THAI to Cuts Losses by Grounding Uneconomical A340s

13th Feb 2016

Thai Airways International (THAI) is set to ground 10 of its Airbus A340 aircraft because the four-engine jets are far too uneconomical even with the 40 per cent fuel drop in 2015.

THAI previously tried to sell the A340s, but couldn't find the buyer for them.

Airline President Charamporn Jotikasthira explained the reasoning in an interview for local media on Thursday, saying:

"The fuel consumption is so uneconomical. All new planes now have two engines that can fly as long as the four engines with much better fuel efficiency."

The state-owned carrier is now looking for ways to cut its losses by canceling routes and selling some of its assets.

According to Charamporn, the airline will also try to get more revenue out of the bookings from its website, aiming for the 30 per cent mark in the following few years, That number right now stands at 16 per cent.

THAI President also explained:

"We still have a lot of unfilled seats a need urgent action to spur demand for advance bookings. Promotions for bookings on our website are key to the company's future because our current system is so inferior to other competitors."

Siam Tiyanont, an analyst for Philip Securities for Thailand said:

"A swift sale of aircraft will offer much-needed funds for THAI repay loans or make investments. Its goal for increased online sales is probably too ambitious, because a previous attempt delivered very slow results."

THAI's shares have dropped 11 per cent so far in 2016. In 2015, the company's stock has fallen 37 per cent and currently stands at 8.05 baht.

The carrier could also sell some of its bonds (around 6 billion baht) in order to repay a part of its debt; said CFO Narongchai Wongthanavimok THAI recently completed a revaluation of its assets for the 4th quarter, which aided it in decreasing its debt-to-equity ratio to single digits, whereas it was 14 in the previous quarter.

The state-controlled airline has been reporting losses since 2013. Between January and September of last year, THAI posted a loss of 18 billion baht, while in the same period of 2014; it posted a deficit of 9.2 billion baht.

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