THAI tackles financial woes

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THAI AIRWAYS
THAI tackles financial woes
SUCHAT SRITAMA
THE NATION


Charamporn

BANGKOK: -- Thai Airways International plans to cut ineffective routes and sell more than 10 aircraft next year in a bid to turn around years of operational losses.

These moves are part of company's draft five-year master restructuring plan to deal with its financial problems and shield itself from global economic instability.

The THAI board of directors approved these plans, proposed by new president Charamporn Jotikasthira, at the company's monthly meeting on Monday.

According to Charamporn, the national carrier is planning to cut some international and domestic routes in order to reduce operating costs. However, frequencies will be increased on strong routes in response to market demand.

He said the airline also planned to sell more than 10 planes in the new year.

"The year 2015 will see big changes for THAI and the changes needed to be made before moving forward," he said.

An official at the airline said it would delete the long-haul Bangkok-Johannesburg route from its flight timetables as of January 15, meaning that THAI will no longer operate a service between Thailand and Africa.

Some other weak-performing routes between Bangkok and Europe are being considered for reduction. Charamporn said passenger numbers from Europe in the final quarter of this year were lower than projected despite it being high season. The main reason is the economic slowdown in key markets.

Aside from revisions of international service, domestic routes without connecting flights such as Surat Thani, Chiang Rai, and Phitsanulok are likely to be cut and given to its sister airline, THAI Smile Airways.

Charamporn said some of the service cuts would only be temporary. "Once things improve, we will resume operations."

Although the THAI board of directors has approved the plans, they will need final approval from the "superboard" set up by the junta to oversee state enterprises. THAI will submit the plans to the superboard before the end of this month. If they are approved, the airline should begin the first steps of its rehabilitation plans early in the new year.

Management of the national airline expects a turnaround into profit next year, after losses for four consecutive years. However, Charamporn confessed that THAI was three months behind in plans that should have kicked off this quarter, but it was more important to get the plans right before rushing into things. THAI and THAI Smile will continue to work together and synergise strategies to deal with the tough situation going into next year. THAI is also concerned about the falling oil prices and will see how to deal with them in the long term. Hedging on jet fuel may need to be revised.

Source: http://www.nationmultimedia.com/business/THAI-tackles-financial-woes-30250501.html


-- The Nation 2014-12-24

[Mango Bob]

just a little rant why Thai will never make it. Was looking for flights to JFK in April for 3 week trip for me and the wife. Cost on Cathay Pacific for both of us 75,000 baht. Cost on Thaiways, with very little choice and long layover 176.000 baht. This is economy restricted. You wonder why they don't have customers.

[NongKhaiKid]

i think so many of us are waiting to read that cost cutting will include all the many freebies and perks for those and such as those, could be a long wait though.

[ezzra]

Never really understood why TG fairs are always dearer than most other local players

by as much as 30%, just because they fancy themselves as the national carrier dose that

give them the right to be a pompous ass airline and charge much more for the same service

you get from other airlines? I guess that this is what happened when you're not a private

company and you relay on government findings...

[harada]

The efficient, polite service of old and realistic prices might attract a lot more passengers, me for one.

[hansgruber]

How does a listed company get run like a government ministry?

Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

[harada]

How does a listed company get run like a government ministry?

Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

I would have gotten here sooner sir but I've just had a hip replacement.

Edited December 23, 2014 by harada

[baboon]

just a little rant why Thai will never make it. Was looking for flights to JFK in April for 3 week trip for me and the wife. Cost on Cathay Pacific for both of us 75,000 baht. Cost on Thaiways, with very little choice and long layover 176.000 baht. This is economy restricted. You wonder why they don't have customers.

What else needs to be said on the matter?

[Suriya4]

No more sales of planes to middle east prince please. Or sales to IS.

[NeverSure]

How does a listed company get run like a government ministry?

Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

LINK

[daveAustin]

Needs a lot more than that. We're talking a serious purge/restructure/re-branding. It is so far behind the competition today and the prices are completely unrealistic -- more than 50% more expensive than BA to London.

[Briggsy]

Posters here are buying into the fairytale that anyone with power, board members, senior govt. figures, etc., actually care about THAI's profitability. It is all just smoke and mirrors. They have been putting out the same line for years to reduce the volume of protest.

THAI is a gravy train. It provides a range of benefits for a connected sector of the populace and their families. These benefits include paid directorships with generous allowances, overpaid job opportunities with little actual work and lots of benefits, free first class and business class travel, opportunities to get kickbacks from contracts, even a supply of young women to meet in the form of flight attendant applicants for the RTAF officers, etc. The people who benefit from this are very powerful. So nothing will change.

THAI will remain subsidised by the state as it always has been.

Don't believe the narrative. Look behind the narrative at what is not said publicly and you will find a picture closer to the truth.

Edited December 24, 2014 by Briggsy

[Ricardo]

No more sales of planes to middle east prince please. Or sales to IS.

The sale of an A340 to a Saudi didn't go through, because the THAI board didn't like the market-price they were being offered, IIRC.

Then again, perhaps now that the cost of fuel has fallen dramatically, perhaps they might re-introduce the remaining A340s, and run them at a profit ?

But I didn't know that ISIL had their own airline, do you have a source, for that ?

[canopus1969]

and shield itself from global economic instability ...

[razer]

Was it Thai Airways or Thai Arrogance? Thai Airways have never been price competitive with economy or with full fair tickets. Working for a Thai company, we always flew Thai Airways but of course the company paid. Old Boys supporting Old Boys. Maybe those days are over.

[bridge2bridge]

Typical Thai thinking " we will cut some journey's but increase others.

WHY then sell planes?

[Ricardo]

Some other weak-performing routes between Bangkok and Europe are being considered for reduction. Charamporn said passenger numbers from Europe in the final quarter of this year were lower than projected despite it being high season. The main reason is the economic slowdown in key markets.

So falling numbers and market-share are due to the economic-slowdown, rather than unrealistic or uncompetitive pricing by THAI, perhaps they might mull having a crackdown on their own costs, or operating more appropriately-sized/fuel-efficient aircraft on those routes, thus releasing the larger if venerable B744s for those routes which apparently need them, where "frequencies will be increased on strong routes in response to market demand." ?

Edited December 24, 2014 by Ricardo

[bangon04]

Some other weak-performing routes between Bangkok and Europe are being considered for reduction. Charamporn said passenger numbers from Europe in the final quarter of this year were lower than projected despite it being high season. The main reason is the economic slowdown in key markets.

So falling numbers and market-share are due to the economic-slowdown, rather than unrealistic or uncompetitive pricing by THAI, perhaps they might mull having a crackdown on their own costs, or operating more appropriately-sized/fuel-efficient aircraft on those routes, thus releasing the larger if venerable B744s for those routes which apparently need them, where "frequencies will be increased on strong routes in response to market demand." ?

We are still thinking that THAI should be run as a business, whereas in fact the Farang simply does not understand that the outside world is responsible for the poor performance of THAI, and the sooner the outside world improves its treatment of THAI, the sooner the national pride will be restored to its previous heady complacency.

[wabothai]

Selective cost cutting, no hurt for the big boys of course.

[Ricardo]

Some other weak-performing routes between Bangkok and Europe are being considered for reduction. Charamporn said passenger numbers from Europe in the final quarter of this year were lower than projected despite it being high season. The main reason is the economic slowdown in key markets.

So falling numbers and market-share are due to the economic-slowdown, rather than unrealistic or uncompetitive pricing by THAI, perhaps they might mull having a crackdown on their own costs, or operating more appropriately-sized/fuel-efficient aircraft on those routes, thus releasing the larger if venerable B744s for those routes which apparently need them, where "frequencies will be increased on strong routes in response to market demand." ?

We are still thinking that THAI should be run as a business, whereas in fact the Farang simply does not understand that the outside world is responsible for the poor performance of THAI, and the sooner the outside world improves its treatment of THAI, the sooner the national pride will be restored to its previous heady complacency.

You are clearly correct, and I chide myself for my obvious fault in believing that Thai-owned international-businesses have to be globally-competitive or serve their customers in some way, this is clearly an absurd notion which I learned from studying American business-methods, while not playing golf or drinking tea as rigorously prescribed for management-level oiks like myself, in British-owned companies.

There must be a whole body of academic research, produced by Thai university researchers, describing the inherent fallacies of Western management practices & theory, if only I had the wisdom and enlightenment to study and comprehend it all more deeply.

Meanwhile THAI management believe that they must mull & propose, while waiting for orders from above, or permission to proceed with getting-on and running the company. And yet their financial results persist in failing to reflect their clear superiority ? Perhaps this is a reporting or accounting issue !

[DaffyDuck]

How does a listed company get run like a government ministry?

Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

This applies to Briggsy and all the naysayers in this thread as well.

Have you been paying attention what has happened to THAI over the past 5 years, and more importantly, what restructuring Prayuth set in motion?

What you say is true and exactly the reason why THAI has been losing money the past 5 years. Nepotism. It's also the reason why the entire board and CEO were fired by Prayuth, and why an all new board and CEO are in charge.

Uphill battle, but they have the support of the government, and they actually stand a chance of turning THAI around.

Edited December 24, 2014 by DaffyDuck

[rickirs]

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How does a listed company get run like a government ministry?
Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

In 1977 The Thai government owned 100%. Since 1991 the Ministry of Finance has been the majority shareholder at more then 50%; the remaining minority stock is traded in the stock market.

[rickirs]

The Nation 2014-08-15

"General Prayuth Chan-ocha, chief of the ruling National Council for Peace and Order (NCPO), said yesterday that state enterprises would be grouped to allow those making profits to lend more support to other tasks while those with low income or suffering losses will be able to depend on themselves."

It's time to "fish or cut bait" General Prayuth. Either nationalize the remaining minority stock or sell off Thailand's majority stock in the company and let the market decide the airline's future.

[Thai at Heart]

Is that not the worst picture of dracula posing as a businessman?

How did he come up with these plans in a month?

[Suffinator]

Never really understood why TG fairs are always dearer than most other local players

by as much as 30%, just because they fancy themselves as the national carrier dose that

give them the right to be a pompous ass airline and charge much more for the same service

you get from other airlines? I guess that this is what happened when you're not a private

company and you relay on government findings...

Greed and the fact that they feel their are superior.

[Suffinator]

How does a listed company get run like a government ministry?

Nepotism if rife within this company. That's why you still have air hostesses if their 60's.

This applies to Briggsy and all the naysayers in this thread as well.

Have you been paying attention what has happened to THAI over the past 5 years, and more importantly, what restructuring Prayuth set in motion?

What you say is true and exactly the reason why THAI has been losing money the past 5 years. Nepotism. It's also the reason why the entire board and CEO were fired by Prayuth, and why an all new board and CEO are in charge.

Uphill battle, but they have the support of the government, and they actually stand a chance of turning THAI around.

Equally it could be argued that Prayuth simply fired the board members so he could replace them with his own cronies.

[bikerbri]

Looks like the new Thai Airways President hasn't long to go,once the unions get hold of his plans.

[bubba]

Thai Airways have 33 aircraft sitting in storage and likely will never be used again. This story says that TG plan on selling off "more that ten" aircraft. That would leave 23 or so in storage, rusting away, costing money to store and becoming less valuable.

http://www.airfleets.net/flottecie/Thai%20Airways.htm

So they would rather borrow money than sell off stored aircraft? Trying to keep the assets side of their balance sheet pumped up or what?

[DaffyDuck]

Equally it could be argued that Prayuth simply fired the board members so he could replace them with his own cronies.

Since they and the CEO aren't exactly 'cronies', this would be a tough case to make.

Even if that were the case, and these cronies were put in place to actually turn THAI around, it would be a positive developments. The prior board and CEO have done nothing for 5 years, except raise prices, and twiddle their thumbs...

[DaffyDuck]

Thai Airways have 33 aircraft sitting in storage and likely will never be used again. This story says that TG plan on selling off "more that ten" aircraft. That would leave 23 or so in storage, rusting away, costing money to store and becoming less valuable.

http://www.airfleets.net/flottecie/Thai%20Airways.htm

So they would rather borrow money than sell off stored aircraft? Trying to keep the assets side of their balance sheet pumped up or what?

Since you are apparently so well informed about the exact plans, please share with us what you know.

"More than 10" could include up to 33 - though it's more than likely that they are considering repurposing some of the 23 other planes for domestic routes, which the CEO has stated they would increase the frequency of. That means, using more planes. Hence, most likely bringing the existing planes out of mothballs.

There is no indication that he is planning to let the remaining planes rot - if they are able to sell around 10 planes (ie they are flight worthy) then the remaining planes can be made so as well. Your speculation is invalid.