Back in black, THAI eyes good Q2

The airline returned to profitability in the first quarter, netting Bt4.54 billion, after drops in global oil prices, economic recovery in some parts of the world and its cancellation of loss-making routes.

The company suffered a net loss of Bt2.634 billion in the first quarter of last year.

Recent drops in global oil prices have led to more business operations, prompting higher demand for air travel. The US economy is beginning to expand in light of stronger fundamentals, while the European economy shows signs of strengthening with low interest rates and a weakening euro.

Charamporn Jotikasthira, president of THAI, said the carrier should see a good second quarter after depreciation of the Thai currency encourages foreigners to travel to this country, especially from China. The airline is yet to see significant bookings from overseas as it is currently the low season, but expects more inbound arrivals soon.

He said the results for the second quarter would depend on how THAI could reduce operating costs, targeting cuts of 10-20 per cent in each department. One of the packages is an early-retirement scheme with a budget of Bt5.5 billion to cut its workforce by about 1,800.

In the first quarter of this year, THAI also proceeded with the first phase of its "Stop the Bleeding" reform plan to cancel loss-making routes. These included the Bangkok-Johannesburg route, which ceased in the middle of January, and the Bangkok-Moscow and Phuket-Seoul routes, which were stopped on March 29.

Under the fleet-adjustment strategy, 11 aircraft were decommissioned and two decommissioned planes were sold. THAI received two new planes. As of March 31, the company’s fleet totalled 93 aircraft.

As Thailand’s tourism sector began to recover, several countries enjoyed some economic growth and the airline made efficiency improvements, THAI served 5.62 million passengers in the first quarter, up 17 per cent from the same period last year. Its cabin factor averaged 75.4 per cent, up from 70.1 per cent a year earlier.

On a consolidated basis, THAI booked Bt4.415 billion in earnings before taxes and exchange-rate and asset impairment in the quarter, compared with a loss of Bt3.29 billion in the first three months of last year.

The company cited a 3.4-per-cent increase in income from sales or services and an 11.6-per-cent decline in total expenses after a decrease in average oil prices for its return to profitability.

THAI also enjoyed Bt9.65 billion in foreign-exchange gains in the quarter, up from a Bt8.66-billion gain for the same period of last year. However, its losses from aircraft-asset impairment inched up from Bt11.72 billion to Bt11.80 billion.

In the first quarter of this year, the company, on the consolidated basis, posted a net profit of Bt4.549 billion, compared with a net loss of Bt2.619 billion in the same period a year earlier.

THAI and its subsidiaries posted Bt10.92 billion in consolidated earnings before interest, tax, depreciation, amortisation and losses from asset impairment (EBITDA), up 236.7 per cent from the same period of last year. Its EBITDA margin was 21.1 per cent, compared with last year's 6.5 per cent.

Charamporn said the earthquake in Nepal had not affected THAI’s operations as the airline continued its daily flights to that country.