Top Thai Airways execs to take pay cuts in loss-making months

“We will cut 10 per cent of our salary in a month that shows a net loss, while in a month that shows a net profit, there will be no cut. This will be effective from this month until our business recovers,” THAI president Charamporn Jotikasthira said at a press conference yesterday after the company reported a net loss of Bt9.89 billion for the third quarter.

A net loss of Bt18.09 billion was posted for the first nine months of the year. 

The company reported that revenue from passenger and cargo business was Bt137 billion in the first nine months, down 1.4 per cent from Bt139 billion in the same period last year. 

Charamporn accepted that the national flag carrier’s plan to cut overall costs to the tune of Bt10.7 billion this year would now be impossible to achieve, as some of the cost-reduction programme had not gone according to plan.

“We will cut costs by about Bt7 billion to Bt8 billion this year, having cut costs worth about Bt5 billion in the first nine months,” he said. However, he expressed confidence that THAI’s business restructuring would enable the company to achieve the target of generating a net profit in the first quarter of next year, by cutting costs of up to Bt20 billion and increasing revenue over the course of 2016.

The company’s board yesterday approved an emergency plan to reduce its business costs.

The measures include: reducing those parts of the investment plan that are not essential for the business, with investment in airline safety for customers not included in the reduction; improved inventory management and fuel management, especially fuel hedging; improved management of route expansion; a cut in advertising costs; restriction on overtime costs; and improvement in the procurement process. 

The board also approved a plan to increase the company’s revenue, such as by revising routes by focusing on those that generate the best return to the business and cutting some that do not generate a return.

Charamporn said that of the 21 aspects of the restructuring plan that was proposed to the carrier’s board and the State Enterprise Policy Committee early this year, the company had successfully implemented seven elements.

These include a reduction of 1,400 staff under an early-retirement campaign this year. The company has already had around 800 takers, and believes it can achieve the targeted number by the year’s end.

 

Bt2-billion cut in staff costs 

“We also plan to cut staff costs worth Bt2 billion in 2016, as part of our plan to cut costs worth Bt20 billion in total next year,” he added.

Another 12 elements of the restructuring plan are under way, while the remaining two will be delayed until next year to avoid affecting customer service this year, he said.

The president also said the company was continuing the plan to sell 34 assets worth between Bt5 billion and Bt6 billion domestically and overseas, such as housing for staff overseas and in Thailand, and some of its offices abroad. 

“We are ready to sell, but it is dependent on market sentiment. Property values in Europe are still dropping, as a result of which we are still delaying some overseas asset sales,” he said.

Meanwhile, the plan to sell 42 aircraft this year has also been revised, to a minimum sale of 28 planes.

Eighteen aircraft were sold during the first nine months, leaving at least 10 to be sold in the current quarter.