Smooth as Silk

An increase of income, lower cost, and selling old planes are the dreams that every director of Thai Airways International Public Company Limited (THAI) had wished for as well as all those beneficiary, such as, shareholders, passengers and a majority of TG’s crew. In the midst of high competition in the aviation business, THAI seems to shrink further when the airline has more competitors, causing its cost to go higher while the sales keep getting lower and lower, resulting in a smaller amount of gross profit. The airline must maintain the image of the so-called and long-time “national airline”. While the government holds a major share in THAI, limiting the workflow in many departments within the company and straying from the international policy of “Open Skies”. Thus, Mr. Sumeth Damrongchaitham, THAI’s president and director (DD), had introduced three new interesting plans that might have given hope to all beneficiaries. Firstly, a new plan to sell 20 old planes, of which 16 planes has been offered to buyers at a total of 4 billion baht while expecting a result to be concluded at the end of January 2019. The highlight of this deal besides disposing old planes and recording the income as an extraordinary item is the removal of THAI’s asset impairment on those planes. According to THAI’s 2017 financial statement, the company sets asset impairment at 470 million baht and plane depreciation at 2.72 billion baht, while its deficit in 2017 was 2.11 billion baht. That being said, if THAI is able to cut even only plane depreciation, the company would turnaround to book a net profit of approximately 600 million baht. If the deal of 16 planes goes smoothly, that would help add more profit at the bottom line of THAI’s financial statement with relative ease. However, the problem remains in the other four planes which two of the four are Airbus A340-500 and 600 that are outdated and the sinking in market price makes the remaining two planes harder to find a proper buyer. Secondly, Mr. Sumeth has set a goal to reach 200 billion baht of revenue in 2019 which is very close to the projection for 2018 and 2017 revenue at 149 billion baht and 191 billion baht, respectively. Even though there are no new planes for THAI, but with its constant income and decrease in asset impairment and depreciation, there is a chance to earn more profit. Lastly, a plan to buy 38 new planes will add more value to this so-called “national premium airline”. While we are using old models like A330, Boeing 747 and even Boeing 777 (-200ER), a majority of airlines nowadays use new models such as A380, A350, and Boeing 787 (Dreamliner) as their main fleet. These new planes will allow THAI to be able to compete with Singapore Airlines, Emirates, Qatar Airways, Etihad and a lot more in this region. The returning to SET50 is not a dream anymore when Mr. Sumeth has taken the wheel along with Mr. Ekniti Nitithanprapas as THAI’s Chairman of the Board of Directors and Mr. Vachara Tuntariyanond in the team to guarantee the transparency and management ability. Do not forget that THAI is the share that does not need to see profit at the end of each quarter, but only a ray of hope can send the share to its peak easily.