THAI expects to reach 15% cost-reduction goal

AVIATION

Thai Airways International says it is on course to achieve its 11.84-billion-baht target for cost cutting this year, a worthwhile contribution to its ongoing rehabilitation effort.

Cost savings in the first nine months of the year hit 10.3 billion baht, indicating the target of slashing non-fuel costs by 15% is achievable, said THAI president Piyasvasti Amranand.

Controlling and reducing unnecessary expenses and establishing a more effective work process without downgrading safety standards and service quality are the keys, he said.

He told THAI staff of the need to continue cost-saving plans through next year, when the carrier aims to repeat or exceed the cost reductions in 2009.

Prospects for improvement in the airline's fourth-quarter balance sheet look promising, but are still subject to uncertainties. ''We have stopped bleeding but are still in the critical stage, requiring us to work hard to achieve a true recovery,'' said Dr Piyasvasti.

The airline overhauled its manage ment and business operations after facing its worst financial crisis, characterised by liquidity problems, starting about a year ago. Dramatic cost cutting is a main feature of the rehabilitation.

The airline reported a loss of 21.38 billion baht last year, its first loss in 43 years, due partly to losses in fuel hedging.

The airline posted a net loss of 4.03 billion baht in the third quarter, worse than analysts had expected, due to foreign currency losses and lower yields.

For the first nine months of this year, THAI's net loss was 1.57 billion baht (0.92 baht a share), improving from a loss of 6.61 billion baht (3.89 baht a share) in the same period last year.

Cost cutting happened in nine areas with the percentage of reduction achieved ranging from 12.5% to 67%, compared with the same period a year ago.

The highest saving was in flight operations, featuring a year-on-year drop of 67%. Next was aircraft leasing and spare aircraft, with a 63.9% fall, while overtime wages dropped 47.7%.

THAI shares closed yesterday on the SET at 18.10 baht, down 30 satang, in trade worth 58 million baht.