THAI board backs aircraft procurement plan

Corporate July 14, 2017 01:00

By   THE NATION

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THAI AIRWAYS International Plc’s board on Wednesday approved in principle the flag carrier’s plan to procure 28 new aircraft.



  THE NATION

The proposal would be fleshed out and resubmitted next month for the board’s approval and then forwarded to the Cabinet later this year.

The board also gave the green light to the airline to fly the Bangkok-Vienna route four days a week for full coverage of the Eastern European market. 

Montree Jumrieng, executive vice president for corporate strategy and sustainable development at THAI, reported that the board agreed with the procedures for acquiring 28 aircraft over five years to replace those about to be retired. 

THAI will set out their specifications and pricing and propose them in August for the board’s nod before seeking the approval of the Transport Ministry and the Cabinet.

The national airline expects the consideration process to take no more than three months before forwarding the detailed procurement plan to the Cabinet in November or December. Out of the 28 aircraft, 19 will go to THAI and nine to Thai Smile Airline.

THAI aims to receive the first plane within 18 months after signing the purchase contract, or in late 2019, while targeting to have all planes delivered within three years, which would lower the average service life of its fleet of 100 aircraft from 11 years to eight years.

There is no conclusion yet on whether the new aircraft will be bought outright or leased. That depends on the offers from aircraft manufacturers and THAI’s liquidity in the next five years.

THAI has also been thinking about procuring more aircraft in the second phase from 2022-26, as 22 more aircraft will be due for decommissioning. 

The second-phase procurement plan is still up in the air as THAI is waiting for the government’s reform plan and the state of its finances.

The Bangkok-Vienna route would be operated for six months during the winter schedule beginning on October 20, using a Boeing 777-200ER.

The targets for the Bangkok-Vienna route are a cabin factor of about 75 per cent and break-even within the first year. 

About 40 per cent of the passengers on this route will likely be domestic tourists and those from Indochina. The remaining 60 per cent will be European tourists travelling to Thailand. 

If this route suffers losses, it may be dropped within six months.

THAI also plans to extend frequencies from four to five a week to seven promising routes from Bangkok, to Brussels, Rome, Milan, Moscow and Scandinavia.

The meeting heard that the engines of one of six Boeing 787 aircraft had been completely repaired, while three of the planes will be temporarily out of service for engine repair and change this month. 

During the maintenance period, THAI will merge its flights to Japan into one flight and reduce those to Singapore to four flights. It will also transfer one flight on the Bangkok-Chiang Mai route to Thai Smile.

Next month, THAI plans to have two of its aircraft undergo maintenance. It will transfer flights on the Chiang Mai, Phuket and Krabi routes from Bangkok to Thai Smile. 

THAI expects to complete the repair of these six aircraft and return them to normal service by September.

Rolls Royce, the British manufacturer of aircraft engines, will take full responsibility for the aircraft repair, while THAI will incur other expenses, from opportunity costs for the aircraft repair to expenses for passenger transfers. 

THAI will finalise the list of additional expense this September before sending it to Rolls Royce to compensate THAI.