Top Thai Airways execs to take pay cuts in loss-making months

[webfact]

Top Thai Airways execs to take pay cuts in loss-making months
SOMLUCK SRIMALEE
THE NATION

BANGKOK: -- THAI AIRWAYS International's eight top-level executives will take a 10-per-cent pay cut in loss-making months until the airline returns to profitability, its president announced yesterday amid growing criticism of the carrier's poor management and huge losses.

"We will cut 10 per cent of our salary in a month that shows a net loss, while in a month that shows a net profit, there will be no cut. This will be effective from this month until our business recovers," THAI president Charamporn Jotikasthira said at a press conference yesterday after the company reported a net loss of Bt9.89 billion for the third quarter.

A net loss of Bt18.09 billion was posted for the first nine months of the year.

The company reported that revenue from passenger and cargo business was Bt137 billion in the first nine months, down 1.4 per cent from Bt139 billion in the same period last year.

Charamporn accepted that the national flag carrier's plan to cut overall costs to the tune of Bt10.7 billion this year would now be impossible to achieve, as some of the cost-reduction programme had not gone according to plan.

"We will cut costs by about Bt7 billion to Bt8 billion this year, having cut costs worth about Bt5 billion in the first nine months," he said. However, he expressed confidence that THAI's business restructuring would enable the company to achieve the target of generating a net profit in the first quarter of next year, by cutting costs of up to Bt20 billion and increasing revenue over the course of 2016.

The company's board yesterday approved an emergency plan to reduce its business costs.

The measures include: reducing those parts of the investment plan that are not essential for the business, with investment in airline safety for customers not included in the reduction; improved inventory management and fuel management, especially fuel hedging; improved management of route expansion; a cut in advertising costs; restriction on overtime costs; and improvement in the procurement process.

The board also approved a plan to increase the company's revenue, such as by revising routes by focusing on those that generate the best return to the business and cutting some that do not generate a return.

Charamporn said that of the 21 aspects of the restructuring plan that was proposed to the carrier's board and the State Enterprise Policy Committee early this year, the company had successfully implemented seven elements.

These include a reduction of 1,400 staff under an early-retirement campaign this year. The company has already had around 800 takers, and believes it can achieve the targeted number by the year's end.

Bt2-billion cut in staff costs

"We also plan to cut staff costs worth Bt2 billion in 2016, as part of our plan to cut costs worth Bt20 billion in total next year," he added.

Another 12 elements of the restructuring plan are under way, while the remaining two will be delayed until next year to avoid affecting customer service this year, he said.

The president also said the company was continuing the plan to sell 34 assets worth between Bt5 billion and Bt6 billion domestically and overseas, such as housing for staff overseas and in Thailand, and some of its offices abroad.

"We are ready to sell, but it is dependent on market sentiment. Property values in Europe are still dropping, as a result of which we are still delaying some overseas asset sales," he said.

Meanwhile, the plan to sell 42 aircraft this year has also been revised, to a minimum sale of 28 planes.

Eighteen aircraft were sold during the first nine months, leaving at least 10 to be sold in the current quarter.

Source: http://www.nationmultimedia.com/business/Top-Thai-Airways-execs-to-take-pay-cuts-in-loss-ma-30272751.html

-- The Nation 2015-11-12

[SABloke]

Pretty useless if we don't know how much they make. If they make 500 000 a month, 10% cuts will only save about 400 000 Baht, however, if they make say 5 million a month I could see some impact BUT I would also say that they're getting paid way too much in the first place.

[apetley]

What would really hurt would be losing the free first class flights for themselves and family during loss making months but I doubt that was considered somehow.

[tx22cb]

How about 1 Dept Head fired every Quarter until targets are met?

How about no free flights for anyone?

The President is a Dead Man Walking. New CEO needed.

[slapout]

There was mention of only 8 individuals involved in the 10% proposal. As mentioned, no reference to salaries these people are pulling down.

How about the perks (free /reduced fare flights

for Thai employees, retired employees, political figures and cronies, famlies, etc?)

[BSJ]

It reflects on what is wrong with many things in the country. Cronyism, corruption, inefficiency need to be stamped out before they can move ahead.

[waldroj]

All those tourist arrivals (increasing every month, according to TAT), yet THAI continues to make a loss month on month.

Serious culture problem exists, AND no one is willing to do anything about it. Even the threat of a red card won't change it any time soon.

Urgent assistance needed from a "foreign" turnaround specialist (who must be given a free hand to save some face for the national flag carrier).

[NongKhaiKid]

A pay cut during loss making months ?

Wait for the announcement that miraculously THAI has suddenly returned to profitability. ?

[theguyfromanotherforum]

Pretty useless if we don't know how much they make. If they make 500 000 a month, 10% cuts will only save about 400 000 Baht, however, if they make say 5 million a month I could see some impact BUT I would also say that they're getting paid way too much in the first place.

Excellent math

[deckape]

Pretty useless if we don't know how much they make. If they make 500 000 a month, 10% cuts will only save about 400 000 Baht, however, if they make say 5 million a month I could see some impact BUT I would also say that they're getting paid way too much in the first place.

Excellent math

His math is okay. Look at the op again.

[SABloke]

Pretty useless if we don't know how much they make. If they make 500 000 a month, 10% cuts will only save about 400 000 Baht, however, if they make say 5 million a month I could see some impact BUT I would also say that they're getting paid way too much in the first place.

Excellent math

Thanks, but I wouldn't call it ''excellent''...pretty basic really

8 people deducting 10% of a 500 000 Baht salary is 400 000 Baht is it not?

Edited November 12, 2015 by SABloke

[Eric Loh]

The writing was on the wall when the Energy Ministry appointed Khun Charamporn. It's a buddy appointment, Junta style when they appointed someone without any direct aviation experience. The company is in dire need of an experience CEO even is he/she is foreigner. On record, Thai Airway loses is the worst in their history during this junta rule.

[TKDfella]

The writing was on the wall when the Energy Ministry appointed Khun Charamporn. It's a buddy appointment, Junta style when they appointed someone without any direct aviation experience. The company is in dire need of an experience CEO even is he/she is foreigner. On record, Thai Airway loses is the worst in their history during this junta rule.

Agreed, and it could get worse if foreign investors start moving towards another neighboring country where elections have just been held.

[Srikcir]

Resorting to salary sacrifices or a foreign experienced airline exec won't change anything so long as it is state-owned. The government needs to sell its ownership and get out of the business. Leave its operations to free enterprise to live or die on its own economic merits.

[Briggsy]

Thai Airways is, always has been and always will be a wealth distribution scheme from the unconnected (that's the taxpayer which includes me and you since we pay more VAT and excise duty than we think) to the connected (politicians, military particularly RTAF, top civil servants, etc.) in the form of inflated salaries and benefits, free travel, director's allowances, pensions, etc.

The bit about it being an airline and a plc run for the benefit of its shareholders is at best secondary and often just incidental.

They seem to need to improve their opaque accounting skills. Far too much negative spotlight recently. If they were able to hide the losses more effectively then there would not be all this scrutiny.

[Aussieroaming]

They need to re-structure the cost basis for their first and business class products to reflect a second tier service. They just don't stand up to the service levels provided by The top Middle East carriers, Cathay and Singapore Airlines yet their ticket costs are at a par. It's rare to see a good promo on Thai these days and very little incentive to be an ROP member.

I'm still a gold member with Thai but have chosen to fly other carriers for the most of my flights in the last two years based on value for money.

[webfact]

THAI executives adopt 10% pay cuts to ease sustained loss



BANGKOK: -- Thai Airways International is now cutting cost to ease its heavy operation loss again in the third quarter, starting with salary cuts of its executives by 10%.

The measure came after THAI suffered sustained heavy losses of over 18 billion baht in the last three quarter.

The national flag carrier yesterday announced turnover results for its 3rd quarter operations which indicated losses in excess of 9.9 billion baht.

Adding all three quarters turnover results reveal a total net loss of 18 billion baht for the entire year.

The company was however continuing in its efforts to stop the massive hemorrhage by implementing reforms to cut costs and increase earnings.

Yesterday the deputy director of THAI signed an order whereby all eight executive vice presidents would have to take a 10% pay cut.

This reduction in wages also applies to the deputy director himself.

The executive however admitted that so far they have only been able to trim 7 – 8 billion baht which is lower that the desired target of 10 billion baht.

Source: http://englishnews.thaipbs.or.th/thai-executives-adopt-10-pay-cuts-to-ease-sustained-loss


-- Thai PBS 2015-11-12

[slapout]

To even approach the expenses of the airline or any company with definable expense outlays, a line item expense

monthly printout has to be avaliable for the past few months and be current , which would include accounts /vendors owed funds, payment history of expenses, etc.

Having heard of the accounting procedures, methods and even a complete lack of a dependable P&L system used by many companies, systems in Thailand I can envision the problems that will /are being encountered in determining who spent what , for what,

to who and what was recieved in return.

There are some very reputable companies who have investigated operations similar to this airline, found the real problems, found solutions /corrections to be made and turned companies around in a relative short time. I do not recall one of these companies accomplishing it with a single personel change.

[Eric Loh]

Resorting to salary sacrifices or a foreign experienced airline exec won't change anything so long as it is state-owned. The government needs to sell its ownership and get out of the business. Leave its operations to free enterprise to live or die on its own economic merits.

Thai Airways was privatized 24 years ago but for nationalist reasons, it was only partially privatized with the Ministry of Finance retaining 51% and retaining the influence on the company direction and profitability. That's where it went wrong when the Government still control the airline.

Some of the ills are quite well documented and the government knows but seem unable to do much. For starter, the airline has seen 19 presidents in last 24 years. There also has a 25% excess in employees when productivity measured against other successful airlines.Aging fleets, over generous and below cost tickets to employees, mountain of debts and an oversize board. Better to bankrupt the company and re-start again.

[Searat7]

Big need to slash the payroll and get down to the proper staffing. Reducing by only 1400 positions is a joke....no meaningful change will occur until a real airline executive is hired with no restrictions

[casualbiker]

The writing was on the wall when the Energy Ministry appointed Khun Charamporn. It's a buddy appointment, Junta style when they appointed someone without any direct aviation experience. The company is in dire need of an experience CEO even is he/she is foreigner. On record, Thai Airway loses is the worst in their history during this junta rule.

Have Thai airways EVER had a CEO with initial airline experience?

[waldroj]

Guys,

As a shareholder, I am concerned about the poor performance of THAI.

The third-quarter management statement makes for quite disturbing reading (see http://thai.listedcompany.com/mdna.html). This may answer some questions raised by others in this discussion.

[Ulic]

So basically a 10% salary reduction for the year. No big deal.

[realenglish1]

They still don't get it You cannot charge more money for a flight then other carriers charge and expect to turn a profit

I.E. Thai airways to Hong Kong 14,000 baht. AIr Asia 9,500 Tiger AIR 6500

The question is What does Thai airways offer in a 2 hour flight that the other airlines do not offer ? NOT VERY MUCH

So then the next question is SO why should I spend 14,000 for a a ticket when I can fly for less for basically the same service ?

When the CEO starts to understand this then he may find ways to turn the airline around Until then the airline will continue to bleed money and loose.

Taking 10% reduction in pay is like sticking a finger in the Dyke.

I am sure to book on Thai airways next time because the CEO took a pay reduction "NOT"

Edited November 12, 2015 by realenglish1

[manhood]

There are many problems to solve: the salary of the managers have to get down with the loss of the airline as that's all mismanagement caused by the manager!!!!!!

the word mismanagement makes already clear who is responsible!

AND they have to work on the bad service of Thai, the high prices if compare to many other airlines with better service, reduce staff as there are tooo many staff without any competence of their work

And there must be a stop of robbing money from the slush funds of THAI from any person involved in running the business such as managers, politicians, military, police and and and...ups this line is endless!

[Thai at Heart]

They need to unwind all their supply contracts and renegotiate and cull a massive amount of the staff, then look at their pricing. They are losing boat loads every quarter. It isn't going to change. It's a bug competitive market out there.

[scorecard]

Big need to slash the payroll and get down to the proper staffing. Reducing by only 1400 positions is a joke....no meaningful change will occur until a real airline executive is hired with no restrictions

- Many years ago Thai gave all employees a pay rise by adding the personal tax due to the gross income. Wonder if they still do it?

- Many years ago Thai raised the salaries of all cabin crew to be equal to SQ cabin crew etc. Why because if the Thai crew happened to walk past an SQ crew at an airport it was just too embarrassing that the SQ crew would know that Thai crew were paid less. Wonder if it's been maintained.

- Many years ago I was involved in an assessment of the Thai organization chart. We quickly discovered several hundred 'manager' positions which had been created for no valid reason in terms of adding value. Most had limited /obscure duties and many had no reporting staff. Wonder if these positions still exist.

- Many years ago I was involved in a project to assess 'job size' of all Thai jobs. (Assessment of the job description, not assessment of people/staff). After the project was completed there was an internal activity to change many of the job sizes by interfering politicians, etc. Wonder if it's still the same.

- Many years ago I attended an internal Thai seminar. aligned to the discussions I asked the director for HR what criteria / measurement scale and definitions they used to conduct an annual personal performance assessment of cabin crew (which is a very large slice of their total employees). The answer: We don't conduct performance reviews, we don't need to because many of our cabin crew have a masters degree.

- I wonder how many employees have been promoted way beyond their capabilities. This is of course rampant in all Thai ministries, the result being that the enterprise is being manager by incapable / uninterested people. A recipe for disaster. You can find it in many other developing countries too.

[z42]

It appears to be a complete mess and then some. Trying to polish a turd is never going to result in anything more than a turd.

I wonder who actually pays to fly with them. Almost every flight price to destinations outside Thailand is double what the cheaper (and in many cases highly reputable) carriers are charging. The prices are an insult largely

[tomyummer]

Just wondering if there had been any cuts in pensions from the last retirees from past regimes? Are pensions counted with part of the big monthly operating losses? I could imagine it being a huge burden.

[steveyinasia]

Something does not add up with this airline, they charge more than the others, their flights are mostly full on the popular routes yet they still make massive losses. Take a real look at where the costs are.