Thai Airways International said last week it expects to return to profit earlier than expected in the fourth quarter and will cut 1,500 jobs this year as part of a restructuring plan at the troubled national carrier.
The loss-making carrier also said it would shed more than a quarter of its full-time employees by 2018, the first major job cuts announcement since the restructuring was approved last month. Thai Airways had previously said it planned to cut costs and prioritise certain routes to return to profit as soon as the middle of next year. The airline, which employs 25,000 people and another 5,000 in subcontracted staff, was singled out as the first state enterprise to undergo reform by Thailand’s military rulers who took over in May after the ouster of Prime Minister Yingluck Shinawatra’s government over charges of corruption.
“We expect to see profit in the fourth quarter,” Air Chief Marshall Prajin Juntong, chairman of Thai Airways and head of the military government’s economic affairs, told reporters in Bangkok. The airline aims to cut operating costs by four billion baht (US$125.5 million) and increase revenue by three billion baht, Prajin said, helped by an increase in the number of passengers flying to Thailand as the political unrest subsides.
The airline said Japanese and Indian customers are returning and European routes are doing better but the Australian market is not recovering as fast. “The recovery plan will take root over the next 2-3 months and we will see in the next five years that Thai Airways will return to become a world-class carrier once more,” Montri Chamrieng, vice president of engineering added according to Reuters.
In the third quarter of next year the carrier will begin restructuring of the company’s hierarchy involving the hiring of more operational staff and the improvement of Thai’s inflight product. The restructuring plan will also see the rationalisation of Thai’s European route network coupled with the expansion of services to Japan and China. According to the Nation newspaper, Thai is also considering moving some short-haul or domestic services of its subsidiary Thai Smile from Suvarnabhumi International Airport to Bangkok Don Mueang airport.
In a bid to reduce its fuel cost overheads, Thai said it will maintain the delivery of brand new A330-300s, A350-900s and B787-8s while phasing out its older A330-300s, A340-600s, B777-200(ER)s and B737-400s.
“It should take one to two years, or probably to the first quarter of next year, to see the result of the restructuring. Performance should improve and we aim to be number one in 2017,” acting president, Air Chief Marshal Siwakiat Jayema, said.
Even though the airline expects to benefit from an anticipated increase in tourists during the year-end holidays, it still expects to report a slightly wider loss for 2014 compared to it 12 billion baht loss a year ago, Prajin added. A day after announcing the restructuring details the carrier also announced that Air Chief Marshall Prajin Juntong would resign effective 20 August. In a statement, Thai said vice chairman Areepong Bhoocha-oom would take over as chairman, without giving further details.
