Agencies at odds over THAI leasing

According to a government report, the Transport Ministry will propose at next Tuesday's Cabinet meeting that the operatinglease method be changed to financial leasing for eight new A330300 aircraft to be procured by the national carrier.

The Cabinet on June 19 decided that THAI should acquire the aircraft by the operatinglease method.

According to the government document, the Transport Ministry argued that financial leasing would be more beneficial to the airline than operating leases.

Financial leasing would give the carrier flexibility when it comes to selling or scrapping the aircraft, whereas operating leases do not allow this, even though the aircraft are considered part of its assets, said the paper.

According to the paper, the Transport Ministry said the financial lease would be of foremost benefit and efficiency to THAI in line with the airline's longterm fleet expansion.

Under financial leasing, the eight aircraft will cost a total of Bt22.27 billion on a 15year lease. If leased for 10 years, they will cost about Bt17.16 billion.

According to the report, financial leasing also means lower costs than operational leasing because the ownership rights can be transferred to THAI, which can later sell or scrap the aircraft.

The report said THAI had projected Bt5.87 billion for selling the eight aircraft on a 15year lease and Bt12.46 billion on a 10year lease.

However, the NESDB does not agree with the financiallease proposal, as THAI would have to shoulder risks when adjusting its fleet to use new aircraft that saved on fuel consumption and delivered low emissions in line with future market demands.

The Finance Ministry also opposes financial leasing, as it would add to publicsector risk as a shareholder of THAI if the carrier's sales failed to reach their target.

"In addition, THAI will have more debts from financial leasing, harming its plans to procure aircraft in the future," the report said.