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Photo: Thai Airways

Thai Airways “is in a trap”, needs new planes

The state-controlled carrier is sticking to a transformation plan as it posts a deepening loss for 2018.

Thai Airways and its subsidiaries have posted a net loss of almost 11.6 billion baht (€320 million) for 2018, far deeper than the 2.1 billion baht loss a year earlier, despite rising revenues.

The group has vowed to press ahead with a transformation plan first implemented last year.

Total revenues increased 3.9% to 199.5 billion baht. But costs rose at a far higher rate, up 10.3% to 208.6 billion baht due in part to rising fuel costs.

Non-fuel operating costs also rose due to increasing aircraft maintenance and overhaul costs, leasing of aircraft and spare parts, and depreciation and amortisation expenses.

One of Thai Airways’ essential problems is its ageing fleet. The state-controlled carrier plans to buy 38 new, more fuel-efficient aircraft to help cut costs and lure customers – but it needs to wait for Cabinet approval.

It may be forced to lease some planes before these deliveries are complete, the Thai flag carrier’s president Sumeth Damrongchaitham said.

“Thai Airways is in a trap — we have old aircraft that have endured heavy use and cause issues to operations,” he confessed. “Many times we had to ground planes, do repairs, change flights.”

Last year, Thai took delivery of five Airbus A350-900s and decommissioned two Boeing 737-400s, resulting in 103 active aircraft by the end of the year, three more than at the end of the previous year.

Aggressive revenues
Cabin factor for 2018 stood at an average of 77.6%, down from the year-earlier figure of 79.2%. The total number of passengers carried was 24.3 million, down 1%.

Thai Airways pledges in 2019 to “generate more aggressive revenues and make various improvements including a modernised and competitive fleet, service enhancements from ground to sky [and] commercial strategies: digital marketing and ancillary revenues, business expansion such as maintenance repair and overhaul at U-Tapao Airport [serving Pattaya and Rayong] as well as human resource improvement and appropriate financial restructuring.”

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