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Sa-teef

Four Basic Reasons Thai Airways is Floundering on the Verge of Collapse

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The carrier lost $211 million in the first half of 2019, bringing total losses to $9.2 billion. The country’s national airline has traditional been run as a cronyist enterprise, benefiting its stakeholders, but its business has been eroded by low cost competition.

Over the summer the airline’s President introduced a six point plan to crowd source cost cutting ideas; reduce food waste; make a ton of money flying to Sendai, Japan; collaborate with a local gas station cafe chain; and platitudes but it was (shockingly) insufficient.

Thai’s new plan is to “reduc[e] the salaries of managerial staff ” and follow “a zero inventory policy at its catering department” according to the carrier’s President. What’s more, “[t]here will be no other rewards for the staff, because the top prize is the survival of the company.”

"In October the President of Thai Airways told employees that the airline was on the verge of shutting down with only a month’s runway to execute a turnaround. The airline promptly worked to walk that back, suggesting it was hyperbolic, but it nonetheless underscored that Thai Airways is underperforming and in financial difficulty, propped up by the Thai government...."

"...However their fleet has long been a hodgepodge and many of the decisions such as where to fly have seemingly been made for reasons having nothing to do with advancing the business interests of an airline. The head of the airline even says big losses are ‘normal’. "

"

  • >Corruption: Procurement, whether of planes or light bulbs, has often been done for reasons other than serving the airline’s interests or at prices that aren’t the best the airline could get. And this leads to suboptimal decisions, like a fleet of 80 widebodies that lacks more than 14 of a single type, leading to scheduling challenges and higher maintenance and training costs and an inability to reach cost efficiency through scale.

    Incompetence: Company executives in many cases have owed their position to patronage rather than ski

  • Bureaucracy: While they want very badly to lean on technology for ancillary revenue they’ve underinvested in tech (perhaps, given their other challenges, this has been a saving grace in terms of waste avoidance). Thai law and custom often places form over sound decision-making as well.

  • Competition: Thai could manage in spite of being so poorly managed when the Thai economy boomed, tourists came in droves, and there wasn’t nearly as much competition from low cost carriers. They no longer have anything close to a monopoly on domestic operations, and they face competition on most routes with strong traffic and yields.

https://viewfromthewing.com/four-basic-reasons-thai-airways-is-floundering-on-the-verge-of-collapse/

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You may have read about this elsewhere but worth repeating for travelers to SE Asia.

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Thai Airways chairman resigns as company struggles

November 2, 2019
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"BANGKOK (AP) — Thai Airways has disclosed that its chairman has resigned as the carrier struggles with financial challenges.

The airline said Friday that Ekniti Nitithanprapas resigned as of Nov. 1.

The carrier’s vice chairman, Air Chief Marshal Chaiyapruk Didyasarin, will be acting chairman.

Thai Airways gave no reason for Ekniti’s departure after three of the airline’s executive directors recently quit. The company’s president recent drew criticism for saying the company was in crisis and might have to close if its employees do not cooperate with a rehabilitation plan.

The company reported a nearly 6.7 billion baht ($220 million) net loss in the April-June quarter. It said a slowdown in tourism in Thailand and in the global aviation market were factors behind a 10% decline in revenue from a year earlier. Passenger traffic fell more than 5%.

The airline has been selling decommissioned aircraft to help alleviate its cash crunch."

https://apnews.com/fa97ac2fd24d480fb8d0ced523398305

 

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