Thai Airways targets Bt5 bn net profit next year

Corporate November 17, 2012 00:00


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Thai Airways International will move ahead with its core business strategy next year by looking for ways to earn more from all business units to achieve Bt5 billion in net profit.

This year, THAI will probably net about Bt3 billion, half of its previous expectation of Bt6 billion, hit by rising oil prices and a declining number of passengers.

Company president Sorajak Kasemsuvan said the national carrier’s higher profit next year would come from both aviation and non-aviation operations such as ground and catering services, as well as cargo.

The company expects revenue to grow by 11-12 per cent to between Bt230 billion and Bt240 billion, from Bt202 billion this year, thanks partly to the acquisition of 17 new aircraft. The additional seats are expected to drive business growth, Sorajak said after a board meeting chaired by Ampon Kittiampon.

The board confirmed that THAI’s three airline brands would each have a clear business position. Thai Airways offers premium service, while Thai Smile, which will fly throughout the region, provides more economical service.

Nok Air, held 49 per cent by THAI, is a low-cost carrier with ‘‘quality service’’, which covers part of the region. It is expected to be listed on the Stock Exchange of Thailand next year. However, THAI does not known exactly what its stake in Nok Air will be after its initial public offering.

Meanwhile, Thai Smile will be spun off as an independent company to work more effectively against the competition. Its flight frequencies, especially on routes in the two-to-three-hour range, will be increased. THAI’s legal department is looking at details for the new company’s establishment, and it expects to take one or two months to complete the process.

The three airlines will work on route arrangements together to secure the overall business, Sorajak said.

The cargo unit will also be in focus. Currently, it is in a loss-making position. This year’s revenue is expected to be Bt24 billion to Bt25 billion, which is targeted to increase to Bt30 billion next year, which will help offset its losses.

Sorajak said he had started forming a committee to be responsible for fuel, as the cost of fuel accounts for 40 per cent of the company’s operating cost. The panel will comprise fuel experts and outside executives to minimise business risk through hedging contracts.

Sorajak will meet with the company’s board to present his business strategy on December 14 after being in office for a month.

In the first nine months of this year, THAI’s profit before deducting currency exchange posted Bt2.64 billion. Its load factor in October was 73 per cent, below its target of 74-75 per cent.