PM Prayut blames previous governments for THAI's financial woes

[GinBoy2]

There is a lot of focus on the freebies, VIP tickets etc etc. All good stuff but unfortunately as juicy as it is, it's a side show on making a profitable airline.

At the end of the day it comes down to a few basics: passenger load factor, fuel price, ROI of aircraft assets.

Well fuel price is the lowest in years, so if the other basics were in place should be no issue, but.....

Load factor is all about price in any given market, and multiple column inches have been written about that here and elsewhere, enough said.

ROI on the fixed assets, thats the huge unseen and unglamorous part of the financial iceberg sinking this ship. Multiple aircraft types, manufacturers are a maintenance nightmare and hugely costly. They can't even standardize engine manufacturers having engines from P&W, RR & GE. Trophy purchases such as the A380, bought on the 'me too' principle doesn't make for a profitable airline. Interesting point on the A380; they actually had second thoughts on going through with the purchase due to worries on actually making them pay (which is a debatable point in the aviation world, except for Emirates etc, who aren't really a airline, more of a hobby) until they discovered that the cancellation terms they had signed up for were more onerous than completing the purchase! Oh those crack negotiators.

Then there is the actual operational efficiency. Planes are huge investments and the depreciation is hitting the books 7x24x365, so the more time that aircraft is n the air generating revenue the better. Best way to watch the difference in efficiency is to watch domestic airlines at either DMK or a regional airport. NOK or AA turn their aircraft around in about 30 minutes, so in other words they are only in non revenue mode for about 30 minutes. A similar Thai Smile aircraft will sit on the ground for 60 minutes or more. Thats huge difference in operations and symptomatic of the problems besetting TG in general.

Tinker around with all the freebies but until the fundamentals are addressed it's window dressing.

The airline business is hard, massive capital investment to return Gross Margins in the pennies.

To quote Richard Branson: "Best way to make a Millionaire, is to take a Billionaire and have him buy an Airline"

Edited November 25, 2015 by GinBoy2

[sawadee1947]

it's a big loss of money. But as I could remember there had been plans to reorganize THAI by a new manager from outside. Air Asia. But Thais are proud to manage everything by themselves. So they decided not to take that good man who flew AirAsia into profit zone. THAI would have lost face if they employed that man.

And......it's so easy to point the finger to the former govt.

[geriatrickid]

Why blame past governments? Blame should be placed on all those who think they are entitled to bloated salaries and perks. Blame those who think they are entitled to freebie flights in business class. Blame those who think that who they know entitles them to a position at Thai Airways. In other words, for the first time in history, be responsible and quit shifting the blame.

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

You claim that the blame lies with the previous governments. Yes, to a certain extent, but it is a cop out to make that claim. How about being honest and recognizing that TG is a place to park former Royal Thai Air Force personnel? Why are there so many people associated with the Thai military at TG? Know what I believe? That if the airline "encouraged" to employ Thai military personnel and was instead allowed to hire competent people, the airline wouldn't be such a basket case. Sure, it's easy to blame all the past governments for appointments but is it fair and reasonable to do that? Let's blame Abhisit for his selection of the finance people during his tenure as PM. Let's blame Yingluck for the selection of former Air Marshals for the BoD. Please, get real. If the Thai military said to hire people, the government did as it was told.

You believe that the PM took steps to eliminate perks. Is that so? really? Please provide some examples of what was done, because I believe nothing has been done outside of the changes that were initiated through the changeover to Thai Smile. The only reason there has been a marked reduction in domestic upgrades is because there isn't much to upgrade to now that most of the domestic routes have been switched to Thai Smile with their all Y configs.

I'd like to know how you are going to back up the reduction of perks on the International routes because TG doesn't release the information. Are you just going to make a wishful guess? Have you you recently flown recently in the TG J or F cabins? Here's what I know: The quality of food has been slashed. F cabins on some routes are still flying under utilized. Most airlines would have scrapped F on routes with results like that. Why do you think there is still F class for LHR/FRA/NRT/CDG? I don't think it's because there is a market in the EU or Japan for those seats, particularly since better quality in J is available from BR/SQ/CX/LH/NH to name a few. My understanding is that TG is obliged to maintain F on some routes because it is a favored destination of some important people.

Edited November 25, 2015 by geriatrickid

[harada]

Well it seems like the current government is steering it into the right direction, cutting salaries of management, cutting staff, etc. The debt is too much that it will take a couple years to recover and return to profitability. I believe they bought a lot of new planes back then which is one of the primary reasons for the debt.

I remember back then, they even had a check-in line reserved for politicians only. If anyone is interested I can dig up the picture too.

Please do I'd like to see it.

[MZurf]

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

"Sorry, but the blame fully lies with previous governments."

I disagree. While Thai has been run as the private airline for the rich and connected since the start there has been ample opportunity for Prayuth to instigate a comprehensive reform of Thai Airways for the last 18 months.

Alas, as usual it has only been words.

http://www.thaivisa.com/forum/topic/733279-junta-cancels-free-flights-of-thai-board-members/

Junta cancels free flights of THAI board members

BANGKOK: -- National Council for Peace and Order Tuesday ordered cancellation of free flights of Thai Airways International board or directors.

The NCPO reasoned that the cancellation would help THAI cut cost and would save the national budget.

The move would be the first step of the junta's operation to cut lavish privileges of state enterprises' boards of directors.

While I applaud the measure (if it has happened) that is not the type of comprehensive reform Thai Airways needs. It is, as usual for the junta, more window dressing.

[Srikcir]

"cost-cutting plan should not affect low- and middle-ranking employees because they could not be blamed for the loss incurred which should be blamed on the previous boards and managements."

Therein lies the basic problem for the airline's recovery - it is state owned and cannot operate like a 100% publically-owned or closely-held company. Third party investors want a return of their capital within 5-7 years and a reasonable annual return (aka yield) on capital. It's all about money, not about job security. You want job security, perform profitably.

If the company employee ranks are bloated and inefficient, the company should have a right to discharge them as reduction in work force. If aircraft inventories are inefficient or bloated or routes unprofitable, the company should have the right to reduce those elements. If ticket sales can be improved by not allowing discounted seating (ie., military and government), the company should have the right to eliminate discounts.

If the Board of Directors are incapable of improving the company's profitability, it needs to be replaced according to the needs of the investors. What Thai Airways needs is a majority shareholder who has a track record of turning unprofitable companies around. Or in the alternative allow a majority ESOP - empower the employees to make financial and operational decisions.

Edited November 25, 2015 by Srikcir

[spidermike007]

No mention is every made of the bloated airfares, being charged by an airline that is simply not amongst the excellent airlines anymore. There are too many alternatives, and like the people in the tourism ministry, the executives of Thai do not seem to understand that we vote with our purses and wallets, and our feet. And we have voted not to spend crazy money to fly with an inferior airline. Seems the Thai people have made pretty much the same decision. I use Thai rarely. When I do, I find the planes a bit worn out, the food mediocre at best, and the service surprisingly mediocre. And my bags are usually late getting off the plane. I have none of those complaining with EVA, and some others. Get your house in order. Stop yacking incessantly, and start acting, and performing, as your people expect you to.

Edited November 25, 2015 by spidermike007

[waldroj]

Interesting to hear the junta head telling the new board and management that they had to bear the loss burden of their predecessors, just as his government had to bear the financial burden caused by its predecessors.

No one can deny that THAI appears to have suffered from the loss of CEO Piyasvasti Amranand in 2012, and subsequent appointment of Thaksin cronies to board positions. Yet, it's hard to see this Thai PBS article as being anything other than another example of propaganda in support of the junta’s fixation with the past as the cause of all Thailand’s woes today (18 months on from the coup).

If Prayut wants to dwell on the past, then maybe he needs to reflect on HIS interference in THAI affairs back in January (http://www.mcot.net/site/content?id=54c60636be0470bd408b457d) - this type of rhetoric and meddling only adds to the problem.

Someone should point out that reformist governments look to the future, trying to bring about real change, not trying to blame their current failures on previous administrations.

That said, the problems with THAI (although it is a publicly listed company) can easily be seen across the entire public sector in Thailand. Far too much upper management, far too many patronage appointments, and an apparent disregard to select people for senior position on merit (instead of through merit).

As for giving Chotikasathien “time to prove his worth”, well THAI does not seem to have too much time left for us to see this worth. What’s needed is a champion who can hit the ground running, with true inspirational leadership, positive action, and a desire to bring about tangible change. Much like Thailand needs now.

One could argue that THAI and Thailand are similar in how they are being lead, and the possible fate that awaits them, yet unlike THAI, Thailand does not appear to have a board monitoring Prayut’s performance!

[craigt3365]

Why blame past governments? Blame should be placed on all those who think they are entitled to bloated salaries and perks. Blame those who think they are entitled to freebie flights in business class. Blame those who think that who they know entitles them to a position at Thai Airways. In other words, for the first time in history, be responsible and quit shifting the blame.

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

You claim that the blame lies with the previous governments. Yes, to a certain extent, but it is a cop out to make that claim. How about being honest and recognizing that TG is a place to park former Royal Thai Air Force personnel? Why are there so many people associated with the Thai military at TG? Know what I believe? That if the airline "encouraged" to employ Thai military personnel and was instead allowed to hire competent people, the airline wouldn't be such a basket case. Sure, it's easy to blame all the past governments for appointments but is it fair and reasonable to do that? Let's blame Abhisit for his selection of the finance people during his tenure as PM. Let's blame Yingluck for the selection of former Air Marshals for the BoD. Please, get real. If the Thai military said to hire people, the government did as it was told.

You believe that the PM took steps to eliminate perks. Is that so? really? Please provide some examples of what was done, because I believe nothing has been done outside of the changes that were initiated through the changeover to Thai Smile. The only reason there has been a marked reduction in domestic upgrades is because there isn't much to upgrade to now that most of the domestic routes have been switched to Thai Smile with their all Y configs.

I'd like to know how you are going to back up the reduction of perks on the International routes because TG doesn't release the information. Are you just going to make a wishful guess? Have you you recently flown recently in the TG J or F cabins? Here's what I know: The quality of food has been slashed. F cabins on some routes are still flying under utilized. Most airlines would have scrapped F on routes with results like that. Why do you think there is still F class for LHR/FRA/NRT/CDG? I don't think it's because there is a market in the EU or Japan for those seats, particularly since better quality in J is available from BR/SQ/CX/LH/NH to name a few. My understanding is that TG is obliged to maintain F on some routes because it is a favored destination of some important people.

Thai Airways is run by the government. Yes, many former military got huge freebies as members of the board. But putting in a former pilot of head of this organization kinda makes sense. At least here! LOL.

But the politicians take the cake. Free trips for them and their entourage to Europe. Free to being back whatever they want, no limits, etc. So I do blame the previous governments. They had the power to make the changes, but did not. They just abused the system.

I've already posted a link where the junta eliminated the free perks for execs.

http://2bangkok.com/financial-guru-faber-strange-that-the-government-gets-to-appoint-thaksin-cronies-to-head-large-companies.html

Financial guru Faber: “Strange” that the government gets to appoint Thaksin cronies to head large companies

[worgeordie]

Mismanagement has been going on for years and years,I think they bought

new planes biased on commission paid,not the suitability of the aircraft for

the airline,they had too many different kinds and makes of planes,which

meant spares had to be kept for each kind,and pilots trained to fly different

planes,which proved very costly,plus too much interference from people that

do not know anything about how to run an airline,Thai used to be one of the

best,now.....!

regards Worgeordie

[apetley]

Ask Branson to spare 5 mins

Thai Air + Virgin ....

Nah......'Thai Virgin' just doesn't sound right.

[edwinchester]

Ask Branson to spare 5 mins

Thai Air + Virgin ....

Nah......'Thai Virgin' just doesn't sound right.

Yes, way too farfetched.

[ParadiseLost]

I just simply can't understand how they can masquerade as anything other than a means for connected Thais to fly either for free or vastly reduced fares. I would NEVER fly them because in my opinion the ethos and the fares demanded are not attractive in the slightest. Sure am not alone in that line of thought

Your first point is enough to put me off ever flying with them - nothing more obnoxious than 'a connected' Thai...

Not saying this is limited to Thais - anyone considering themselves 'important', or 'special' is equally vomit inducing. Remember the South Korean peanut lady biatch?

Will they look into the unusual wealth of past and present executives? Or have their been so many abusing THAI you would bring most of the 'elite' into disrepute...

Edited November 25, 2015 by ParadiseLost

[baboon]

Fair enough, it was the fault of previous governments. However now the junta head has oversight, we should shortly expect to see the transformation of THAI into an airline which will go from strength to strength and leave its competitors in the dust.

What on earth makes you think anyone in the Army knows the first thing about running an airline ?.

Stop blaming the Junta for everything like a spoilt child and start supporting progress on reforms so they are pressured to get out and let Thailand have it's first government from free and fair elections.

Couple of quick questions:

1. Where in my post did I blame the junta for THAI's current woes?

2. Why, if you truly are confident that the junta will work out well for Thailand, do you feel the need to be so belittling of those who might disagree with you? Is it simply because you are the disagreeable individual in real life you are on here or do you have a few reservations you would rather not admit to?

[WhizBang]

Stop blaming the Junta for everything like a spoilt child and start supporting progress on reforms so they are pressured to get out and let Thailand have it's first government from free and fair elections.

Reforms? Ain't gonna happen JohnnyBoy. The military and this junta are just as corrupt as the police or politicians they replaced. What I predict for Thailand, is a long term, Burma style dictatorship, or a civil war.

[elgordo38]

Fair enough, it was the fault of previous governments. However now the junta head has oversight, we should shortly expect to see the transformation of THAI into an airline which will go from strength to strength and leave its competitors in the dust.

Hans Christian Andersen carries a big stick

[Assurancetourix]

Ask thai people in the street ....

Who is the biggest mafia in Thailand ?

The army is n* 1;

The Police is far behind ...

Why nothing about The TMB ;

Thai Miltary bank which went bankrupt twice ?

[arrowsdawdle]

it wasn't us they did it!

Not they, he...George Bush. A page from the Barry Sotero playbook.

[billd766]

Yes it's a very old problem but what is being done now ?

For example has the PM stopped those and such as those benefiting from all the freebies or is that another issue that's off limits because of who's involved ?

Yep - like the military families who are taking the business class seats now - gratis.

No-one is saying it was mishandled in the past but you'd be brave person to argue that it's benefited from the fiscal incompetence of the junta.

It WAS mishandled in the past by previous governments unless you believe , as you seem to, that all the losses over the previous years and all the perks were down to this government who have been in power for about 18 months.

Too many governments kept sticking their noses in and changing the top management to suit themselves and ignoring the practicalities of making a profit, customer satisfaction etc which is why it is in need of a drastic overhaul now.

Why wasn't it done before? For that answer you would have to ask the previous governments and you probably wouldn't get a straight answer anyway.

Why is this government doing it now? Because somebody has to do it or Thai Airways will quietly fade into an expensive oblivion.

Before I retired 6 years ago I used to fly long distance, UK to Thailand, Singapore, Indonesia in both business and cattle class, and I used Thai, Singapore, BA and EVA. Singapore was always #1, EVA #2, Thai #3, BA #4. I also tried Cathay Pacific once and China Eastern but wasn't impressed with either.

Thai was always over manned and the service was not so good, nor was the food.

Back in the mid 1990s it used to be very good but it dropped off over the years.

IMHO it will never be as good as Singapore but there is a lot of room for improvement, especially in the middle and upper management as well as the cabin crews. I don't know that much about the ground staff but the aircraft have always seemed to be well looked after with only the odd light bulb. etc not working

https://www.planespotters.net/airline/Thai-Airways-International

Their fleet of Boeing 747s are from 12 to 22 years old, they have 6 Airbus 340 that are uneconomical that they are trying to sell but won't drop the price,

http://www.thaiaircrafttrading.com/aircraft.htm

Meanwhile every day they are idle and not earning revenue is more losses to the company.

That is my explanation and my defence.

What was yours again?

quote

"Yep - like the military families who are taking the business class seats now - gratis.

No-one is saying it was mishandled in the past but you'd be brave person to argue that it's benefited from the fiscal incompetence of the junta."

No facts, no details, no explanations, just blame the government as usual with nothing to back it up.

[billd766]

Why blame past governments? Blame should be placed on all those who think they are entitled to bloated salaries and perks. Blame those who think they are entitled to freebie flights in business class. Blame those who think that who they know entitles them to a position at Thai Airways. In other words, for the first time in history, be responsible and quit shifting the blame.

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

"Sorry, but the blame fully lies with previous governments."

I disagree. While Thai has been run as the private airline for the rich and connected since the start there has been ample opportunity for Prayuth to instigate a comprehensive reform of Thai Airways for the last 18 months.

Alas, as usual it has only been words.

And how many years and how many governments before this one had the chance to sort Thai out?

How many actually DID anything about it?

[MZurf]

Why blame past governments? Blame should be placed on all those who think they are entitled to bloated salaries and perks. Blame those who think they are entitled to freebie flights in business class. Blame those who think that who they know entitles them to a position at Thai Airways. In other words, for the first time in history, be responsible and quit shifting the blame.

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

"Sorry, but the blame fully lies with previous governments."

I disagree. While Thai has been run as the private airline for the rich and connected since the start there has been ample opportunity for Prayuth to instigate a comprehensive reform of Thai Airways for the last 18 months.

Alas, as usual it has only been words.

And how many years and how many governments before this one had the chance to sort Thai out?

How many actually DID anything about it?

No government has done anything in the past, and the junta seems unable/unwilling to do anything as well. Limiting a few free flights for Thai board members isn't the kind of comprehensive reform Thai needs to survive.

[gemguy]

Of course he is blaming previous government as all new governments always blame the previous government administrations for the mess the country is presently in.

In reality it just gets worse with successive governments.

Meantime, is he implying that the military establishment in the past and or now has absolutely nothing to do with the run amuck financial aspects of all the previous governments as we all know it is the military that is the real behind the scenes government while they control a very large share of the budget.

Just thinking people need to be reminded of that....lol

Cheers

[GeorgesAbitbol]

Fair enough, it was the fault of previous governments. However now the junta head has oversight, we should shortly expect to see the transformation of THAI into an airline which will go from strength to strength and leave its competitors in the dust.

What on earth makes you think anyone in the Army knows the first thing about running an airline ?.

Stop blaming the Junta for everything like a spoilt child and start supporting progress on reforms so they are pressured to get out and let Thailand have it's first government from free and fair elections.

Say the guy who blame Thaksin for every problem in Thailand....

[ChrisY1]

And of course, no mention of the 2008 coup when the general in charge at the time ordered Thai to pay/give the RTA 1 billionThb......

This kind of thing is endemic and Thai would have no recourse..........

As a previous poster mentioned.....why on earth have so many different aircraft types...all with varying styles of maintenance, and travelling to destinations that obviously don't get patronised from Bangkok.

Unfortunately, as is often the case here....political and military intervention has all been part of the downfall of Thai..........however, IMO, strong management is the main cause!

[tbthailand]

Fair enough, it was the fault of previous governments. However now the junta head has oversight, we should shortly expect to see the transformation of THAI into an airline which will go from strength to strength and leave its competitors in the dust.

What on earth makes you think anyone in the Army knows the first thing about running an airline ?.

Stop blaming the Junta for everything like a spoilt child and start supporting progress on reforms so they are pressured to get out and let Thailand have it's first government from free and fair elections.

Stop blaming the Junta for everything like a spoilt child and start supporting progress on reforms so they are pressured to get out and let Thailand have it's first government from free and fair elections.

sure, don't blame the government for Thai Airways' problems, ... so why does the current self-appointed "PM" blame past governments for Thai Airways' problems.

Maybe the blame should be placed at the feet of Thai Airways' management... BTW, that would be a bad thing to do because the board has historically been packed with (and still is) military men... oooooops.

BTW, in case you didn't just poop and leave, maybe you could point out what "reforms" are "progressing", I missed it. Also, you might explain how a self-appointed military government which took power from a government that had been elected in a verified, monitored, "free and fair" election by the people of Thailand, will now some how lead Thailand to it's "first government from free and fair elections"...

[mike324]

Well it seems like the current government is steering it into the right direction, cutting salaries of management, cutting staff, etc. The debt is too much that it will take a couple years to recover and return to profitability. I believe they bought a lot of new planes back then which is one of the primary reasons for the debt.

I remember back then, they even had a check-in line reserved for politicians only. If anyone is interested I can dig up the picture too.

Please do I'd like to see it.

This was from a friends post...

[rubl]

Fair enough, it was the fault of previous governments. However now the junta head has oversight, we should shortly expect to see the transformation of THAI into an airline which will go from strength to strength and leave its competitors in the dust.

Business transformations, change of culture, change of goals, change of almost everything in THAIs case. I'm afraid it will take a wee bit longer than 'shortly'. Even waving a magic wand doesn't help an airline to survive.

[rubl]

Yes it's a very old problem but what is being done now ?

For example has the PM stopped those and such as those benefiting from all the freebies or is that another issue that's off limits because of who's involved ?

Yep - like the military families who are taking the business class seats now - gratis.

No-one is saying it was mishandled in the past but you'd be brave person to argue that it's benefited from the fiscal incompetence of the junta.

Are Military Families taking business class seats ?

Anyway, what 'financial incompetence' did the government show regarding THAI ?

[rubl]

"He added that a strike would be pointless as the management was trying to solve the financial problem."

That's a euphemism for "You start striking, we start arresting".

Actually it might be more of a "go on strike and show that the company runs as 'well' without you"

[rubl]

Why blame past governments? Blame should be placed on all those who think they are entitled to bloated salaries and perks. Blame those who think they are entitled to freebie flights in business class. Blame those who think that who they know entitles them to a position at Thai Airways. In other words, for the first time in history, be responsible and quit shifting the blame.

What you say was due to the actions of previous governments. The PM has taken steps to eliminate these perks. It was done last year, I believe.

Sorry, but the blame fully lies with previous governments. Running an airline isn't an easy, nor necessarily profitable, business. Bankruptcy is common.

"Sorry, but the blame fully lies with previous governments."

I disagree. While Thai has been run as the private airline for the rich and connected since the start there has been ample opportunity for Prayuth to instigate a comprehensive reform of Thai Airways for the last 18 months.

Alas, as usual it has only been words.

Absolutely!

PM Prayut should have made THAI his number one priority from day one, that day in September, 2014, about 14 months ago.