THAI intends to delay delivery of new aircraft

Corporate January 21, 2016 01:00

By Somluck Srimalee
The Nation

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THAI AIRWAYS International Plc (THAI) yesterday revealed a major cost-cutting measure by seeking to delay delivery of 14 new aircraft, worth Bt96 billion, from Airbus and Boeing, from this year to 2018.



The measure follows a suggestion from the State Enterprise Policy Commission, which has urged the airline to instead focus on business restructuring.

President Charamporn Jotikasthira said at a press conference yesterday after a board meeting that the company has to manage its existing fleet in keeping with the commission’s suggestion at a meeting on Monday that urged Thai Airways to review its plan to expand its fleet.

THAI reported cabin factor of 73.3 per cent at the end 2015, which was better than its cabin factor of 68.9 per cent in 2014. The existing cabin space is seen as adequate to serve the growth in the number of customers this year and there is no need for new aircraft.

“We cannot say right now whether we will be able to delay deliveries of the aircraft. What we are trying to do is to negotiate with both Airbus and Boeing to delay deliveries. If our efforts fail, we will find other ways of managing our fleet,” he said.

According to the business plan, THAI will receive delivery of two new aircraft this year, seven next year, and another five in 2018.

Charamporn also said that the company’s plan to sell its non-core assets, such as office branches and residential units for its staff – both local and overseas – would start within this year. They include 10 assets in overseas markets such as residences for staff – in Jakarta, London, Copenhagen, and two residential units in Singapore and five office branches – in Sydney, Rome, Madrid, Hong Kong, and Penang. In Thailand, the airline owns nine branch offices in Mae Hong Son, Phitsanulok, Udon Thani, Nan, Trang, Surat Thani, Phuket, and two office branches in Hat Yai. They are worth about Bt1 billion altogether.

He said that THAI had revised its business plan to boost cabin factor from 73.3 per cent at the end of last year by expanding its destinations in order to grow its total revenue this year, he said.

“We hope our financial results will be better this year, as we have focused more on cutting costs, and increasing revenue,” he said

He added that decrease in oil price would help the company to reduce its fuel cost. However, the company has hedged the price of fuel accounting for 45 per cent of total fuel used annually by the airline.