Thai Air To Decide On Airbus A380 Order

[Buckwheat]

Thai Air to Decide on Airbus A380 Order in February

Thai Airways International Pcl, Southeast Asia's second-biggest carrier by market value, said it may cancel its order for Airbus SAS's A380s if the European planemaker doesn't adequately compensate it for delivery delays.

Airbus, the world's largest maker of commercial jets, has told Thai Air there will be a further delay of between 22 months and 24 months beyond the already rescheduled Nov. 2009 start of deliveries. The delay of the 555-seat A380 is limiting the carrier's ability to expand capacity and add new routes, Wallop Bhukkanasut, Thai Air's executive vice president, said today.

A cancellation by Thai Air would the first by a passenger airline after Airbus repeatedly delayed the delivery of the world's largest commercial aircraft, most recently on Oct. 3, because of wiring problems. Airbus, based in Toulouse, France has already lost a customer for the A380 freighter when FedEx Corp. this month scrapped its order for 10 planes.

A cancellation ``is possible if their compensation offer is not enough,'' Wallop told reporters in Bangkok today. ``The final decision will be made by the new board in February.''

A380 Route

Thai Air, which has six A380 aircraft on order, needs the double-decker planes to add capacity to existing routes and start new destinations as economic growth spurs travel demand.

The A380 was intended to service European cities including London, Paris and Frankfurt, as well as China and Japan. The airline will now have to put on hold their plans to start flights to Helsinki because of the delay, Wallop said.

The airline said it will get two Boeing Co. 777-200ERs by the end of this year and two more next year. An Airbus A340-500 will also join its fleet in 2007. It operates 86 planes.

Adding flight frequencies and new destinations will also help boost its sales, Wallop said. The company last month introduced four new routes, to Johannesburg in South Africa and India's Hyderabad, Varanasri and Bodh Gaya. It has no plans to further expand international routes now due to limited capacity.

``We will focus on increasing frequencies to profitable routes,'' Wallop said.

Shares of Thai Air were unchanged at 49.25 baht as of 4:25 p.m. in Bangkok. The stock has gained 12 percent this year, compared with the 7 percent advance in the nine-member Bloomberg Asia Pacific Airlines Index.

Fuel Surcharges

Thai Airways is considering cutting its fuel surcharges for some competitive intra-Asia flights to Singapore, Hong Kong, and Malaysia this year, though it ruled out an across-the-board reduction. The company also plans to lower the double-surcharge for transit flights, which account for between 20 percent and 30 percent of passengers.

``The surcharge needs to stay because the situation in Iran and North Korea still pose risks to oil price movement,'' Wallop said. Other long-haul carriers still levy higher surcharges than Thai Air on intercontinental flights, he said.

Thai Air has increased surcharges at least twice since raising its levies by as much as 50 percent in August 2005, after it posted its biggest quarterly loss in more than five years because of fuel costs and currency losses. The carrier increased levies in June to $65 for European flights and $25 for Asian flights.

Thai Air's fuel expenses rose 21 percent from a year earlier in the three months ended June 30 to 14.8 billion baht, or 36 percent of its total operating costs - its single biggest expense.

Sales Forecast

The company expects sales in fiscal year 2007, which starts Oct. 1, to rise between 13 percent and 14 percent from a year earlier due to higher tourist arrivals, especially during the peak year-end season, Wallop said.

The company also plans to add flights to Samui island, a popular resort in Thailand's south, in March, competing with airport owner and rival Bangkok Airways Ltd. for the first time on the route.

``Our cabin factor in October was very good, recovering to 77 percent-78 percent already after falling in the last 10 days of September due to the military coup,'' he said.

Thailand's armed forces seized power from former Prime Minister Thaksin Shinawatra in a Sept. 19 coup and installed Surayud Chulanont to lead the government until a general election, to be held in October 2007.

http://www.bloomberg.com/apps/news?pid=206...p;refer=germany

[sibeymai]

I wonder what shortcuts Airbus will be taking to get the A380 delivered ? Think I'll be flying Boeings for a few years until the technical problems with the A380 show up and get fixed.

[cdnvic]

I wonder what shortcuts Airbus will be taking to get the A380 delivered ? Think I'll be flying Boeings for a few years until the technical problems with the A380 show up and get fixed.

They'll only use half the bolts to hold the wings on...

Aircraft engineers don't play fast and loose with people's lives. The whole reason for the delay in the first place is to make sure it's done correctly.

[Axel]

Airbus is under pressure to put that bird to fly.

Respect to them as long as they come out to say, "Sorry, not yet".

This gives me more confidence once there will be commercial flights.

[sibeymai]

understood, but Airbus doesn't operate in a commercial vacuum. Let's hope they're good enough to maintain the highest standards. Airbus will be under enormous financial pressure facing delivery delays of up to 24 months.

Whenever the first loss occurs the first speculation by the media will be on production shortcuts to meet delivery deadlines. Airbus would probably never recover if this were proved so from a long term corporate perspective there's absolutely no value in cutting corners.

It's the short term I'm more worried about where executives make tidy bonuses or even just keep their jobs by making deadlines which shoudln;t be made.

it always seems to come down to the human factors, either building them or flying them.

[britmaveric]

Major electrical problems is what I hear.... no worries prob smth to do with the entertainment system and whats the worst that can happen, burn up like that Swiss Air flight --- oh that was an airbus too!!

[Diablo Bob]

Wow...... If Thai Air cancels along with FedEx, that will be a 5 Billion dollar hit for Airbus........

We are not talking peanuts here.

[CHdiver]

Major electrical problems is what I hear.... no worries prob smth to do with the entertainment system and whats the worst that can happen, burn up like that Swiss Air flight --- oh that was an airbus too!!

It was a Jet from Swissair (don't exist anymore ) Typ McDonalds MD 11 ( same same). Think the People from McDonalds are now working for Boeing? Maybe better to fly Airbus ?

[LaoPo]

Also on BBC news, here:

http://news.bbc.co.uk/2/hi/business/6157498.stm

LaoPo

[Scott]

So for those who loved to whinge about the delays at the airport--perhaps you can explain why Airbus can't seem to do it's job on time!

[cdnvic]

Major electrical problems is what I hear.... no worries prob smth to do with the entertainment system and whats the worst that can happen, burn up like that Swiss Air flight --- oh that was an airbus too!!

It was a McDonnell Douglas MD-11, and the fire was the result of wiring and insulation that is no longer allowed in aircraft. It was required to be replaced in all passenger aircraft by 2005.

Next try try hearing facts over rumours

[h90]

I wonder what shortcuts Airbus will be taking to get the A380 delivered ? Think I'll be flying Boeings for a few years until the technical problems with the A380 show up and get fixed.

the technical problems are the wires in the entertainment system. So the worst what can happen is that you can't watch movies.

[cdnvic]

Never fails to amaze me how so many people get their panties in a twist over imagined dangers of flying but don't think twice about getting in a Bangkok taxicab.

[Diablo Bob]

Never fails to amaze me how so many people get their panties in a twist over imagined dangers of flying but don't think twice about getting in a Bangkok taxicab.

cdnvic - I think that the only time I became "Nervous" about being in the friendly skys was right after Ronald Reagan fired all the air traffic controllers who were on strike, and replaced them with military controllers. At the time, I just wasn't to sure of their ability to deal with the shear mass of traffic in some areas (Chicago O'Hare, NYC, Atlanta etc.).

Time showed me that they had what it takes........

When you consider the millions of hours of flight and the amount of fatalities, flying (regardless of commercial, GA & Light sport) are still safer than driving. When you consider the complexity of the aircraft the manufacturers of aircraft are still producing safe airplanes.

[Asian Frog]

When the Boeing 747 has been launched in 1970, the first Generation of Engines was Pratt & Whitney's ones. We've gotten a lot of problems with those engines, it was not rare to be obliged to change the engines after only few hundred hours. At the very beginning, Pilots of British Airways were on strike for salaries when flying B747. During this period, most of Airlines were loosing money with the B747 except British Airways which was renting the engines of its grounded B747. It took around two years to fix the issues: cooling and reinforcing the engine casings.

Today, Airbus is facing some technical issues, officially wiring ones, you have to know that around a thousand of kilometers of wires are installed on board a jumbo. With an aircraft built in several countries, and as there must be a lot of modifications by designers, you can understand that the follow up is not a simple affair. It is the honour of Airbus to postpone the production until issues are fixed. On the other hand, it is the normal game that Thai Group put some pressures to get compensation.

If we compare with the 747, the first years were also problematic for Boeing but 2 or 3 years are nothing compared to the whole production life (Now 36 years). So, yes some troubles, but it will not affect Airbus on long term.

Edited November 21, 2006 by Asian Frog

[ya5702]

the technical problems are the wires in the entertainment system. So the worst what can happen is that you can't watch movies.

From memory, I believe the problem was in the overheated wires powering the onboard casino (jackpot) machines. Fortunately for Singapore Airlines (which laid claim to have "pioneered" onboard gambling), Swissair suffered the loss.

[mouse]

The problems are much deeper than we are allowed to believe. Take a look at this site.

http://www.joe-mangan.com/

Edited November 22, 2006 by mouse

[cdnvic]

The problems are much deeper than we are allowed to believe. Take a look at this site.

http://www.joe-mangan.com/

You aren't dragging up that crackpot's site again are you?