Thai Airways International confirmed on Wednesday that it had placed an order with Boeing for at least 45 aircraft, giving the US planemaker a much-needed boost as it grapples with intense scrutiny following an accident on an Alaska Airlines flight earlier this year.
THAI, emerging from a major restructuring, said its order includes an option to purchase more jets. The new aircraft will be added to the fleet between 2027 and 2033 and the deal will not affect ongoing repayment plans under its debt rehabilitation process, it said in a statement.
“The long-term aircraft acquisition plan is crucial for replacing gradually expiring leased and ageing aircraft,” it said.
“THAI’s current financial health and projected liquidity are adequate to support the procurement within the aforementioned timeframe. … THAI remains open to considering various funding models including operating and financial leases, aiming to strike a balance that optimises financial flexibility and operational efficiency. This acquisition will not affect the ability to repay debts to the creditors.”
The recovery in tourism has bolstered business, with the company reporting a fourth straight quarterly profit in November. It plans to exit its rehabilitation plan this year.
The statement noted that THAI had a fleet of of 100 aircraft in 2013.
“The company decommissioned and discontinued the leases of ageing and less fuel-efficient aircraft during its rehabilitation process … to decrease maintenance and operating costs. … The decommissioning resulted in 64 operating aircraft at the end of 2022, a 36% decrease compared to 2013.”
The rapid recovery of tourism and travel demand since the end of the Covid-19 pandemic has allowed THAI to bolster its fleet by acquiring additional aircraft through operating leases. The fleet consisted of 70 aircraft at the end of 2023 and will increase to 79 this year, with 90 aircraft projected by 2025, it said.
“Considering the number of aircraft scheduled for decommissioning and lease expiry, the aircraft order backlog, aircraft production capability and the significantly increasing demand for aircraft in the aviation industry, THAI’s fleet, without this long-term acquisition, would decrease to only 51 aircraft in 2033, a 49% decrease from 2013,” the statement said.
“This would not generate the revenue needed to repay debts to creditors. However, with the acquisition of 45 aircraft, THAI’s fleet would reach 96 aircraft, which is still less than in 2013.”
General Electric, which typically makes engines for widebody aircraft including the Boeing 787 Dreamliner, will power the jets.
Boeing was expected to win the order after a rival offer by Airbus was thwarted by a disagreement on engine pricing with Rolls-Royce, which drew a rare public rebuke from THAI chief executive officer Chai Eamsiri.
The total value of the aircraft deal was not disclosed. The order also came with options for additional aircraft, the airline said, adding that its fleet size would reach 96 jets after the acquisition.
The new jets would also allow the carrier to capture enough traffic to generate at least 180 billion baht in annual revenue from 2025 onwards, in line with the airline’s rehabilitation plan, Mr Chai told Reuters in an interview earlier this month.
THAI said it would release more details of the order and the engine selection at the Singapore Air Show from Feb 20 to 25.
The deal adds to a growing order book for Boeing, which has recently locked in deals for 150 Max jets from Akasa Air of India. Meanwhile, Airbus has won an order for twenty A350-100s from US-based Delta Air Lines and another eleven A350-900s from Ethiopian Airlines.
Boeing is still mired in the fallout of an Alaska Airlines jet suffering a panel blowout in early January. That resulted in the temporary grounding of more than 170 Max 9 jets and has heaped scrutiny on the manufacturing practices and quality control of the company and its subcontractors.
Boeing, under close supervision of US aviation regulators, said this month that it plans to build its 737 Max aircraft at a slower pace during the first half.