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THAI to submit B156bn new plane purchase plan to Cabinet

THAI to submit B156bn new plane purchase plan to Cabinet

BANGKOK: Thai Airways International (THAI) will seek Cabinet approval this month to buy or lease 38 new planes at an estimated cost of B156 billion, with 31 planes to be procured over the next five years.

tourismtransport
By Bangkok Post

Thursday 9 May 2019, 10:58AM


Thai Airways International (THAI) will seek Cabinet approval this month to buy or lease 38 new planes at an estimated cost of B156 billion, with 31 planes to be procured over the next five years. Photo: Bangkok Post

Thai Airways International (THAI) will seek Cabinet approval this month to buy or lease 38 new planes at an estimated cost of B156 billion, with 31 planes to be procured over the next five years. Photo: Bangkok Post

Airline president Sumeth Damrongchaitham said on Tuesday (May 7) the aircraft acquisition plan would reach Deputy Prime Minister Somkid Jatusripitak this week and be put to the Cabinet later this month for approval.

Procurement would be by purchase and leasing, with the planes a mix of wide and narrow body models, he said.

There would be two phases. The first stage was for 31 planes to replace old ones within five years, and the second would be for seven other aircraft, Mr Sumeth said.

The national airline was also studying new routes to increase income. Management would ask the airline board to approve a new Bangkok-Sendai (Japan) service, to be launched in November. THAI was also interested in flying the Bangkok-Manchester route, but had yet to conduct a thorough study of it, Mr Sumeth said.

He hoped the airline could be profitable again in mid-2020.

The move comes as the State Enterprise Policy Office (Sepo) is focused on five financially ailing state enterprises forced into business rehabilitation, aiming to make their turnaround efforts pay off, Sepo’s chief says.

The five are flag carrier Thai Airways International Plc (THAI), the State Railway of Thailand (SRT), the Bangkok Mass Transit Authority (BMTA), TOT Plc and CAT Telecom, said director-general Prapas Kong-Ied.

Improving loss-making state enterprises has been a priority for the National Council for Peace and Order since it came to power in May 2014. Two state enterprises – the Small and Medium Enterprise Development Bank of Thailand (SME Bank) and Islamic Bank of Thailand (IBank) – have exited from business rehabilitation plans.

THAI’s second phase of jet purchases is an urgent issue that must proceed, Mr Prapas said.

Funding sources are a stumbling block for new aircraft purchases after THAI’s board approved a plan to comply with the Cabinet’s recent resolution, he said.

THAI has scrambled to move away from losses for several years amid intensified competition in air travel. The struggles of loss-making low-cost subsidiary Thai Smile and the grounding of Airbus 350s and their replacement with Boeing 737s and 747s that consume more fuel and incur higher maintenance costs have taken a bite out of operating performance, Mr Prapas said.

To help make Thai Smile profitable, THAI’s board appointed president Sumeth Damrongchaitham as chairman to bring the budget carrier’s policy in line with that of the parent airline.

In 2018, THAI’s net loss widened to B11.6 billion from B2.11bn in the previous year.

Mr Prapas said SRT’s business rehabilitation is expected to make strides with a plan to set up two subsidiaries: one is tasked with generating income from large land banks to solve the agency’s retained loss, while another is to operate the Red Line electric railway.

Unlike the Airport Rail Link, whose management plan must seek SRT board approval, the State Enterprise Policy Commission (superboard) wants the soon-to-be-set-up firm to run independently from SRT, Mr Prapas said.

For the first phase of seven double-track train routes spanning a combined distance of 1,000 kilometres, all 13 contracts have been signed and construction is expected to be completed by 2022.

The purchase of 3,000 new buses with a variety of fuel usages to halve fuel cost and lower maintenance cost, as well as the adoption of e-tickets to replace 5,000 human ticket-takers, are crucial in plans to bring the BMTA’s earnings before interest, tax, depreciation and amortisation (ebitda) into positive territory.

The Finance Ministry will consider shouldering BMTA debt in the hundreds of billions of baht once ebitda swings back to profit.

For TOT and CAT, Mr Prapas said a subcommittee on business rehabilitation appointed by the superboard has instructed both state enterprises to map out a merger plan.

TOT and CAT plan to amalgamate into a national telecom firm.

 

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ChelseaPete | 10 May 2019 - 17:22:48

As you have now cut passengers luggage allowance down to 20kg the new planes will be a complete waste of money. The business will now go to other Airlines. Penny wise pound foolish move Thai Airways. Then again common sense is not common here as we all know !

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