Charamporn Jotikasthira has just landed one of the toughest jobs in the country: president of Thai Airways International (THAI). It will be a challenging task, even for one of the top financial professionals in Thailand.
President of THAI has always been the hottest seat at Thailand's state enterprises, due to political interference and an active labour union. As such, not many finish the four-year term. The task is even tougher now as the airline struggles, recording losses of 12 billion baht in 2013 and 9.21 billion baht in the first nine months of 2014. Bold strokes are needed to revive the flag carrier.
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'I don't see any reason why I can't finish my four-year term.
What I'm doing now is focusing on the priority task. What will happen, I can't tell you, but I know that THAI right now really needs someone to help turn it around, that's all. Actually, the plan was made months before I came in.
The mission is to turn around the operations of THAI from huge losses to long-run profitability.
I believe this is not a dream, the mission is possible. The plan is there and the team is there, so what we need is execution.
It is not really harder than other jobs, I think ... but there are huge details that I need to grasp, and these require all the skills I learned from past experiences.
THAI's business, in fact, is not that bad. We are still able to rival others, even those strong Middle East players, but we have to do what we have to do immediately.
The key is 'execution'. We have to understand the character of the organisation first, and once we know it we can find our groove.
Previously, people thought it wasn't that serious, that operations will gain sometimes and lose sometimes. People thought it was a temporary circumstance, but now the business environment has totally changed.
We don't have unlimited credit to continue operating at a huge loss. The major routes that are unprofitable will need to be axed, but it is not permanent; once business is back, we can adjust in line with circumstances.
And we can see the new management philosophy, those low-cost airlines are gearing towards Europe and full-stream flying in Southeast Asian skies. They operate at a really low cost, one that our full service can hardly rival.
We are at critical point. We all know that we have been in the storm, but this time is different from the past. Now you can't blame political instability. It's happening with airlines around the world; the big airlines in Europe all have already cut a lot of jobs.
I believe we are heading in the right direction. I have been talking to each department since the plan was announced, and there are about 300 staff working in each department. I think they are all aware of our situation and ready to adjust.
The nine-month loss of 9.2 billion baht is absolutely not normal. Let's extrapolate the loss to 12 billion baht for a 12-month performance. Metaphorically, if an aeroplane flies at over 40,000 feet, we have flown at a 12,000 feet a year. We will last less than four years before crashing to the ground. Of course, the people who support you will be parachuting once the aeroplane drops to 10,000 feet.
At this point, the captain and crew have to lend a hand to pull it up to the sky. Why would we let it crash when we are still able to survive?
I believe there is buy-in for our plan. They can see our point. If we choose to enter Chapter 11 it will be a lot easier, but if we are still be able to turn around, why not do that. If it is already bankrupt and you want to resurrect it, that is even more difficult.
The approach is very basic. Firstly, we have to locate the root cause of the problem, then find the right solution to address the problem and follow up to make sure it is done on time and on budget.
Every airline uses a similar method for business turnaround. The plan is in the textbook, you can find it anywhere ... it depends on whether you follow it or not, and the clue is 'discipline'.
Actually, we started the execution plan after we announced the [business overhaul] plan recently. Our focus started with reducing loss, like others in the same business.
On the sales-increase strategy, let's put it this way: I believe that we weren't yet at our full potential, that we hadn't yet squeezed our capacity in every channel.
So we came up with an initiative with clear milestones for our 17 Plan and six strategies to follow.
The initiative is that we put 17 people in place that we call project leaders. They are all key people and are all vice-presidents. They are the ones who will lead the organisation in the future.
Project management is about discipline, and we need project leaders to follow up and push the team in the right direction. This is basic management that all the professionals have adopted, and they know how to do it.
We have to develop a strategy by matching tools with the right competitors. That is why we need Thai Smile to compete with them, but for intercontinental still use Thai Airways.
My target is a rise in revenue of 20% within one year and 20% fat cutting. Of course, since we set a 20% target in all areas on people, 20% is 5,000 jobs out of a total of 25,000.
We have to cut fat by 20% because, it is very simple, we have overall fat of around 16%. If we cut only 16% we aren't in the black, we have to do more.
I haven't yet looked at the details, so we have no detailed breakdown of the number of people in each unit that need to be cut.
But if we have done good enough, I believe it should not need to be cut that much. We have to go step by step. If we have to reshuffle people across departments, they must have skills training. If they can't do it, we have to let them go, but of course the golden handshake is offered in that case.
But I want to make it clear that it is on a 'voluntary basis'.
Actually, some took the early retirement that we've been offering since last year. So far, some 700-800 people have expressed interest in taking early retirement or MSP [mutual separation plan] if we open it. But it is not the same conditions as last year, when we made the offer to a limited group.
Our liquidity is absolutely not a problem. We keep focusing on priorities such as reduced losses, cutting fat and increasing revenue inflow. The accrued debt is about 250 billion baht, but as long as cash flow is strong enough we don't have to worry, we will think about how to clear the debt later.
What I am a bit concerned about is anything in the state enterprise that is different from the private sector. I am familiar with the private sector. Let's say I am aware that there might be unknown factors.
Corruption is not my concern. Look, we are trying to be clean and lean, so whoever approaches us has to give us a discount. When we renegotiate every contract, our business partners have to help us.