Confidence high at THAI despite heavy Q2 loss 

Corporate September 13, 2017 01:00

By The Nation

THAI Airways has revealed heavy losses for the second quarter of 2017 but the flagship carrier insists it remains confident of its overall performance this year.



 “Although the second-quarter performance showed a loss of over Bt5 billion, we are not performing badly in the third quarter year-on-year and pre-booking figures are satisfactory,” said THAI chairman Areepong Bhoocha-oom.

While he admitted that the latest figures reflected the high competition faced by the airline, Areepong said THAI’s marketing teams were working closely with each other throughout the region and he expected passenger numbers to be improved resulting in higher returns.

The airline’s reservation system was updated last year and was already responsible for raising “cabin factor” [seat sales] to 80.2 per cent of capacity for the first seven months of this year, up from 73 per cent last year and 72 per cent in 2015.

The cabin factor is projected to stay at a profit-making 80 per cent for the whole of this year.

Acting THAI President Usanee Sangsingkeo cited external factors for the Bt5-billion second-quarter loss, including exchange rates, oil-price movements, and losses incurred by subsidiaries Thai Smile and Nok Air.

Europe remains a key focus for the airline – it plans to start direct flights to several major cities, including Vienna, Madrid and Barcelona, while also increasing daily flights to others, including Brussels.

THAI earns 19-20 per cent of its total revenue from the European flights, 20 per cent from Asian flights and 30 per cent from domestic flights. 

Areepong also pointed out that other premium airlines such as Singapore Airlines and Cathay Pacific had also suffered recent losses.

Although THAI could be profitable by pursuing only its core business, the airline needed expand into other ibn order to achieve sustainable growth, Areepong added. 

Entering the maintenance, repair and overhaul (MRO) sector remained a target, especially since both US aircraft manufacturer Boeing and European counterpart Airbus expected the most orders for their aircraft from the Asia-Pacific region. 

Meanwhile, THAI will be among the first to gain a foothold in the flourishing Eastern Economic Corridor (EEC) and expected to finalise its business plan early next year, Areepong said. 

The most modern hangars are likely to be built, he said, following discussions THAI had held with Boeing and Airbus about entering the MRO sector. 

Focusing on the EEC would be key to THAI developing its MRO business – memorandums of understanding needed to be completed this year in order for the new business to get underway in 2018.

Prime Minister Prayut Chan-o-cha will also continue his efforts to persuade US companies, including General Electric, to invest in the EEC.

Areepong wants the new businesses to be launched as soon as possible next year.

 

Most view