Thai Airways International (THAI) on Monday appointed Chokchai Panyayong as acting THAI president, replacing Piyasvasti Amranand.
Ampon Kitti-ampon, chairman of THAI's board of directors, said the airline had given Mr Piyasvasti one month's notice and will pay him six month's salary, as is due to him under his contract.
Sources said Mr Piyasvasti's payout would be about 5.4 million baht.
"It's not that Mr Piyasvasti is not capable but communication between him and the board has not been effective enough as to enable THAI to reach the target profit," Mr Ampon said.
Chokchai Panyayong (L) and Piyasvasti Amranand (Photos THAI)
Negotiations between Mr Piyasvasti and the company ended positively, he said.
Mr Chokchai will serve as acting president until a new president is elected. Finance permanent secretary Areepong Bhoocha-oom will chair the company committee for the selection of the president, the chairman said.
Mr Ampon said the selection would likely take two or three months.
THAI union president Jaemsri Sukchoterat said the union wanted the board to hold a public forum to clarify Mr Piyasvasti's dismissal.
"We will meet to discuss our position this matter because we cannot find a proper reason for Mr Piyasvasti's dismissal," Mrs Jaemsiri said.
"Mr Piyasvasti was dismissed partly because of political interference and conflict between him and the board chairman."
THAI employees had been working smoothly with Mr Piyasvasti and there were no communication problems, she added.