Sepo nursing 5 enterprises back to health

Sepo nursing 5 enterprises back to health

THAI's turnaround sits atop to-do list

Thai Airways tops five state enterprises that the State Enterprise Policy Office hopes to see a turnaround. (Photo by Somchai Poomlard)
Thai Airways tops five state enterprises that the State Enterprise Policy Office hopes to see a turnaround. (Photo by Somchai Poomlard)

The State Enterprise Policy Office is focused on five financially ailing state enterprises forced into business rehabilitation, aiming to make their turnaround efforts pay off, Sepo's chief says.

The five are flag carrier Thai Airways International Plc (THAI), the State Railway of Thailand (SRT), the Bangkok Mass Transit Authority (BMTA), TOT Plc and CAT Telecom, said director-general Prapas Kong-Ied.

Improving loss-making state enterprises has been a priority for the National Council for Peace and Order since the bloodless coup in 2014. Two state enterprises -- the Small and Medium Enterprise Development Bank of Thailand (SME Bank) and Islamic Bank of Thailand (IBank) -- have exited from business rehabilitation plans.

THAI's second phase of jet purchases is an urgent issue that must proceed, Mr Prapas said.

Funding sources are a stumbling block for new aircraft purchases after THAI's board approved a plan to comply with the cabinet's recent resolution, he said.

THAI has scrambled to move away from losses for several years amid intensified competition in air travel. The struggles of loss-making low-cost subsidiary Thai Smile and the grounding of Airbus 350s and their replacement with Boeing 737s and 747s that consume more fuel and incur higher maintenance costs have taken a bite out of operating performance, Mr Prapas said.

To help make Thai Smile profitable, THAI's board appointed president Sumeth Damrongchaitham as chairman to bring the budget carrier's policy in line with the parent airline's.

In 2018, THAI's net loss widened to 11.6 billion baht from 2.11 billion in the previous year.

Mr Prapas said SRT's business rehabilitation is expected to make strides with a plan to set up two subsidiaries: one is tasked with generating income from large land banks to solve the agency's retained loss, while another is to operate the Red Line electric railway.

Unlike the Airport Rail Link, whose management plan must seek SRT board approval, the State Enterprise Policy Commission (superboard) wants the soon-to-be-set-up firm to run independently from SRT, Mr Prapas said.

For the first phase of seven double-track train routes spanning a combined distance of 1,000 kilometres, all 13 contracts have been signed and construction is expected to be completed by 2022.

The purchase of 3,000 new buses with a variety of fuel usages to halve fuel cost and lower maintenance cost, as well as the adoption of e-tickets to replace 5,000 human ticket-takers, are crucial in plans to bring the BMTA's earnings before interest, tax, depreciation and amortisation (ebitda) into positive territory.

The Finance Ministry will consider shouldering BMTA debt in the hundreds of billions of baht once ebitda swings back to profit.

For TOT and CAT, Mr Prapas said a subcommittee on business rehabilitation appointed by the superboard has instructed both state enterprises to map out a merger plan.

TOT and CAT plan to amalgamate into a national telecom firm.

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