Sharp fall in net profit won’t impact THAI rehabilitation plan, CEO assures

He expressed his concerns as the company released its operational performance results for the first quarter of 2024. The report shows that revenue increased due to the continued growth in demand for international travel, but net profit decreased when compared to the same quarter last year.

Chai identified higher operating costs due to more flights and services at airports, the impairment of unused aircraft, and the depreciation of the Thai baht as key factors contributing to the profit reduction. 

THAI and its subsidiaries reported total revenue of 45.955 billion baht, 10.7% higher than in the same period last year when revenue was 41.507 billion baht. The increase is primarily due to a significant increase in passenger revenue following the resumption of flight services and increased flight frequencies on preferred routes to Europe, Australia, and Japan.   

The increase in production, traffic, number of flights, routes, number of passengers, baht depreciation, ground service fee, and raw material prices led to a 22.5% increase in total expenses to 34.880 billion baht in the first quarter.

THAI and its subsidiaries reported operating profits of 11.075 billion baht before financial costs, excluding one-time items, down 1.959 billion baht, or 15% from Q1 of 2023.   

The airline's net profit fell 78.9% to 2.423 billion baht from 11.879 billion baht the same quarter last year. 

Chai, however, assured that the net profit would have no impact on the company's overall operations, expansion, or rehabilitation plan. 

"Our work continues to proceed as planned, including a comprehensive restructuring exercise aimed at turning finances around," he said, explaining that the greater part of the decline in net profit was primarily due to the foreign exchange factor, not poor operation or low travel demand. 

He pointed out that 18 unused passenger aircraft were also responsible for the huge decline in net profit, as the airline was responsible for bearing the impairment cost.

However, Chai expected this burden to be lifted after the second quarter of this year as the board has found potential buyers for all of those aircraft.

“A contract has already been signed with a buyer for six planes, and the remaining 12 are awaiting a proper contact. We expected to complete the sale of all 18 aircraft this month or next," he said. 

Following the sale, he expected THAI's total expenses for the remainder of the year to be reduced. However, given the country's low travel season, the move may not help increase revenue in the second quarter.

To strengthen its growth, Chai announced plans to increase flight capacity on popular routes such as Beijing, Shanghai, Sydney, Melbourne, and Perth: One more flight per city in Australia, three flights to Beijing, and four flights to Shanghai. The addition will occur from July 1.

Meanwhile, the airline plans to add three new destinations — Brussels, Oslo, and Amritsar in India’s Punjab state — in the fourth quarter of this year. The routes have more than 70% cabin demand. 

He said more routes could be added, but the plans must be postponed as THAI lacks sufficient carriers. 

In Q1/2024, THAI had a total of 73 active aircraft, an increase of 8 aircraft, all of which are Airbus A350-900, that THAI acquired and used for flight services.  The average aircraft utilisation rate was 12.8 hours per day.

According to the plan, THAI will have 79 active aircraft by the end of the year and 90 by 2025.

Earlier in February, THAI confirmed its plane order with Boeing. The order includes an option to purchase additional jets, which will be added to the fleet between 2027 and 2033. The agreement will have no effect on the company's current repayment plans under the debt rehabilitation process.

In terms of debt rehabilitation, Chai assured that debt repayment would resume as planned by the middle of the year. 

"THAI has managed slot time for flight operations in accordance with international standards and processes to support the continuously increasing passenger demand. It has been adjusted more effectively for better connectivity in non-operated routes," he said.