Thai Airways reports huge B11.5bn loss

Thai Airways reports huge B11.5bn loss

Thai Airways International Plc hopes its balance sheet will recover in the next few years after its new fleet is in service, as it is now severely affected by the cost of maintaining ageing aircraft.

The national carrier yesterday announced consolidated losses of over 11.5 billion baht last year, even though it managed to successfully increase its revenue by 7.5 billion baht, to 199.5 billion baht, up 3.9% from 2017.

But the earnings could not cover huge spending of 208.5 billion baht, which rose sharply by 19.4 billion baht, or 10.3%, from 2017 expenses.

THAI suffered a 2.1-billion-baht loss in 2017.

THAI president, Sumeth Damrongchaitham, called asset impairment, the cost of maintaining an ageing and less efficient fleet, an "income trap" for THAI. Ageing aircraft require high repair costs and fail to keep customers as satisfied as on a newer plane.

The company is asking the National Economic and Social Development Council to approve its 200-billion-baht purchase of 38 new aircraft. Still, even if approved, it will take time for delivery. As a result, the company is not likely to get back into the black in the next one or two years.

He said, however, that THAI will focus this year on reducing costs and increasing sources of non-core business income such as catering and digital marketing. The company expects to earn 3-4 billion baht from these businesses. Aside from maintenance costs, the company was also affected by oil price hikes and fierce competition in the airline industry.

Mr Sumeth said the company's board of directors on Thursday decided to wipe THAI's accumulated losses, worth 28 billion baht, by utilising its legal reserve and share premium account. The company's accumulated loss will then be reduced to 296 million baht.

If the plan is approved by its shareholders in April and the company posts profits higher than that, it can pay dividends to shareholders, he said. He insisted that the plan will not affect the value of shareholder equity.

Last year, 24.3 million passengers flew with THAI, a 1% drop from the previous year. The cabin, or load factor, which gives the occupancy of an airline, averaged 77.6%, a decrease from 79.2% in 2017.

THAI shares dropped 3.82% to 12.60 baht yesterday in trade worth 96.84 million baht.

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