THAI tackles financial woes

These moves are part of company’s draft five-year master restructuring plan to deal with its financial problems and shield itself from global economic instability. 

The THAI board of directors approved these plans, proposed by new president Charamporn Jotikasthira, at the company’s monthly meeting on Monday. 

According to Charamporn, the national carrier is planning to cut some international and domestic routes in order to reduce operating costs. However, frequencies will be increased on strong routes in response to market demand.

He said the airline also planned to sell more than 10 planes in the new year.  

“The year 2015 will see big changes for THAI and the changes needed to be made before moving forward,” he said.

An official at the airline said it would delete the long-haul Bangkok-Johannesburg route from its flight timetables as of January 15, meaning that THAI will no longer operate a service between Thailand and Africa. 

Some other weak-performing routes between Bangkok and Europe are being considered for reduction. Charamporn said passenger numbers from Europe in the final quarter of this year were lower than projected despite it being high season. The main reason is the economic slowdown in key markets.

Aside from revisions of international service, domestic routes without connecting flights such as Surat Thani, Chiang Rai, and Phitsanulok are likely to be cut and given to its sister airline, THAI Smile Airways.

Charamporn said some of the service cuts would only be temporary. “Once things improve, we will resume operations.” 

Although the THAI board of directors has approved the plans, they will need final approval from the “superboard” set up by the junta to oversee state enterprises. THAI will submit the plans to the superboard before the end of this month. If they are approved, the airline should begin the first steps of its rehabilitation plans early in the new year.

Management of the national airline expects a turnaround into profit next year, after losses for four consecutive years. However, Charamporn confessed that THAI was three months behind in plans that should have kicked off this quarter, but it was more important to get the plans right before rushing into things. THAI and THAI Smile will continue to work together and synergise strategies to deal with the tough situation going into next year. THAI is also concerned about the falling oil prices and will see how to deal with them in the long term. Hedging on jet fuel may need to be revised.