Home' Asian Aviation : AAV March 2016 Contents 36 AsianAviation | MARCH 2016
hai Airways International has scotched
speculation that it will acquire a stake
in low-cost carrier (LCC) Thai AirAsia
because the airline is facing its own
organic problems and the sector in Thailand is facing
major hurdles of its own.
“Thai has not yet considered any investment
in any airlines for the time being,” Narongchai
Wongthanavimok, executive vice president for
finance and accounting, said in a filing with the
country’s stock exchange. “Should there be any
development in this front, Thai will properly notify the
SET as soon as possible,” the letter added.
Industry speculation and reports suggested that
the country’s national carrier was on the verge of
acquiring a 20 percent stake in Thai AirAsia for
five billion baht (US$140 million). Some reports
suggested the government was orchestrating the
deal after a deputy prime minister said the national
carrier should take a stake. Thai AirAsia officials said
then that they were “open” to discussions.
While Thai succeeded in ending the rumours, it
did add it was hoping to cooperate with Thailand’s
other airlines to help the Southeast Asian country’s
“Thai would like to clarify that the company has
discussed with all Thai-operated airlines in the country
in considering strategies for Thailand’s aviation
industry in supporting transportation and tourism,”
the company said in its filing with the stock exchange.
The news of a potential acquisition led to
widespread confusionin the investment community
with analysts suggesting it was a back-handed ploy
to get the balance sheet of Thai Airways out of the red.
Thai is making heavy losses and, despite a profit
of four billion baht in the last quarter, will still report
losses of 14 billion baht (US$392.38 million) for the
last year — similar to 2014’s loss of more than 15
The news of a potential acquisition and the airline’s
denial also comes after it was confirmed the carrier
has mothballed and put up for sale 10 Airbus A340s,
a step that would be highly unlikely for a national
carrier on the move and about to buy a vigorous LCC.
“These 10 A340s have been grounded, waiting to
be sold as they are not fuel efficient,” an official with
the national carrier told Asian Aviation.
Thai’s president, Charamporn Jotikasthira, was
“The fuel consumption is so uneconomical,” he
told one wire service in an interview distributed by
the airline. “All new planes now have two engines
that can fly as long as the four engines, with much
better fuel efficiency.”
Analysts have welcomed the move, one of several
initiatives the carrier has undertaken along with route-
cutting and asset sales, such as a hotel portfolio, to
haul itself onto firmer financial ground.
Pointing out the planes were very old and inefficient,
Jitima Ratanatan, an analyst with Kasikorn Securities,
said they were “not efficient for the company...not
good for the company” and selling them would be
good for cash flow.
Another big problem the A340s had was the lack
of passengers, not because people didn’t want to
fly to Los Angeles and New York, where the A340s
used to fly to, but the planes could only carry a limited
number of people.
One analyst with a local securities house
reported the four-engine plane could only carry
215 passengers. Even with low fuel prices that the
industry has been enjoying, the A340 “was no longer
Adding to this is the fact that new aircraft such as
the Boeing 777-200LR have rewritten the economics
of the long-haul market, which for Asian carriers is
also being challenged by the rise of the Gulf carriers
such as Emirates and Qatar, the analyst added.
The A340s parked and waiting to be sold may be
there for a while because there is a lack of interest,
according to analysts.
For the airline itself, Thai is shifting gears and
hoping to increase the portion of revenue from
bookings on its own website to 30 percent in the
next few years, from 16 percent now, Charamporn
“We still have a lot of unfilled seats, and need
urgent action to spur demand for advance bookings,”
Charamporn said in his news agency interview.
“Promotions for bookings on our website are key to
After reporting a net loss for 2015 and facing problems on its home tarmac that are curtailing new routes to major destinations,
Michael Mackey looks at why Thai Airways has decided now is not the time to invest in acquisitions.
Thai Airways cools acquisition speculation
A Thai Airways A340 on the tarmac.
3/03/2016 7:21:47 PM
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