply trophy planes. Few carriers (if any) actually make money with the A380, but for totally illogical reason TG bought 6. The lunacy of this was compounded when they tried to cancel the orders only to discover that the cancellation terms they signed up for so high they were better off taking delivery. Crack negotiators huh?

I think thats plenty of reasons why ex-military men shouldn't be running an airline!

[gchurch259]

"Siwakiat said the long-term plan for the purchasing of aircraft was also discussed yesterday. The airline aims to sell old planes and replace them with new ones."

Hmmm, good thinking Batman.

Airlines operate on a formula of RPSM (Revenue per seat mile) Vs CPRSM (Cost per revenue seat mile). As you know older aircraft cost more to maintain and changes in Technology reduces fuel cost as some of the newer aircraft have more efficient engines. Another thing most airlines do is lease at least 1/3 of their aircraft and with the hard times they give notice to cancel the lease and return the aircraft.

Seems they have made some wrong decision on aircraft purchases. A340-500/600 to fly nonspot to NYC when there was no market there and to make it worst there is no market for the 340's. Next I wonder about the A380 purchase/lease I guess to compete with the other companies that fly them, hell with competeing worry about making money. I do not know what the load factor for them is, but customs must be an interesting thing when two or three of them arrive close to each other.

Thai does try and take care of thier Business Travelers very well.

[Ricardo]

Just another state run company that is pillaged by the elite.

Auditors discovered $5 million dollars missing and were told to keep it quiet.

Guaranteed the Genersl won't be looking to carefully at those books.

"Guaranteed the Genersl won't be looking to carefully at those books."

I disagree, this is the perfect time for the classic tactic of getting all the bad-news out-in-the-open, painting it as black (now there's a topical & relevant metaphor for you !) as possible, and then blaming the previous administration !

Edited August 15, 2014 by Ricardo

[FiestyFarang]

Last time I flew from Bangkok to London I was offered a seat that had stains on it like coffee covering the whole lower cushion, not sure how old the stain was so I asked for another seat. The look I received is that you are lucky to be flying Thai and shut up. For 50,000Baht I like a clean seat. I will never use them again, Singapore Airlines A380 upstairs Economy. A380 is so quiet upstairs worth the extra 50 mins flying time compared to Bangkok, with friendly helpful staff and no stained seat. BA offer some good prices and use the A380 from October on Sundays (Sin-LHR) Saturdays (LHR-Sin)

[Nigeone]

I haven't used Thai for many years and then it was only a domestic flight but it's hard to ignore all the members reporting on poor service and fares that can't compete with other airlines.

Is this part of the prevalent business ' model ' that when you're losing money you increase prices ?

With backs to the wall every saving helps so what about all the jobs for unqualified boys and of course all the freebies ?

If they read these forums its obvious what they need to do...doesn't take a brain surgeon to work out if planes are flying empty then reduce prices to compete, offer a better service like they used to do and hey presto!! mind looking from the outside I think there days are numbered..its hard for them to get back customers when going against the arab airlines with there access to funds and fuel etc...there F*****

[fab4]

I like all these comments of hiring an experienced excutive to run Thai. Believe me, one would be hard to find. I worked in Maintenance Management for five different US airlines and all of them entered into bankruptcy. I believe all but two US carriers have files for bankruptcy. The other World Wide Carriers have had the same problem, except for the oil rich countries airlines.

Historically in the long run airlines have never been a good investment, but a necessary service in todays economy and global reach.

I am a Gold Level flyer with Thai and enjoy most of their service and their prices may need a little adjustment. Try comparing ANA and JAL to Tokyo if you think Thai is high.

I wish them well, but the have a rough road. From a maintenace stand point I have no problems with their aircraft, or NOK. I have inspoected aircraft with both airlines.

My preferred airline is EVA out of Taiwan, but they do not fly to some of the places I need to go. Their service is excellant and their maintenance is the best of any airline I have inspected or worked for in my 50 years aircraft maintenance experience.

I worked in Maintenance Management for five different US airlines and all of them entered into bankruptcy.

I can only hope that this was just an unfortunate coincidence

[ginjag]

What do ex Military, know about running an airline?

We'll see, have to be much more than the last in control. Is this a real question or just another anti army poster.??

[ginjag]

I haven't used Thai for many years and then it was only a domestic flight but it's hard to ignore all the members reporting on poor service and fares that can't compete with other airlines.

Is this part of the prevalent business ' model ' that when you're losing money you increase prices ?

With backs to the wall every saving helps so what about all the jobs for unqualified boys and of course all the freebies ?

If they read these forums its obvious what they need to do...doesn't take a brain surgeon to work out if planes are flying empty then reduce prices to compete, offer a better service like they used to do and hey presto!! mind looking from the outside I think there days are numbered..its hard for them to get back customers when going against the arab airlines with there access to funds and fuel etc...there F*****

Thai is subsidized, it's just they have no operational management, pricing is the main reason and bad old ideas.

[fab4]

What do ex Military, know about running an airline?

We'll see, have to be much more than the last in control. Is this a real question or just another anti army poster.??

You do realise that the "last (lot) in control" included 3 Air Chief Marshall's?

[Nigeone]

I wondered if it was subsidised and asked the same in another topic..well we are being told there going to lose 12mill to 20 mill bht this year.

Wonder what the real amount is going to be and my guess is we will never know but you just know its a alot more than there saying or will ever admit too

Edited August 15, 2014 by Nigeone

[Thai at Heart]

Isn't this negligent use of state money to provide a subsidy ?

[ginjag]

What do ex Military, know about running an airline?

We'll see, have to be much more than the last in control. Is this a real question or just another anti army poster.??

You do realise that the "last (lot) in control" included 3 Air Chief Marshall's?

Maybe and the rest---who were they---care to look it up. Another clan member picking another topic and turning it into anti army propaganda.

If there were no political topics you Pro Shin anti army posters could not function.

[Nigeone]

Isn't this negligent use of state money to provide a subsidy ?

Its Thailand !!! theres negligent use of money everywear dont hold your breath to see it change some day soon..

[GinBoy2]

What do ex Military, know about running an airline?

We'll see, have to be much more than the last in control. Is this a real question or just another anti army poster.??

You do realise that the "last (lot) in control" included 3 Air Chief Marshall's?

Maybe and the rest---who were they---care to look it up. Another clan member picking another topic and turning it into anti army propaganda.

If there were no political topics you Pro Shin anti army posters could not function.

Regardless of their political preferences, TG has always been a 'playground' for ex air-force personnel for it's entire existence. the fact that the previous lot were allied to PT is irrelevant, in years past they have been dem implants, all with the same result, a slow painful decline as airline amateurs faced the increasing cutthroat world of the modern airline business

[Thai at Heart]

Isn't this negligent use of state money to provide a subsidy ?

Its Thailand !!! theres negligent use of money everywear dont hold your breath to see it change some day soon..

I await a case similar to Yingluck

[ginjag]

You do realise that the "last (lot) in control" included 3 Air Chief Marshall's?

Maybe and the rest---who were they---care to look it up. Another clan member picking another topic and turning it into anti army propaganda.

If there were no political topics you Pro Shin anti army posters could not function.

Regardless of their political preferences, TG has always been a 'playground' for ex air-force personnel for it's entire existence. the fact that the previous lot were allied to PT is irrelevant, in years past they have been dem implants, all with the same result, a slow painful decline as airline amateurs faced the increasing cutthroat world of the modern airline business

My point to the anti army poster was why just single out them, when as you say it's a cancer over the years.

[Don Aleman]

Have a 2 fer sale offering Thai Air & Thai Smile to the winner, ( actually the loser ) !

[ginjag]

Have a 2 fer sale offering Thai Air & Thai Smile to the winner, ( actually the loser ) !

Buy 1 get one free----no thanks.

Buy one and get A.Asia free ---YES i'll buy.

[laobali]

Love to know Tony Fernández's thoughts on this. Could he turn THAI around and make it profitable?