Thai Airways International (THAI) is preparing to cut salaries and related expenses for top executives by 15-25% to survive the financial turbulence caused by the recent coronavirus outbreak.
The new cost management plan will be effective from March 1 and last for six months. Monthly salaries for the airline's top executives, including the president, will be decreased, said THAI president Sumeth Damrongchaitham.
Other related costs such as transport expenses will be cut as well.
At least 40 executives will be included in the cutback.
Mr Sumeth said the airline has no plans to lay off pilots at the moment, but it has tightened operating costs in line with a weaker load factor on Asian routes.
"About 10% of total flights in Asia have been cut," he said. "Some routes directly affected by the virus, such as those to Beijing, have been reduced to 2-3 flights per week, with the load factor falling to 50%."
Mr Sumeth expects the overall load factor to drop to 70% during the first quarter.
Jeffrey Goh, chief executive of Star Alliance, said the coronavirus outbreak is having a significant impact not only on airlines that serve Asian routes, but also on related industries such as hotels and restaurants.
"Last week the number of infections stabilised for a bit, then new cases emerged in Italy, Iran and South Korea," Mr Goh said.
He said the aviation industry in the region will continue to grow because it is a maturing market and has strong passenger demand and a sizeable aircraft fleet from Star Alliance members and airlines outside the network.
Mr Goh said GDP per capita in the region is trending upwards, which will enable people to travel 2-4 times a year.
He said fare cuts may not be the best choice when compared with the partnership strategy taken by airlines and other business counterparts, such as hotels, for valued-added services.
THAI Smile, a wholly owned subsidiary of the flag carrier, is set to become a Star Alliance connecting partner, enabling the airline to connect with the Star Alliance network without becoming a member of the alliance.