FRIDAY, March 29, 2024
nationthailand

Some THAI directors worried Saudi prince's offer for Airbus too low

Some THAI directors worried Saudi prince's offer for Airbus too low

THAI AIRWAYS International's board of directors is split over the sale of an Airbus A340-500 to a Saudi prince, as some have expressed concern that the offer is only about a third of the aircraft's book value.

Prince Faisal Al Saud placed an order for one of four aircraft up for sale via AvCon Worldwide, offering to pay US$23.5 million (Bt744 million) for the plane. A $2.5-million deposit was placed. But the book value as of June was $67.07 million.
A source at THAI said the proposal was submitted for the board’s consideration about two months ago. Some directors were concerned that the low price would result in the immediate loss of Bt4 billion from the sale of the four planes and could spark an investigation. Others said the sale would benefit THAI in the long term, as the planes are now parked idly at Don Mueang Airport.
The source noted that delaying the sale would cost the airline Bt1.3 billion a year in depreciation. By 2018, that would add up to Bt6.8 billion.
Only the plane Prince Faisal made the offer on was free of financial burden, while THAI is paying the lease on the other three.
“The best way is to sell them off, as their value will drop every year because of low demand. Singapore Airlines recently converted a similar plane to be completely business-class, but the strategy did not work out. The plane was then sold back to the manufacturer in return for new aircraft,” said the source, who asked not to be named.
He added that the Saudi prince planned to refurbish the plane as his private jet. He is pushing for a quick decision, as he has scheduled the refurbishment period at Sabena Technics in France, which specialises in the overhaul of old aircraft.
THAI president Sorajak Kasemsuvan said AvCon recently requested confirmation of the sale.
“We’ll resubmit this proposal to the board for consideration. For now, it remains undecided whether THAI will sell the plane to Avcon or not. THAI will choose the best solution,” he |said.
He also noted that if THAI opted not to sell the plane, the deposit of $2.5 million would be returned to AvCon.
The Airbus A340 is a long-range four-engine wide-body commercial passenger jet. It is used on long-haul, trans-oceanic routes but as engine reliability improves, airlines have been phasing out this type in favour of more economical twinjets. Airbus Industrie itself announced in November 2011 that the A340 programme had been terminated because of the lack of new orders. According to the THAI source, the first three aircraft were delivered in 2005 and the last in 2007. As such, their prices differed.
While the book value of the first three as of June was $55.75 million, the fourth was valued at $67.07 million. This is against the market prices of $55.6 million and $66.9 million respectively, the source said.
THAI introduced the airliner into its fleet in May 2005, for the Bangkok-New York route. The direct-flight service was halted three years later because of combined losses of more than Bt7 billion. In May 2012, THAI decommissioned the four aircraft and began looking for buyers. The planes have been used only on special occasions since, such as some government overseas trips.
Few buyers exist, though, because of the A340’s high fuel consumption.

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