Wingless Birds! 4 Airlines are Being Shot Down One by One

First one is our big brother (but little sulky), Thai Airways International Public Company Limited (THAI) that had welcome Mr. Sumeth Damrongchaitham, the new president, with a 3.1 billion baht loss. Although the loss has been reduced to 40.50% from the same period of last year, the loss is still higher than the estimation due to fuel cost, which is 16.9% of the overall expense.

While THAI has some extra profit from the sale of their offices and Royal Orchid Hotel (Thailand) Public Company Limited or ROH’s shares for 1.2 billion baht, the amount is still considerably miniscule. More importantly, if THAI fails to record this profit, it would have had a 4 billion baht loss, not to mention the decreased cabin factor from 78.5% to 75.8%

The challenge for the mighty Mr. Paiboon Damrongchaitham’s niece is how to “stop the bleeding”? Especially, the fleet that had been pre-ordered and awaited in a silver platter before he took the position. When the deal was completed, the beneficials were all rich, but when the troubles occurred, they were nowhere to be found.

 

Let’s take a look at Dr. Prasert Prasarttong-Osoth’s Bangkok Airways Public Company Limited or BA, who has his own son, Captain Puttipong Prasarttong-Osoth, as the commander instead of himself. BA faces a 83 million baht loss from the same period of last year that recorded a 553 million baht loss. The problem seems to be just like THAI regarding the fuel cost of 16.8% from the overall expense.

On the bright side, with unique services of BA in the low season reflecting in a slightly decrease in cabin factor. What to consider is how to control the fuel cost? If this can be achieved, BA will definitely gain profit!

 

On to the next one, who is the original low cost airline, Asia Aviation Public Company Limited (AAV), known as Airasia Airline. The business is under the control of its CEO, Mr. Tossapon Bijleveld, who is well-known for his master level of eloquent skill. Sadly, his skill would not be able to help him from the loss of 306 million baht. The loss is AAV’s first time in four years.

The boat capsized incident in Phuket also has a huge effect on AAV, since tourists from China are 30% of AAV’s overall passengers in their airline business. When there are less Chinese tourists, AAV’s profit declines.

Even though the government is approving free visas for Chinese tourists to restore Thailand’s tourism, it appears to be too late…..

 

Last on the list is Nok Airlines Public Company Limited or NOK, who has Mr. Piya Yodmani sitting at the CEO position. He once said that “NOK will make a turnaround” during his early days after receiving the title. However, in reality, Nok is not even going to turnaround, but seems like it will not fly again. Especially, when NOK has lost 829 million baht of its profit in the 2Q18, which is worse then the same period of last year at the loss of 649 million baht.

The weak bird is now having a complicated disease after their shareholders’ equity is lower than 1 billion baht, which is less than 50% of paid-up capital (2.2 billion baht). Resulting to its receiving a “C” caution sign from SET. The situation is even worse after getting the “C” sign when the only transaction available for NOK right now is through the cash balance method.

 

The 2Q18 consolidated financial statements show that regardless of high fuel cost, less Chinese tourists, loss from currency exchange or competitive prices, airline shares do not seem to be a good choice for investment, especially NOK that is the worse among the other four airlines.