THAI to sell 32 aircraft

[webfact]

THAI to sell 32 aircraft
Suchat Sritama
The Nation

BANGKOK: -- Thai Airways International (THAI) is hoping to sell 32 of its aircraft this year as part of its financial rehabilitation and route-cutting plan with the aim of turning a profit by yearend.

THAI president Charamporn Jotikasthira said the airline's board members yesterday initially approved the sale 14 planes this year. They are four Airbus A330-300s, six Airbus A340-600s and four Boeing 747-400s. The aircraft will be placed on the market by mid this year.

He added that the management will also ask the board members to approve the sale of eight more Boeing 747-400 aircraft in June and expects that they will go on the market in the last quarter of this year.

Last year, THAI's put 20 aircraft on the market, and 10 have been sold so far, with the remaining to be added to the aircraft up for sale this year.

Charamporn said the aircraft were being sold as part of the airline's plan to cut its costs, rehabilitate financially as well as reduce its routes. THAI also took delivery of two new Boeing 777, while two Boeing 787 and two Airbus 320 are scheduled to arrive later this year.

With these adjustments, the airline will this year have 77 aircraft in its fleet, not including the 20 being used by its subsidiary Nok Air. Also, these adjustments will bring the average age of the aircraft in the fleet down to 7.8 years, which should boost the airline's competitiveness and efficiency compared to 2013.

Charamporn said the airline would continue to cut and/or revise 15 to 20 per cent of its routes. It has already changed some 10 routes so far, such as cutting the Bangkok-Johannesburg route this month. It is planning to stop flying the Bangkok-Moscow route because this service has been losing the airline Bt200 million to Bt300 million per year since it opened in 2009. THAI will also cut the Bangkok-Madrid route in September.

It will also revise or adjust flight times on many routes such as United Kingdom, Paris and Germany by using bigger aircraft, such as the Airbus A380. THAI's management believes the adjustment of its fleet and routes would help it turn a profit by the end of this year.

Charamporn said the projected revenue for this year would be Bt170 billion, lower than the Bt185 billion earned last year, though overall losses will be lower.

According to Charamporn, the board also discussed this year's budget, which is being audited by Office of the Auditor-General.

THAI is also set to focus more on business strategies and will focus on six priorities, namely market size and potential, aircraft type and routing, onboard products, operating cost, marketing and promotion, and sales.

Source: http://www.nationmultimedia.com/business/THAI-to-sell-32-aircraft-30254718.html


-- The Nation 2015-02-24

[Stradavarius37]

Yes but will anybody buy them? Its a buyers market, and the typical THAI offering is to mark prices to high (see their ticket prices for example).

[Prbkk]

Yes but will anybody buy them? Its a buyers market, and the typical THAI offering is to mark prices to high (see their ticket prices for example).

Yes, but getting rid of a few old clunkers is one thing but they need to address the issue of staffing levels....something they have been unwilling to do because of the power of the union. About 10,000 staff have to go and even then they would have more than sufficient.

[yellowboat]

Given their current behavior and that of the junta, will not fly then until things improve in Thailand.

[gregc]

The Thai executives who authorised the purchase of the $200 million/plane A340's should be made to face the music for these white elephants. They won't fetch 10% of their purchase price! But knowing Thai bureaucracy, they are too busy enjoying their government funded country club retirements to care.

http://www.wsj.com/articles/SB30001424127887324049504578541300750306548

[rubl]

Does this mean THAI will also lay off pilots, cabin staff, counter staff, maintenance people, etc., etc.?

[trainman34014]

What the coward needs to do is trim 25% of the workforce because the first place to get true cost savings is on removing heads from the payroll. Of course; it won't happen as the majority are from 'connected' families and are guaranteed jobs for life. Disgusting way to run a business.

[jalansanitwong]

There's no market for 747's anymore unless they convert the plane to a cargo carrier. Any bids?

Africa might be interested if theycan pay for it on the never never system.

I bet the gov wont disclose how much theyre selling all this old junk for.

[worgeordie]

Buy one get one free, the longer they stand here the more

deteriorated they will become,

regards Worgeordie

[Strangebrew]

Why cut work force cut wages starting at the top and working its way down. Then reduce ticket prices to fill seats no free rides for two years till profit is back then only if still no free rides instead maybe charge those hiso 75% plus full tax on tickets. exec's fly economy class only they want upper class they pay difference in price.

[crickets]

They need a international budget airline like qantas has jetstar. Flying to australua with three full meals is a waiste. Can fly jetstar business class for the same price as there economy.

[dundas]

They need a international budget airline like qantas has jetstar. Flying to australua with three full meals is a waiste. Can fly jetstar business class for the same price as there economy.

Not sure that's true in every case. I just priced a Jetstar ticket Melbourne-Bangkok for approximately $920 - that's after buying the extras to get some flexibility, meals, baggage etc. Buying an equivalent promotional ticket on TG (Q class) to CNX instead of BKK will cost me just over a hundred dollars more, gives me a better choice of flights, and CNX is my destination in Thailand anyway - I priced Jetstar to Bangkok because that's as far as they fly.

Whatever TG's faults, my airline of choice ain't Jetstar. Their so-called business class isn't much better than TG economy anyway.

Having said all of that ... Thai probably do need to get rid of some of their more disinterested staff, not just the planes that nobody else wants.

[davidmann]

they should try running there business like other airlines ,look at there seat prices ,everybody is cheaper ,even BA ,what they need is western management that know what there doing

[FangFerang]

Another mythical govt-to-govt deal (been popular since the 1970's). Last year sold 10 of 20. Next year, sell 7 of 14 (if the market ever shows stability). remaining imbalance: 17 -- woohoo! I wonder how much graft and kickback changed hands from the original purchase?

[siam2007]

as has been mentioned, I doubt that there will be a lot of bidders for those dinasaurs they want to sell. I personally liked to fly the A340, but indeed it is fuel-consuming Monster. B737-400 ? nobody wants them, must be 20 years old at least. older version of B747 samesame...... Africa the only option. A330 should attract some interest though.

more important seems that they get rid off the overpaid staff too who have manned those aircraft for decades. those staff almost entirely originate from the Thai Hi-So (regular folks almost never had a chance to land a Job at Thai) and they have earned salaries that are a lot higher (cabin crew double as high as I know) than the salaries of fruit-juice-cart-pushers that can be earned in Western countries. plus THAI staff used to earn up to 16 salaries a month..... no wonder they can not make a profit any longer

[Ricardo]

They need a international budget airline like qantas has jetstar. Flying to australua with three full meals is a waiste. Can fly jetstar business class for the same price as there economy.

"They need a international budget airline"

They already have one, it's called 'Thai Smile', and operates short-haul domestic/international routes.

They also have a major shareholding in Nokair.

But if they can't make a profit from running the parent-airline, why would anyone want to fund yet another try, at setting-up a further lower-cost subsidiary ?

[Valentine]

They should sell those planes no matter what the price offered as currently they will continue to lose money. Cut their losses which is not something most Thais are keen to do.

He should also follow the lead from the PM about cutting politicians pensions to twice the length of term served rather than for life. Far too many people getting free rides on Thai & outsiders virtually have zero chance of cheap or free upgrades. It seems like all those in power are blind to this elephant in the room. Thai is a public company & so any halfway decent business reporter should be able to glean those expenses from Thai accounts. It would be interesting to see how much Thai loses on all the free rides.

[geriatrickid]

TG has too much capacity. The only way to deal with this fast is to cut flight frequencies and the routes with the lowest load factors. TG is doing this now.

This is what every major airline did 5 years ago. The lost recent load factors are grim. Very grim.

A\ (06-Jan-2015) the following traffic highlights in Nov-2014:

• Passenger numbers: 1.6 million, -11% year-on-year;
• Passenger traffic (RPKs): -5.9%;
• Passenger load factor: 70.1%, -1.0 ppts;
• Domestic: 72%, -2.5 ppts;
• Regional: 77.2%, +4.3 ppts;
• Australia: 61.6%, -3.9 ppts;
• Europe: 65.6%, -6.2 ppts;
• North Pacific: 52.6%, -6.8 ppts;
• Africa: 42.3%, -22 ppts;
• Cargo volume: 54,842 tons, -9.5%;
• Cargo load factor: 54.1%, -2.2 ppts.

TG only has its toes in the frigid waters of recovery with its recent moves. There will have to be more cuts. Unfortunately, for those expecting lower fares in the coming year, you are in fantasy land. When load factors increase, fares increase. This is how DL, AC, AA, & UL went from bleeding red ink to posting large profits in the past year. I expect that TG will start following the international carriers with increased charges and fees in the foreign markets.

Yes, there will be staff cuts. We will see the staff protest, but it will happen. In the meantime, more and more routes will be turned over to Thai Smile allowing pay and benefits to be cut. More pax are crammed onto Thai Smile equipment than was the case when TG was operating the metal. It might work.

It worked for Lufthansa with its low cost carrier Germanwings . It's working for Air Canada with its Rouge unit.. This is what AF has tried to do with its overpaid and bloated workforce as it shifts more flights to its lower cost unit, but this has been less than successful.

The end result will be a trend to tighter configs, what North American pax derisively call "slave ships" and higher air fares. Until TG gets there in 12-18 months, it is not going to be pretty as TG cuts back on F&B, refurbishments, and general upkeep. Don't expect the Royal Orchid lounges to be spruced up any time soon so get used to those tatty stained sofas, and the tuna fish sandwiches, because it will get worse before it gets better.

[Sviss Geez]

There's no market for 747's anymore unless they convert the plane to a cargo carrier. Any bids?

Africa might be interested if theycan pay for it on the never never system.

I bet the gov wont disclose how much theyre selling all this old junk for.

Ask Sradavarius37, post 2, he seems to be privy to the prices being asked.

[Sviss Geez]

Yes but will anybody buy them? Its a buyers market, and the typical THAI offering is to mark prices to high (see their ticket prices for example).

They have sold half of the stock they originally put on the market which isn't a bad hit rate so there are obviously buyers out there.

[Sviss Geez]

they should try running there business like other airlines ,look at there seat prices ,everybody is cheaper ,even BA ,what they need is western management that know what there doing

Yes, that's right, airlines in the west never have financial issues and they are all profitable.

[Artisi]

Sell a couple to the navy, this way they can put a few useless planes on the useless air-craft carrier they have tied-up along side the wharf 24/7. It would be of no value to anyone except it will stop people asking "where are the planes that are supposed to be on a navy aircraft carrier?"

[Johnny S]

The Pride of Thailand in a death-spiral - smooth as silk

[Chao Lao Beach]

As per the article it appears they are keeping the 340- 500's ? ( Long range ) Or are thye gone allready?

The Thai executives who authorised the purchase of the $200 million/plane A340's should be made to face the music for these white elephants. They won't fetch 10% of their purchase price! But knowing Thai bureaucracy, they are too busy enjoying their government funded country club retirements to care.

http://www.wsj.com/articles/SB30001424127887324049504578541300750306548

They allready put them on the market, took a deposit of a fair price then when found out it was a brown man the board cancelled the deal.

http://www.nationmultimedia.com/business/Some-THAI-directors-worried-Saudi-princes-offer-fo-30214982.html

Edited February 24, 2015 by Chao Lao Beach

[MaiChai]

Subsidiary Nok Air? Thought that got sold off to another company and subsidiary is Thai Smile?

[grantbkk]

Yesterday started planning a trip to Los Angeles and looked at a variety of business class airfares. Same distance and similar itinerary China $2,727, Korean Air about $970 more. Thai allows you to fly at their lowest fare of $4,619. Of course at that price you get service staff with at least 20 years more experience that may or may not drop dead before you get to your destination. It makes the Thai flight more interesting than their contemporaries. One more plus for buying the Thai flight would be new guy announcing last week that the Los Angeles route may me discontinued, marking Thai's triumphant exit from the United States.

[elgordo38]

Does this mean THAI will also lay off pilots, cabin staff, counter staff, maintenance people, etc., etc.?

Yeah they are buying some of them self flying aircraft from Google.

[kinmaew]

Why not just sell the whole airline its going nowhere I will never fly them again because other airlines run by non Thais have much better business models that meet customer needs.

[kinmaew]

Hold the phone.... The new Happiness State Airline (HSA) is coming soon. You MUST have fun and be a right wing nationalist to fly.

[gchurch259]

Thai os losing money on Moscow because of competition from Transaero and Nordwind, Russian Low Cost Carriers. I believe they fly to the wrong airport. They fly to DME which is an older and less desirable I prefer SVO easier and newer airport. There is another airport I believe MOW. DME has too many flights, bad Customs area and is undergoing major expansion. No parking for Limo, a long walk to their parking lot.

SVO is a better choice.