THAI given B12bn operating profit target

THAI given B12bn operating profit target

Low fuel prices, tourism aid recovery

Thai Airways International has racked up huge losses in the past few years, and management has a 'produce-or-else' ultimatum for 2016. (Bangkok Post file photo)
Thai Airways International has racked up huge losses in the past few years, and management has a 'produce-or-else' ultimatum for 2016. (Bangkok Post file photo)

Thai Airways International Plc (THAI) has been given a target operating profit of 12 billion baht this year while the company is expected to post a net profit of two billion baht.

Deputy Transport Minister Ormsin Chivapruck said the airline's revenue is projected to surge to 194 billion baht this year, up 7% from 182 billion baht last year.

The company has estimated its net profit this year at two billion baht, said Mr Ormsin.

The national carrier posted a net loss of 13.06 billion baht last year. However, it has succeeded in stemming losses, Mr Ormsin said after a meeting Wednesday of the State Enterprise Policy Committee (SEPC), chaired by Prime Minister Prayut Chan-o-cha.

The Finance Ministry said at the meeting that THAI's recovery was mainly due to low fuel prices, leading the SEPC to set a target operating profit for the company of at least 12 billion baht this year, an SEPC source said.

THAI is also required to make management changes in line with international best practices.

The airline reported its first quarter earnings to the committee Wednesday. Revenue was 48.8 billion baht, slightly lower than its target of 49.4 billion baht.

Ekniti Nitithanprapas, director of the State Enterprises Policy Office, said THAI's performance had improved over the first quarter of this year.

The committee urged further managerial improvements, requiring THAI to work based on its competitor's benchmarks.

Mr Ekniti said the SEPC set criteria to evaluate the performance of THAI and other debt-ridden state enterprises, including profit, expense reduction, asset management and efficiency of service.

THAI president Charamporn Jotikasthira said the company had made money as a result of the growing tourism sector.

However, he declined to set specific revenue goals in the second quarter because it falls within the low tourist season.

He said that the passenger load factor (PLF) -- a measure of airline efficiency -- in the first quarter was 77.9%. The company's average PLF in 2015 stood at 75%, an increase from 68.9% in 2014.

He said 21.2 million passengers used the airline in 2015, up 11% from 2014.

The company is trying to boost its PLF to 80% this year, he said.

"THAI should be ranked among the top five airlines this year by the International Air Transport Association (IATA)," Mr Charamporn said.

Meanwhile, authorities are gearing up efforts to tackle aviation safety deficiencies ahead of a meeting with European aviation regulators early next month.

Defence Ministry spokesman Kongcheep Tantrawanich issued an update on the progress of the Command Centre for Resolving Civil Aviation Issues's (CRCA) work to address the country's aviation safety shortfalls.

The International Civil Aviation Organisation (ICAO), the US Federal Aviation Administration (FAA) and the European Aviation Safety Agency (EASA) have also been updated on the progress.

The Civil Aviation Authority of Thailand (CAAT) has approved the recruitment of experts and skilled workers and a restructuring of organisational structures, the spokesman said.

Work is under way to select the new CAAT director, scheduled to begin work in June.

According to Maj Gen Kongcheep, the CAAT's 16 local inspectors finished the ICAO's required training course organised by the Singapore Aviation Academy.

The inspectors will also undergo a Designated Check Pilot programme, a Safety Management System course and conduct work on simulators in Thailand.

The inspectors will start auditing local pilots in May and flight operations the following month, the spokesman said.

Meanwhile, the CAAT has hired CAA International (CAAi), a globally recognised aviation consultancy and a wholly owned subsidiary of the UK Civil Aviation Authority, to provide guidance to the agency during the process.

The CAAi will also send 10 flight inspectors and 10 other specialists to work with the agency.

A partnership contract was signed Wednesday between Chatchai Thipsunari, permanent secretary for transport, and Maria Rueda, CAAi managing director. The contract, which will run for nine months, and comes at a cost of 153 million baht.

Transport Minister Arkhom Termpittayapaisith said the CAAi will also be brought in during the second phase of preparations for the ICAO's audit in the middle of next year.

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