High oil prices had cast doubts over the financial prospects of THAI, which is now undergoing changes amid fierce competition. On Tuesday, oil prices made a new high. Dubai crude oil on the day rose $1.55 per barrel to $64.70, against an earlier estimate that it would drop in the second quarter of the year.

The rise looks set to continue due to concerns about supply disruption arising from the geopolitical conflict between Iran and the US and greater-than-expected economic growth, driven by East Asia, especially Japan and China.

"With the current tension, fuel prices will likely remain high [$76/bbl] through the year. If that's the case, this would bring the full-year average price up to $74.5, up 6.4 per cent from our previous estimate of $70/bbl, or even higher," KGI said in the research.

However, it said that the fuel surcharge could be raised higher which would mitigate the impact of rising fuel prices.

"Our analysis of the impact of rising fuel prices is based on maintaining the fuel surcharge structure at the current 25-26 per cent of total fuel costs and a 15-per-cent hedge of its fuel exposure. If, in the future, THAI can further raise its surcharge, we will have to evaluate the impact again," it said.

KGI sees that THAI's fair value should be in the range of Bt48-Bt58, against the market closing of Bt48.25 on Tuesday.

It attributed its positive analysis to the strong recovery in tourism and other factors, and the intact long-term expectation of a decline in fuel prices.

"We are maintaining our earnings forecast," the report noted. "At the same time, we will wait and see if THAI's fuel surcharge structure and fuel price movement change positively in the third quarter."

The Nation