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Published on April 16, 2008

Ayudhya Securities revised THAI's normalised net profit for this year and next downwards by 20.59 per cent and 29.32 per cent, respectively.

From previous estimates of Bt5.73 billion and Bt7.4 billion, the new forecasts are Bt4.55 billion and Bt5.23 billion. The brokerage also revised THAI's net profit this year downwards by Bt5.47 billion, or a decline of 4.5 per cent from the previous estimate.

The rising price of jet fuel is the main factor affecting the company's financial statement, it said.

In the first quarter, jet fuel in the Singaporean market jumped 58 per cent year on year to US$114 (Bt3,600) per barrel. Ayudhya Securities revised its price assumption for jet fuel during this year and next upwards to $100 and $95 per barrel, respectively, from its previous estimate of $80 a barrel for the two-year period.

The brokerage also revised its forecast for the baht/US-dollar exchange rate downwards, from 33 to the dollar to 31. Since most of its income is booked in dollars, this will mean lower revenue in baht terms after conversion. This will result in a decline in the company's passenger yield, from Bt2.51 per revenue-passenger kilometre (RPK) to Bt2.41 per RPK ,excluding fuel surcharges.

However, Ayudhya Securities predicts THAI's average cabin-occupancy factor in this year and next will be 79.6 per cent and 80 per cent, respectively, after a rise in average cabin occupancy in the first two months of this year, from 80.7 per cent last year to 81.8 per cent.

Cabin-occupancy levels on domestic routes were good, due partly to the opening of the Koh Samui route in February, while the occupancy factor on international routes was also higher, except those to North America, because of the economic downturn. However, revenue contribution from that region accounts for only 4 per cent of total revenue.

Krung Thai Securities predicts THAI will record a normalised net profit of Bt3.34 billion this year, down 38 per cent from last year, due mainly to the high cost of jet fuel.

The brokerage believes THAI's fuel costs will rise 28 per cent to Bt75.58 billion this year and 5 per cent to Bt79.2 billion next year. Jet fuel accounts for 38 per cent of operating expenses.

However, Krung Thai Securities expects the cost of jet fuel to ease in the fourth quarter, due to a slackening in speculation in commodity markets and the end of the Beijing Olympics.

The brokerage predicts THAI's net profit will rise 39 per cent next year to Bt4.64 billion, due to higher demand and capacity expansion.

The Nation