AVIATION
THAI board pursues further cost cutting
- By: BOONSONG KOSITCHOTETHANA
- Published: 8/01/2009 at 12:00 AM
- Newspaper section: Business
The board of Thai Airways International yesterday asked management to come up with more cost cuts across the board - including perks to board members - to weather the global economic crisis.
Surachai: Wants plans within a month
The cost reduction is part of an overall survival bid including the delay of deliveries of new jetliners, especially those due in the short term, which the national carrier plans in face of the worsening economic environment.
THAI chairman Surachai Tansitpong, who is also the permanent secretary of the Transport Ministry, said all units of the airline needed to submit cost-trimming details within one month.
He said the cost cuts would be across the entire spectrum of THAI's operation and even the meeting fees and perks given to the airline's board of directors would be looked into.
Earlier this week, Transport Minister Sopon Zarum suggested that perks given to directors and fringe benefits to staff including free air tickets come under close scrutiny.
"Initially, I think that trimming may need to come first from the top level, say board members," he said, noting that possibilities still need to be studied.
In line with the slowdown in air traffic demand and easing financial burdens, the airline's board yesterday instructed management to ask the European manufacturer Airbus to delay the delivery of the six new A330-300 wide-body jets due this year for as long as possible.
The delay would mean that the airline could defer the initial payment for new aircraft, thus providing some relief on financing costs.
Recently, Airbus reportedly agreed with THAI's request to postpone the first payment for the six jets, among eight A330-300s worth at least US$700 million ordered more than a year ago. The first payment will be postponed to April from January and subsequent payments will also be delayed three months.
The airline wants to put off the decommissioning of ageing aircraft, namely six A300-600s and two Boeing 747-300s that have been in use for more than two decades and are supposed to be replaced this year by the new A330-300s.
THAI executives have said all the survival measures adopted earlier to enable it to weather the slump in travel demand and political tensions in Thailand have become meaningless in the aftermath of the recent seizure of Bangkok's two airports by People's Alliance for Democracy (PAD) protesters.
The national carrier is bracing for its first loss in 45 years in 2008. The eight-day airport shutdown was estimated to have cost THAI about 20 billion baht in lost revenue and cancellations.
The airline suffered a loss of 6.61 billion baht in the first nine months of 2008, due largely to high fuel prices and the downturn in travel demand.
THAI shares closed yesterday on the Stock Exchange of Thailand at 7.20 baht, down 45 satang, in trade worth 58.1 million baht.
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