THAI told to revamp rehab plan
Focus to be on route changes, new IT push
Deputy Transport Minister Thaworn Senneam has ordered loss-ridden national flag carrier Thai Airways International (THAI) to overhaul its financial rehabilitation plan and draw up a new business plan within 30 days.
Mr Thaworn's order comes in response to a recent decision by THAI's board to suspend for six months a plan to procure 38 new aircraft for an estimated 156 billion baht.
Speaking after receiving an update on the national carrier's business operations, the deputy minister said he has given the airline 30 days to come up with new financial rehabilitation and business plans.
These documents must set clear objectives of cutting expenditure and bringing in more revenue to the company, which is saddled with accumulated debt of more than 100 billion baht. The plans are expected to include flight route adjustments and more efficient use of information technology.
Mr Thaworn said the aviation industry was highly competitive, while the international "open skies" policy did not favour the company, which does not have advantages over its competitors and faces crippling debts. The open-skies agreement allows foreign carriers unrestricted access to signatories' airspace and airports. The carrier earlier complained that while Thailand opens its skies to foreign airlines, several countries fail to reciprocate, which is unfair to Thai airlines.
Mr Thaworn said the extent of the losses THAI is facing should not be too hard to tackle but the airline needs to put more effort into turning the situation around. "It's homework for the board which oversees the airline. "I also have responsibility toward the people and the House of Representatives. We've talked about how to make the airline return to the black," he said.
Mr Thaworn also said he has asked the airline to keep him updated on its aircraft purchase programme every month and expedite a scheme to sell 19 decommissioned planes to cut maintenance costs.
Last week, Mr Thaworn criticised the airline's financial rehabilitation programme implemented nearly a year ago, saying it did not seem to be working. He also questioned how serious the airline's executives were in dealing with the worsening financial situation.
THAI board chairman Ekniti Nitithanprapas said on Thursday the deputy transport minister has asked the airline to review the aircraft procurement programme and demanded to know how the airline plans to deploy the fleet to sharpen its competitive edge in the industry.
Mr Ekniti said the board decided to suspend the aircraft purchase programme because it is a huge investment. The airline is advised to review factors that may affect the planned investment. The highly competitive environment, the economic slowdown which would take its toll on the tourism industry, and unpopular routes all need to be taken into consideration, he said.
THAI president Sumet Damrongchaitham, meanwhile, admitted it has been tough for the national flag carrier given the fierce competition in the commercial aviation industry this year, which has exacerbated the airline's losses. THAI has a short time to finish drafting a short-term financial rehab plan, he said. As for now, he said, the airline will start generating as much income as possible from ticket sales in the coming high tourism season, he said.
The marketing department will explore ways to generate more ticket sales including by stepping up internet sales, he said. The current ticketing agents remain an important part with regard to generating income for the airline, he said. And as part of efforts to bring down operating costs, the airline will consider cutting overtime and slashing procurement by 10%, he said.
Measures undertaken previously included trimming executives' allowances, which was intended more as a message to people in the organisation that they need to cooperate in the fight to survive the current financial crisis, he said. The airline is also reviewing flight operations on unprofitable routes and routes with fierce competition, he said.
As for potential sources of revenue, THAI banks on gaining revenue from Airbus's planned establishment of a multi-billion-baht maintenance, repair and overhaul facility for jetliners at U-Tapao airport, which is a joint venture with THAI.