THAI to sell 30 properties overseas and in Thailand

[webfact]

THAI to sell 30 properties
The Nation

BANGKOK: -- Thai Airways International is selling properties overseas and in Thailand, as part of its rehabilitation plan.

THAI President Charamporn Jotikasthira told reporters that some of the 30 target properties are used as office while the rest as staff accommodation. Nineteen of them are in foreign countries.

"The plan is ready for the board of directors’ consideration in September," he said, adding that the sale is to reduce the operating cost.

Source: http://www.nationmultimedia.com/breakingnews/THAI-to-sell-30-properties-30266138.html


-- The Nation 2015-08-07

[webfact]

AVIATION
THAI's cost-cutting plan calls for sale of 30 properties
The Nation


THAI President Charamporn Jotikasthira

BANGKOK: -- Thai Airways International is selling properties overseas and in Thailand, as part of its rehabilitation plan that sets to turn around the loss-making airline.

THAI President Charamporn Jotikasthira told reporters that some of the 30 target properties are used as office while the rest as staff accommodation. Nineteen of them are in foreign countries.

"The plan is ready for the board of directors’ consideration in September," he said, adding that the sale is to reduce the operating cost.

He did not reveal the combined value of the properties. Among the first lot to be sold, comprising 3-4 properties, is the office in Sydney, Australia.

He added that under the business rehabilitation plan, implemented in January, the company has cut the operating cost by 6 per cent. Yet, this is still far from the 20 per cent target, to be achieved in 18 months.

Nevertheless, he saw a brighter future in turning around the national airline, reflecting through the Bt51 billion revenue in the first quarter of this year. The amount was Bt16 billion higher than the same period a year earlier.

His aim is from January 2016, THAI will start record monthly operating profits.

Source: http://www.nationmultimedia.com/new/2015/08/07/business/images/30266139-01_big.jpg


-- The Nation 2015-08-07

[tomross46]

This is a good first step. If the asset is not turning a profit and you can not justify it on the bottom line, it should be liquidated, There also are aircraft on the books that are not showing a profit, are not economical to operate, and the books indicates an inflated value. These items assets should be evaluated, by an independent auditor, and sold. The book value does not indicate the market value.

[Bodene]

When they start selling the farm in a fire-sale, they're in real trouble.

With the track record of what happens to THAI President's and CEO's I don't think I would care to be this guy. Applying for that job would be a high-risk strategy for CV development.

Mind you, Pridyathorn hasn't done badly from being almost completely incompetent. The original bad penny.

[ratcatcher]

I am sure many of these 'properties' are located in 'upscale' areas of some major cities. In fact I am sure many fall well into the ultra luxurious as far as accommodations are concerned.

A wise and vital move, when the ship (pardon the mixed metaphor) is sinking, abandon all unnecessary items.

Smooth as silk.

[steven100]

They did mention recently about staffing cuts also, but the number from memory wasn't nearly enough in my opinion. Thai airways has at least 20 % top heavy management that would be considered dead wood .... get rid of this and take an axe to corporate expenses and then figures will start to look better.

Edited August 7, 2015 by steven100

[laocowboy2]

This is a good first step. If the asset is not turning a profit and you can not justify it on the bottom line, it should be liquidated, There also are aircraft on the books that are not showing a profit, are not economical to operate, and the books indicates an inflated value. These items assets should be evaluated, by an independent auditor, and sold. The book value does not indicate the market value.

Ref the planes very true and Thai would love to be rid of them at once. BUT Thai is a state-owned company, and state-owned companies are prohibited from selling assets below book value. Crazy but that is the Law.

[marcusd]

Thai had airplanes they wanted to sell but could not get the RIGHT price. This was some time ago I read it here on Thai Visa. (Must be true..hahah)

Now if they want to sell, in business I was taught your first loss is your best loss otherwise the loss increases... meaning grab those dollars whilst you can as there may not be as many dollars with the next guy.

Selling planes and writing off the loss now could give Thai money to play with rather than having a load of planes rusting (pun) on the tarmac.

I know they are not metal that rusts guys...

[gchurch259]

They are the process of selling some of their older aircraft at the present time.

This is a good first step. If the asset is not turning a profit and you can not justify it on the bottom line, it should be liquidated, There also are aircraft on the books that are not showing a profit, are not economical to operate, and the books indicates an inflated value. These items assets should be evaluated, by an independent auditor, and sold. The book value does not indicate the market value.

Ref the planes very true and Thai would love to be rid of them at once. BUT Thai is a state-owned company, and state-owned companies are prohibited from selling assets below book value. Crazy but that is the Law.

[smutcakes]

I am sure many of these 'properties' are located in 'upscale' areas of some major cities. In fact I am sure many fall well into the ultra luxurious as far as accommodations are concerned.

A wise and vital move, when the ship (pardon the mixed metaphor) is sinking, abandon all unnecessary items.

Smooth as silk.

I wonder if some of these luxurious properties will be sold off market to other wealthy Thai individuals or companies/funds and then leased back to THAI at premium market rates....

[kkerry]

I don't know if they own the building in Sydney where the Thai office is located, just a very short walk from Circular Quay, but if they do then the red hot Sydney property market will see them make a packet.

[fish fingers]

Thai Airways Board need their perks one way or the other

[geriatrickid]

They did mention recently about staffing cuts also, but the number from memory wasn't nearly enough in my opinion. Thai airways has at least 20 % top heavy management that would be considered dead wood .... get rid of this and take an axe to corporate expenses and then figures will start to look better.

Where did you get the 20% top heavy management number? I haven't seen this referenced in any of the investment reviews.

Senior managers are often former active service military personnel. It is unlikely that they would ever be laid off. Thai Airways is a cash cow for for the military.

[SOTIRIOS]

...let's hope this perverse free-for-all comes to an end...

[TallGuyJohninBKK]

So, 19 of the properties are in countries outside of Thailand. And yet, I don't think THAI as yet is abandoning service to anywhere near that number of countries. Just the U.S. with the upcoming end of their L.A. service, and perhaps a couple others.

So, that kind of suggests that there will be a whole lot other places where they'll continue to need office space and other facilities for their staff -- even if they're no longer owning the buildings themselves. Which kind of opens the door to what a prior poster above suggested about the potential for THAI selling to some connected VIPs and then turning around and paying inflated prices for leasing/rental.

That would, after all, be the normal way to handle such things here.

[chilli42]

I will admit that I don't have all the facts at hand .... nor does anyone outside of THAI. I do know it's easy to sell off assets to generate cash. It's easy to cut costs by reducing staff and shutting down unproductive equipment. My 13 year old daughter could figure that out. The bit that matters once you have done this is do you have a brand, the marketing talent, customer service and the operations to run a successful and grow thing profitable airline? If not that cash will disappear like dew in the morning sun and you will be back in the same place in a couple of years. CEO's and business leaders get paid to run the business. Selling assets and cutting costs are a great way for a CEO to show he is doing something about a business in crisis. It's really just for public consumption, a quick fix. I have seen nothing that indicates THAI even has a grasp of the underlying issues much less a plan to restore the business to health. This is not a management team I would be betting my hard earned cash on, they are clueless.

[Chicog]

Gulf Air did this in attempt at "breaking even".

It didn't solve the fundamental problems of the business, and they are still pissing cash.

[greenchair]

Weren't they lucky that they could buy a piece of land in Australia and now sell it.

[Lite Beer]

PLANNED PROFITABILITY BY 2016
THAI to offload properties
SUCHAT SRITAMA
THE NATION

BANGKOK: -- Carrier hopes sell-off and other measures will see it return to operating profitability by 2016

Thai Airways International expects to return to operating profitability in January after finalising its plan to sell some of its 34 local and overseas properties - worth several billion baht in total - as part of its turnaround effort.

Besides the property sales, the airline has discontinued several money-losing services, sold unused aircraft and implemented voluntary and early retirement programmes.

The property disposal plan will be executed in the next few months, according to Narongchai Wongthanavimok, the airline's executive vice president and chief financial officer.

"We have been discussing this plan for some time. Now, it's set to be finalised. We're selling office and staff accommodation in Thailand and abroad," he said.

In addition to property ownership, the airline holds shares in several hotels, but it remains unclear if they will also be offered for sale.

Due to fierce competition from low-cost airlines and inefficiency, the airline has faced big accumulated losses over the past several years, requiring it to undergo a business rehabilitation plan, which started January.

So far, THAI has cut its operating expenses by 6 per cent but has targeted 20 per cent to stay competitive and profitable.

The cost-cutting plan is

supposed to be achieved in 18 months.

A large inventory of unused aircraft is another drag on its finances, with up to 17 jetliners needing to sold after 19 and 10 aircraft were sold earlier this year and in 2014, respectively.

Huge job cuts

The airline has targeted cutting 1,400 jobs via the voluntary and early retirement programmes.

In the first quarter, it reported total revenue of Bt51 billion and a net profit of Bt4.5 billion. The airline, however, posted a net loss of Bt15 billion in 2014, up by 29 per cent, or Bt3.5 billion, from the 2013 loss.

As of March, THAI and its subsidiaries had total assets of Bt292 billion, a decrease of Bt15 billion, or 4.9 per cent, from December 2014.

Regarding loss-making services, the airline plans to suspend more flights, including from Bangkok to Los Angeles and Bangkok to Rome, from October 25.

For years the airline persisted with these routes, costing it more than Bt100 million per year.

Moreover, it will cut the frequency of its flights to Kolkata, and transfer the operations of three routes, Hyderabad in India, Changsha in China and Luang Prabang in Laos, to its subsidiary, THAI Smile.

Narongchai said the property disposal plan would be approved by the board of directors by September.

THAI owns 21 offices and staff accommodation properties around the country and another 13 properties overseas.

Narongchai said the decision on each property would be made carefully, based on various factors including utilisation, location, and market value.

Some of the 34 properties may be put on the market for sale immediately while others could be kept for further expansion or renovation.

The executive declined to be more specific but THAI president Charamporn Jotikasthira said earlier this week the sale would reduce operating costs.

Charamporn did not reveal the combined value of the properties, but said up to four offices in Sydney were among the first batch to be offered for sale.

The airline hopes to see a brighter future soon after implementing these moves to return to an operating profit.

Source: http://www.thaivisa.com/forum/forum/18-thailand-news/

-- The Nation 2015-08-08

[whiteman]

and pigs can fly

[biplanebluey]

and pigs can fly

Yep---- the beginning of the end

[ginjag]

The biggest expenses by far are it's wages. Please Thai give us 2 wage expenses=====1 staff at Thai,........2 execs-management-committee --chairpersons--etc.,

This will give the people/public a view to where the profits are going.

[ginjag]

Yesterday compare air fares, this is fact. Thai-BKK-LHR return next month way over 40,000 baht.

Eva Air -direct flight---Bkk-LHR 35,000 baht-------I have a printout. travel agent Udon. and Eva better service. THAI execs read THIS.

[smutcakes]

Yesterday compare air fares, this is fact. Thai-BKK-LHR return next month way over 40,000 baht.

Eva Air -direct flight---Bkk-LHR 35,000 baht-------I have a printout. travel agent Udon. and Eva better service. THAI execs read THIS.

I don't think 100 quid difference is much, there is no reason why THAI have to be absolutely the cheapest, out of those two options i would probably still fly THAI. There are far more exaggerated examples of their crap pricing. A few months ago a restrictive business class BA flight could be had for just a couple of hundred quid more than THAI economy.

Anyway i would expect THAI BKK-Heathrow to be more expensive at this time and next month as demand will be high with thousands of Aussies coming over for the World Cup in the UK, and coming through BKK is a popular routing.

[TallGuyJohninBKK]

A large inventory of unused aircraft is another drag on its finances, with up to 17 jetliners needing to sold after 19 and 10 aircraft were sold earlier this year and in 2014, respectively.

I try to follow the news, particularly as regards to aviation topics... But, I must say, I don't recall hearing any news over the past two years about THAI having been able to successfully sell 29 different aircraft (19 in 2015 and 10 in 2014). Usually, that kind of stuff makes the news somewhere.

I do recall THAI having some plans to sell a couple of their old, fuel-guzzling aircraft to a Middle East entity that got bogged down in nasty public accusations over alleged maintenance checks on those aircraft not having been properly done.

[bamnutsak]

THAI had BAIN come in earlier this year. Their report suggested many things, including the real estate sale, and subsequent lease back.

The THAI board of overseers was not pleased with this report.

Airlines are in the transportation/service business, not real-estate. Better to sell, and lease back.

TG is supposed to be implementing a new inventory management - their current one is a chalk-board - which will (supposedly) monitor prices and make adjustments in real-time.

YMMV.

[Jimlove]

Death Spiral for THAI continues ....

[hawksway]

Why not sell it's low cost subsidiary Thai Smile and the shareholding in Nok Air plus Thai Engineering which could be snapped up by Haeco who would have greater competency to maintain Thai's aircraft to a higher air worthiness standard minimising the need for so many back up planes?

[sammygood]

i guess THAI is like thai landlords

in stead of lowering the price to a competitive one, they cling on to their high price in the hope ....

[bkkclio]

Why sell those properties? Can't they just lease out those properties, offices in prime locations are not as a priority as a decade ago, i believe that they could just rent out those prime location properties, and move the offices and staff residences to a more economic location. The costs of offices and staff residences in foreign countries are a fix cost... Thai Air. will still need offices spaces and accommodations for their representatives. Unless they are in need of liquidity, in that case the sale of those properties (30) will just be a mere blink of positivity in the books.

Thai should present the case of selling those 17 airplanes. "Thai is a state-owned company, and state-owned companies are prohibited from selling assets below book value. Crazy but that is the Law"..... in this situation the law should be changed, and/ or honest and professional estimate of the value of those aircraft should be done, Checking this website: "http://www.airfleets.net/flottecie/Thai%20Airways.htm" , Thai Airways has 36 airplanes "stored". this a huge cost,.... Tarmac costs, maintenance etc... If they cannot sell those aircraft because no one would buy them, they ought to give them away for free to any charity willing enough to take them.

And, YES, Thai Airways has way to much personnel that are superfluous to a economic operation.... just look at the Head Offices in Viphavadee Rd. To operate aircraft you'll need a certain amount of crew , of engineers etc... operative personnel, that can be quantified by a rational formula. There is no need for all those "Administrative" personnel....secretaries, managers, vice presidents...etc... I will make you smiles if you find out how many VPs TG has...

Thai Airways, is one of the reasons of this Kingdom prosperity, 55 or more years ago it started to operate and as a National Airline and projected this country in the international light.. Thai Airways played a major role in the development of this country, ambassador of culture and major economic developer. If not for this airline, many of you , would have never known where the "Land of Smiles" is. British Airways in its past was "Imperial Airways Limited"...Singapore Airlines played and plays such a major role in the economy of that island. As a National Airline , Thai Airways had and has to operate some routes for "Nationals" interests, of course now 'things' have changed, Routes that were open in the interest of the country, if not economical, will and should be closed.

It's sad, very sad, that this company has still have to obey the orders of the various governments, she had endured since the first flight,in terms of procurements, and operations.... Far away are the times of "Imperial Airways Limited", ex Pan Am, Qantas, Lufthansa, Jal.. all this major airlines passed the point from being a "National Flag Carrier" to be an "Economical effective" Airline.....

If it wasn't for Thai Airways many of us would not have ever known this "Land of Smiles"