THAI told to ride out the turbulence

[webfact]

THAI told to ride out the turbulence
SUCHAT SRITAMA
THE NATION

BANGKOK: -- Shareholders of Thai Airways International (THAI), out of fear for the future of their airline, are pressing management to put out more marketing efforts and prevent prying by politicians in order to ride out the current turbulence.

"The airline is facing tough competition due to more players in the market especially low-cost carriers. Budget airlines and premium rivals are stealing THAI's passengers through their attractive promotions," a shareholder told the airline's executives at the annual meeting last Friday.

The airline must draft a new strategy and initiate proactive marketing campaigns to regain passengers.

The state enterprise should also give shareholders some assurances that its financial status was viable, the shareholder added.

Another shareholder urged the airline's executives to reduce or end management by third parties especially politicians because these people have come and interfered with operations.

That is proven to have caused losses and damage for more than 10 years. Instead, the airline should have full decision-making independence to run its business, the shareholder said.

THAI's management was also questioned by shareholders over the establishment of NokScoot.

They wondered why THAI allowed its sister airline, Nok Air, to form NokScoot with a foreign partner instead of a local partner, reasoning that the new airline's income would not be added to the Thai economy, but would go to Singapore. A group of shareholders is preparing plans to frame this issue.

The disposal of old aircraft was also raised at the meeting, which noted that some other airlines such as Etihad were also placing aircraft on the market at very competitive prices. If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said.

Charamporn Jotikasthira, president of THAI, conceded that the airline lost a whopping Bt15 billion last year. It was also in the red the year before that. The airline has had to suspend dividends, but he insisted that its financial status and performance would improve this year.

THAI's average load factor climbed from 67 per cent last year to 76 per cent last month and has already gained altitude to 77 per cent this month. The airline expects to start seeing profits in the first quarter of 2017.

It is carrying out its restructuring plan including decommissioning ageing aircraft, slashing aircraft types from 11 to eight and cutting costs through an early retirement programme for staff.

It has scaled back its summer traffic programme by suspending the Bangkok-Moscow and Phuket-Seoul routes and loss-making routes such as day flights to London and Frankfurt.

Aircraft types have been adjusted to meet market needs. Madrid, Spain, will also be dropped from its destinations on September 5.

Source: http://www.nationmultimedia.com/business/THAI-told-to-ride-out-the-turbulance-30258801.html


-- The Nation 2015-04-27

[chooka]

Prevent prying by politicians. What does this mean exactly, is it saying they need to pull down the shades, buy a bigger mat and hang the out to lunch sign?

[Sealbash]

Prevent prying by politicians. What does this mean exactly, is it saying they need to pull down the shades, buy a bigger mat and hang the out to lunch sign?

Without knowing what politicians are interfering, and in what part of the business, we do not know what it means. But we can sure the worst if we simply wish to berate the Thais. I am not sure, but I somehow think Thai is not the only airline in the world that is struggling financially.

[Strangebrew]

Look it is called put butts in seats. And how do you do that will two ways offer lower prices and higher service. If your planes are flying 70% full and by cutting fares you get 90 to 95 % full you just got 25% increase in cash coming in. If you stop the practice for the time being of free flights for the fat cats Now more paying seats. Reduce Executives salary till airline shows profit, hedge your fuel purchases while costs are lower buy future supplies. Seriously improve inspection for safety on all aircraft go above and beyond whats asked. Be proactive not reactive.

[NongKhaiKid]

I'm sure politicians and others pry, if nothing else out of fear that their freebies, upgrades and holding departures until they arrive might be compromised.

I am a VIP, I am important and everything else is secondary.

[Ricardo]

"Budget airlines and premium rivals are stealing THAI's passengers through their attractive promotions," a shareholder told"

As though THAI has some sort of inherent right to passengers to/from Thailand ? !

Just another case of 'This is Thainess'.

[JAG]

" If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said."

Amazing, can you really pawn an airliner?

[Ricardo]

"They wondered why THAI allowed its sister airline, Nok Air, to form NokScoot with a foreign partner instead of a local partner, reasoning that the new airline's income would not be added to the Thai economy, but would go to Singapore. A group of shareholders is preparing plans to frame this issue."

Perhaps because Nok is independently-managed, and profitable, unlike one of its major shareholders ?

The "group of shareholders" should rather be campaigning, for the Nok management-team to be promoted, and run the main airline instead, since they've demonstrated their professional-ability to run their particular business better than the main-board runs theirs !

[kingalfred]

The "birds flown" , too late to save it other than big price cuts in fares and that aint the thai way to regain business!

Edited April 27, 2015 by kingalfred

[JAG]

The "birds flown" , too late to save it other than big price cuts in fares and that aint the thai way to regain business!

There will be a way found to prop it up. There are too many influential people involved, and way too much face to be lost.

[Chao Lao Beach]

The disposal of old aircraft was also raised at the meeting, which noted that some other airlines such as Etihad were also placing aircraft on the market at very competitive prices. If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said

So they can't be sold, so just pawn it ???

Look at them freakking out about NokScoot, naughty Singapore. I am amazed they are not freking out about Star Alliance ! Idiots

[JAG]

I have this image of rocking up at the Government Pawn Shop - "How much can you give me for this Boeing 747?"

[harkish]

-----------

The "group of shareholders" should rather be campaigning, for the Nok management-team to be promoted, and run the main airline instead, since they've demonstrated their professional-ability to run their particular business better than the main-board runs theirs !

-----------

Exactly. If you are losing a half billion dollars a year, do you let board members and their families fly free? Or anyone for that matter, no matter what position they have? A truly professional, independent management team would cut benefits to insiders and especially outsiders before it cuts staff; it would look at anything that doesn't add value and cut it. But this wouldn't suit certain powerful people, would it?

I really like Thai and particularly its staff - flight crews are typically great - but have been on so many of their flights where business class is full, with many non-paying 'customers', while economy is half or less empty. Meanwhile, unused planes are lined up at Don Muang, going to seed, because some people don't want to lose face by selling them at a loss. Someone should be fired, and some professionals brought in and given the independance and responsibility to clean this mess up.

[Thaddeus]

"They wondered why THAI allowed its sister airline, Nok Air, to form NokScoot with a foreign partner instead of a local partner, reasoning that the new airline's income would not be added to the Thai economy, but would go to Singapore. A group of shareholders is preparing plans to frame this issue."

Perhaps because Nok is independently-managed, and profitable, unlike one of its major shareholders ?

The "group of shareholders" should rather be campaigning, for the Nok management-team to be promoted, and run the main airline instead, since they've demonstrated their professional-ability to run their particular business better than the main-board runs theirs !

Greed is blind Ric

And deaf.

[Searat7]

THAI will not return to profitability until an experienced airline executive(CEO) is hired and given free reign to make difficult decisions including significant staff reduction. The airline also needs to recognize that old airplanes (the A 340's are not really old) need to be sold at market value, not book value which will result in additional losses. I was on a THAI 747 from Sydney to Bangkok in March and the Economy section was no more than half full but a flight attendant told me the upper classes were full- I wonder how many of those passengers were paying customers !

[EyesWideOpen]

The "birds flown" , too late to save it other than big price cuts in fares and that aint the thai way to regain business!

There will be a way found to prop it up. There are too many influential people involved, and way too much face to be lost.

Certainly true from a desire standpoint. However if massive losses continue,

at some point the ax will have to fall. And at that point things could get

brutal. But whatever they do, they will have to cut fares as they have become

the butt of jokes now due to high pricing. The Thai way of raising prices

when demand is low may work for some low end Thai guest house, but in the

international air carrier market it is death......

[Pii Kate]

I don't know much about finances but I do know when the companies I am invested in are planning on making big changes (Nokscoot) I get sent a prospectus and get to vote on the deal. So if you ASIA shareholders sit on your butts enjoying the benefits without taking the slightest bit of responsibility for your company ??????????? I don't even know how to end this sentence, I'm stunned. Money comes in because you want it without any personal involvement other than cashing the check? Protest a bit louder. Go straight to the Gen/PM. Advertise your ignorance and see how many more international companies back off from Thailand.

[Pii Kate]

Oh, ignorance and greed. Greed. greed, greed.

[newnative]

As long as their fares are twice as much as other airlines it's going to be a long, bumpy ride.

[wabothai]

Found myself a (one way) ticket to Europe for 450+, Thai 2500 euro. One of the most expensive tickets. Beats me.

[geriatrickid]

Step1: The government must enforce the airline safety rules. This will ground many of the LCCs who have eaten into TG's market. TG has a much higher standard of safety and compliance than do some of the LCCs. Not all LCCs are bad, but IMO some should not be flying.

Step 2: Aside from the transport of the usual VIPs and folks who qualify for free airfare, TG assumes some other transport responsibilities: It might be more appropriate if the military took over some of this responsibility as is done in other countries. A transfer of some aircraft would be included. Forum rules do not allow me to be more specific.

Step 3: The strategy of Calin Rovenscu should be used. He is the CEO of Air Canada who eliminated a massive employee pension deficit and restored profitability at Air Canada. He also reversed the decline of the airline transforming it into the best full service airline in North America. (Delta will soon take over, but Delta has had a similar strategy as Air Canada.) Thai Smile is a key part of this strategy.

Step 4: Withdraw from unprofitable routes and use code shares with *A partners. Reduce frequency on several of the EU routes until the new aircraft are delivered. Transfer more of the marginal and price sensitive leisure routes to Thai Smile. People want cheap airfares. Fine. Give it to them with the reduced service low fares require.

Step 5: Cut the workforce to reflect reduced routes and frequencies. Stop acting as an employment center for the military's retired personnel who wish to top up their pensions.

[callaway]

Lower your prices and improve your service then customers will come. When there is less customers the business practise is to market your product better and give incentives for your former customers to re-use your service. Not up the price for the few that still use the service. Also while your at it you can introduce new flying stock as bi-planes went out a long time ago. No matter how you polish them they are still old turds.

[Suffinator]

"The airline is facing tough competition due to more players in the market especially low-cost carriers. Budget airlines and premium rivals are stealing THAI's passengers through their attractive promotions," a shareholder told the airline's executives at the annual meeting last Friday.

And there is the Thai mentality. Never mind about fair competition because they know they don't have the smarts to compete and therefore consider it stealing. Considering how corrupt the society is they would certainly know all about stealing but unfortunately NOTHING about fair and open competition.

The state enterprise should also give shareholders some assurances that its financial status was viable, the shareholder added.

These shareholders are delusional ... haven't the grasped the concept of 'investor risk'? You would think they would be dumping THAI shares and buying up share in competing airlines but no ... cry like babies and demand the gov help.

Another shareholder urged the airline's executives to reduce or end management by third parties especially politicians because these people have come and interfered with operations.

Well they got that part right in part ... welcome to cronyism and graft.

They wondered why THAI allowed its sister airline, Nok Air, to form NokScoot with a foreign partner instead of a local partner, reasoning that the new airline's income would not be added to the Thai economy, but would go to Singapore. A group of shareholders is preparing plans to frame this issue.

Maybe, just floating an idea here, that management realized that their foreign partners had more of an idea on how to make and run a profitable airline. Singaporeans are not subjected to cronyism or graft and therefore are free to WORK for their money.

The disposal of old aircraft was also raised at the meeting, which noted that some other airlines such as Etihad were also placing aircraft on the market at very competitive prices. If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said.

Who would want to buy a plane that has been badly maintained and is now only fit for the scrap yard. They need to stop moaning about other airlines and look at the real issues that has effectively bankrupt THAI.

[JAG]

The "birds flown" , too late to save it other than big price cuts in fares and that aint the thai way to regain business!

There will be a way found to prop it up. There are too many influential people involved, and way too much face to be lost.

Certainly true from a desire standpoint. However if massive losses continue,

at some point the ax will have to fall. And at that point things could get

brutal. But whatever they do, they will have to cut fares as they have become

the butt of jokes now due to high pricing. The Thai way of raising prices

when demand is low may work for some low end Thai guest house, but in the

international air carrier market it is death......

Oh you're right enough, I am sure that however that there is a lot of road for the can to be kicked down first! When the wheels do come off it will be very brutal.

[FredNL]

Crazy !!!

Return ticket to Frankfurt in June (non stop flight)

- Lufthansa: 31,191 THB

- Thai: 133,113 THB

Edited April 27, 2015 by FredNL

[Sydebolle]

THAI reflects pretty much the state of Thailand as a state and hence is quite appropriately called THAI .

Scary is the fact, that once Chatchai Bunya-Ananta, Capt. Yothin and those "alien" Scandinavian experts - who built-up this airline to be among the best carriers in the world - left, retired, lost interest the airline went into free fall.

If you have a choice then do not fly Thai

[Robert24]

" If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said."

Amazing, can you really pawn an airliner?

sure no problem. You can also sell. Or sell and lease back.

[Srikcir]

"prevent prying by politicians "

So long as THAI remains State-owned and controlled, minority shareholders will have to tolerate politicians into the business, whether those politicians be civilian or military. The minority shareholders can only hope that the airlines continues its mismanagement and unprofitability such that the government sells its majority owneship.

But for many developing countries like Thailand, a national-named airlines is considered a symbol of the nation's sovereignty as much as is the national flag. It will fund losses out of the nation's treasury supplied by taxpayers and the minority shareholders will see no return on their investment. Supporting THAI's business with taxpayer funds is not cost effective to the nation and are better used as investment in the nation's infrastructure. But the military agenda does not comort with the typical civilian agenda in terms of needs of the electorate.

[laobali]

" If all of the old planes cannot find a buyer, they can be pawned at a local bank for cash, they said."

Amazing, can you really pawn an airliner?

If you can get it through the door, they'll probably take it.

[chilli42]

When you think about all of the services that an airline must buy .... food, cleaning, equipment, repair ... the procurement list is endless. Knowing how things are done here, is there any wonder why influential people want to get their hands into the rice bowl? The airline ends up with sub standard purchases at prices higher than they should be paying.