Thai Airways Reports Q3 Operating Profit Of US$ 22.3 Million But Overall Continues To Lose Money

Thai Airways has reported a third quarter operating profit of 739 Mio. Thai Baht (US$ 22.3 Mio.) but overall continues to lose money due to high expenses, competition and currency transactions.

Thailand’s national carrier has been struggling for years to make profits as the carrier suffers from a variety of long term management errors, political meddling and as of recent the ICAO red flag.

While the ICAO has cleared Thailand again and removed the red flag regarding the countries aviation sector Thai Airways problems are only decreasing slowly if at all as they posted yet another Net Loss, this time even larger than in the previous year.

The Bangkok Post (access here) just reported about the companies financial results.

National carrier Thai Airways International has reported a quarterly operating profit, but warned competition was likely to intensify after a UN body last month lifted a ban on new international flights by Thai-based carriers. …

Thai Airways, 51% owned by the government, swung to an operating profit of 739 million baht (US$22.33 million) for the third quarter ended Sept 30, from a 836 million baht loss a year ago. Revenue rose 6.3% to 46.9 billion baht as it boosted capacity and filled a higher percentage of seats, but reported a 7.5% decline in average fares.

Thai Airways’ expenses rose 2.7% in the third quarter as jet fuel prices spiked and the government began taxing jet fuel for domestic routes. The airline’s shares were trading 1.7% lower on Monday.

Due to impairments on older aircraft and foreign currency exchange losses, Thai Airways reported a net loss of 1.8 billion baht for the quarter, wider than the 1.6 billion baht net loss a year ago. …

We previously wrote about the removal of the ICAO Red Flag rating (read here) and also about the changes in Thai Airways ticketing procedures as they began to collect Fuel Surcharges again.

Not only Thai Airways but also their low cost rivals are gearing up to apply for new international routes where they will compete with each other for customers. The company also announced that they plan to serve more flights in South East Asia through their own low cost carrier Thai Smile which is not part of Star Alliance and where frequent fliers (except those of Thai Royal Orchid Plus) do not enjoy any associated status benefits such as lounge, priority check in and baggage privileges.

As noted in the article the airline is majority owned by the Thai Government and has seen it’s fair share in political interference over the years which often resulted in bad business decisions. This included ordering of all sorts of different aircraft. The variety of models TG has in their fleet is staggering and produces huge maintenance costs.

Conclusion

Fuel prices are picking up again (at least temporarily) but at the same time the problems that Thai Airways faces go much deeper. Growing competition in Thai’s home market and across the region as well as their giant financial overhead are taking their toll on the company. The airline has been used and abused for decades by politicians as well as the royal upper class in the country who used the company like their personal taxis, putting paying passengers second. Paired with unsound business decisions it’s only a matter of time until such a corporate culture will bring an airline to it’s knees.

Keep in mind that for the last 5-10 years airlines have been very profitable again across the bench, even though most recently full service carriers (including industry icons such as Singapore Airlines and Cathay Pacific) have found it difficult to operate as profitable as in the past, also citing competition in the market.

If you enjoyed this article, get our blog updates for free!

SHARE
Previous articlePREVIEW: Hilton Honors Japan, Korea & Guam 50% off Flash Sale For Stays Through June 30, 2018 (Book By November 24)
Next articleMarriott eBreaks For November 23 – 26, 2017 (20% Off This Coming Weekend)

YOU MIGHT ALSO LIKE