Thai Toughs it out
Thai Toughs it out
THAI says it is ready for major surgery to cut costs, rebuild business and revaluate aircraft purchases.
executives claim they will go full speed ahead to build revenue and
source loans to improve cash flow for the remainder of 2009.
They were commenting on a business turnaround plan that Thai Airways International, released last week.
divides strategies into two areas.Â The first priority is to build
revenue, improve yield improvement, cut costs and source loans to
Further downstream, the plan calls for
structural changes dealing with its route network, fleet plan, cost
structure, human resources, corporate culture and capital structure.
all the jigsaw pieces fit we can achieve EBITDA (earning before
interest, taxes, depreciation and amortization) of Bt38 billion at best
and more realistically Bt33 billion, with a profit of between Bt6 and
Bt7 billion,â€ said Turnaround Steering Committee chairman,Pichai
However, he insisted the projections were conditional on the country ending political unrest.
He claimed the company could cut costs by as much as 10% on a bill of Bt100 billion, excluding fuel expenses.
profits over the last decade averaged out at Bt6 billion, except in
2008, when the airline was hit byÂ a massive loss, made worse by
political troubles and the closure of airports.
â€œAfter we used
accumulated profits to pay staff bonuses and dividends for
shareholders, we are short of funds to pay for new aircraft. Ideally,
we need to make a net profit of Bt10 billion to stay ahead and maintain
the latest product line in aircraft and services.â€
will embark on boosting direct sales and internet sales an area that
produces only marginal results when compared with other distribution
The committee wants online sales to increase to
contribute 10% to 15% of the overall sales turnover. Trade distribution
channels such as travel agencies and online travel systems contribute
as much as 78% of the airlineâ€'s turnover. The committee wants to
improve internet sales from the current 3% to around 5% and steadily
increasing it to 8 and 10%.