Thai Airways International Plc is scrambling for new strategies to cope with challenges in the next two years.
THAI President Piyasvasti Amranand said yesterday that the airline’s management is seeking additional strategies for 2012 and 2013 when the aviation sector should face drastic challenges, led by high jet fuel prices and natural disasters.
He said the airline needed better and clearer plans to deal with unfavorable times ahead. Jet fuel price has climbed by 40 per cent in the first 11 months of this year. The airline has hedging contracts for 60 per cent of fuel for the next quarter, and up to 80 percent in the last quarter of 2012.
In the first 11 months, THAI’s fuel expenses have been increased by Bt17 billion over the same period last year, he added. Against higher cost, the airline could not raise the fares due to the worst flooding in October and November which reduced passenger traffic.
Transport Minister Sukampol Suwannathat, who chaired THAI's executive board meeting yesterday, suggested the airline to introduce new strategies involving with aircraft utilization and aircraft acquisition.
Yesterday, THAI board of directors approved the issuance of bonds worth 2 billion, having Kasikornbank as the adviser. The 5-year bonds, which will be sold to no more than 10 entities, will raise funds for the company's operations, asset investments and loan repayment.
At the meeting yesterday, the board acknowledged the airline’s poor operations in November, when the cabin factor was as low as 61 per cent. In a statement, the board admitted that it’s "exceptionally weak especially for the peak season. The decrease in passenger number is attributed to the flooding, whereby a number of countries issued travel advisories to Thailand. Insurance companies refusing to issue travel insurance during the flood further deterred arrivals with many foreigners canceling or postponing their travel plans," it said.
Cargo and commercial mail service was also affected in November as a result of the flood. With reduced frequencies, the Available Seat-Kilometer (ASK) for November 2011 dropped 2.1 percent from the same period last year. Revenue Passenger-Kilometer (RPK) for November 2011 was 16.8 per cent lower than the same month last year.
For the 11-month period, ASK was 4.2 per cent higher on year while RPK was 0.1 per cent higher. Cabin factor averaged 70.6 percent, which was 3.9 percent lower than the same period last year.
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