Loss-making Thai Airways frets about $3-billion plane purchase

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Thailand’s flag carrier Thai Airways, whose business model is under heavy attack from regional discount carriers, is under pressure from the government as 51-per cent owner to invest $3 billion for new airplanes in order to renew its aging fleet and improve its competitiveness.

However, the airline’s President Sumeth Damrongchaitham said that financing such a large investment was a problem as the company is currently busy to clear away accumulated losses of $750 million by 2022 on its way to restoring profitability.

Airplane purchases could only be done with new debt or a capital increase. The company has lost money for most of the past decade, apart from intensifying competition with low-cost carriers also owing to inefficient cost management and frequently changing top executives.

Thailand’s transport Minister Arkhom Termpittayapaisith said in an interview with the Nikkei Asian Review that the ministry backed the aircraft purchase plan to buy the 23 new aircraft.

But Sumeth said that he will review the plan, as it was drawn up before he took the job.

“We may not need as many as 23 planes,” he said, adding that financing plans had yet to be decided.

However, Thailand’s Deputy Prime Minister Somkid Jatusripitak directed Thai Airways to finalise its plan to purchase all 23 aircraft by the end of this year, saying that said the government was “ready to support the airline to move forward” but it needs to have “clearer strategic plans, particularly for aircraft procurement.”

“For the issue of aircraft purchases, I need to see the details this year. What aircraft, model and type do they propose purchasing?” Somkid said.

Thai Airways used to be neck on neck with Singapore Airlines as the best airline in the world a decade ago until the carrier got into heavy debt and lost competitiveness. During the past ten years, Thai Airways’ domestic market share fell from 37.1 per cent to 27.1 per cent due to the emergence of low-cost airlines and tough competition.

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Reading Time: 2 minutes

Thailand’s flag carrier Thai Airways, whose business model is under heavy attack from regional discount carriers, is under pressure from the government as 51-per cent owner to invest $3 billion for new airplanes in order to renew its aging fleet and improve its competitiveness.

Reading Time: 2 minutes

Thailand’s flag carrier Thai Airways, whose business model is under heavy attack from regional discount carriers, is under pressure from the government as 51-per cent owner to invest $3 billion for new airplanes in order to renew its aging fleet and improve its competitiveness.

However, the airline’s President Sumeth Damrongchaitham said that financing such a large investment was a problem as the company is currently busy to clear away accumulated losses of $750 million by 2022 on its way to restoring profitability.

Airplane purchases could only be done with new debt or a capital increase. The company has lost money for most of the past decade, apart from intensifying competition with low-cost carriers also owing to inefficient cost management and frequently changing top executives.

Thailand’s transport Minister Arkhom Termpittayapaisith said in an interview with the Nikkei Asian Review that the ministry backed the aircraft purchase plan to buy the 23 new aircraft.

But Sumeth said that he will review the plan, as it was drawn up before he took the job.

“We may not need as many as 23 planes,” he said, adding that financing plans had yet to be decided.

However, Thailand’s Deputy Prime Minister Somkid Jatusripitak directed Thai Airways to finalise its plan to purchase all 23 aircraft by the end of this year, saying that said the government was “ready to support the airline to move forward” but it needs to have “clearer strategic plans, particularly for aircraft procurement.”

“For the issue of aircraft purchases, I need to see the details this year. What aircraft, model and type do they propose purchasing?” Somkid said.

Thai Airways used to be neck on neck with Singapore Airlines as the best airline in the world a decade ago until the carrier got into heavy debt and lost competitiveness. During the past ten years, Thai Airways’ domestic market share fell from 37.1 per cent to 27.1 per cent due to the emergence of low-cost airlines and tough competition.

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