THAI boss upbeat on reviving

[webfact]

THAI boss upbeat on reviving

By THE NATION

 

 

Thai Smile Sumeth Damrongchaitham, president of Thai Airways International Public Company Limited (THAI), is confident of Thai Smile turning profitable by next year.

 

He said the subsidiary, which positions itself as a premium airline, had carried out a major restructuring programme of its operations, aimed at cutting operational cost and teaming up with THAI in both sales and marketing. Thai Smile will keep its positioning as a premium low-cost airline and become a feeder service provider for the Star Alliance network.

 

 Meanwhile, Sumeth said: "On behalf of  Thai Smile's  chairman, I  will launch  the largest-ever financial restructuring of the carrier in compliance with the new IFRS9 accounting system, effective by 2020. However, I cannot reveal whether it will be a rise in capital, but the resulting benefits will lead to an improvement in the carrier's performance, higher confidence and the start of in-bound routes directly to many potential markets, such as the Philippines," he said.

 

THAI, as a 100-per cent holder of Thai Smile, implemented the restructuring programme recently in the areas of ticketing, marketing and the arrangement of routes to complement each other's flight schedule. By doing so, Thai Smile will have better cost management.

 

"We believe that by the end of this year, Thai Smile will have significantly reduced its loss. THAI suffered a  Bt3.6 billion loss from holding all shares in the subsidiary and its related businesses last year with the net loss of Thai Smile itself amounting to Bt2.6 billion ," said Sumeth.

 

 For this year, THAI has estimated a loss of Bt1.6 billion to Bt1.7 billion from Thai Smile, down 50-per cent from last year's, he said.

 

"The capacity of Thai Smile has been raised from 8.30 hours per aircraft per day to about 9.30 hours. By next year, we plan to further increase the capacity to 10.30 hours per aircraft per day, which will be the breaking point for Thai Smile. By then, it will no longer incur a loss," said the THAI president.

 

He said Thai Smile had joined Star Alliance, the premium aviation network and the connection with its global system would be completed by the end of this year. It will allow Thai Smile to link up its  routes with major international airlines', giving it an opportunity to operate as a feeder carrier for    passengers coming to Thailand. There are currently many airlines showing interest in joining up with Thai Smile, including Air France.

 

"The entry of Thai Smile to the Star Alliance will reinforce its stand point as a premium airline which will also serve as a feeder carrier for other airlines in the network. I believe that by managing its cost systematically, Thai Smile will turn around and THAI will have a better overall performance," said Sumeth.

 

Source: https://www.nationthailand.com/business/30375324

 

-- © Copyright The Nation Thailand 2019-08-26

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[z42]

Brilliant. Instead of making price cuts. Reinventing the wheel with a concept that has no markers for success.

Premium low-cost sounds very much an oxymoron to me.

[Emdog]

".. further increase the capacity to 10.30 hours per aircraft per day, which will be the breaking point for Thai Smile." I would guess writer meant "break even point", but....

I dunno, 2 more hours in the air per day means 2 hours less time maintenance can be ignored. Just remember "a smile is just a frown turned upside down" as they'd tell us kids on the Mickey Mouse Club

[smutcakes]

If Thai Smile is to be positioned as a premium airline, would that not essentially make it what Thai Airways is supposed to be? I suppose having two National Airlines gives double the procurement opportunities.

[Cadbury]

6 hours ago, webfact said:

Thai Smile Sumeth Damrongchaitham, president of Thai Airways International Public Company Limited (THAI)

I see they euphemistically refer to Thai Airways as a public company when it is in fact a government controlled company with 51% shareholding.

A tricky bit of misrepresentation to draw attention away from the fact it is probably riddled with the same incompetence that permeates normal government administration.

Thai Smile is a fully owned subsidiary of Thai Airways which also owns 22% of Nok Air. Why they part own an airline with which they compete against is a bit of a mystery. Nok Air is a loser in it's own right which will probably means the government will have to partially prop them up as well. 

Propping up (or part propping up) dud state run institutions must be a huge drag on the finances of the country.

[wreckingcountry]

Another “ in denial, irrational “ so called boss! The archetypal Thai with Gov money to squander!


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[wreckingcountry]

I see they euphemistically refer to Thai Airways as a public company when it is in fact a government controlled company with 51% shareholding.
A tricky bit of misrepresentation to draw attention away from the fact it is probably riddled with the same incompetence that permeates normal government administration.
Thai Smile is a fully owned subsidiary of Thai Airways which also owns 22% of Nok Air. Why they part own an airline with which they compete against is a bit of a mystery. Nok Air is a loser in it's own right which will probably means the government will have to partially prop them up as well. 
Propping up (or part propping up) dud state run institutions must be a huge drag on the finances of the country.

This is Thailand ! The failing airline company can’t be alllowed to be seen to fail, even though it is failing. And an outsider with airline business knowledge would never be given the power to reform the whole disaster ! Loss of Face on both of those scenarios!


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[peter14]

They cut bkk manila route... so  I fly Air Asia.... shame..

[ronaldo0]

Did he work for TAT before I wonder !! 

No worry everything ok boss !! ????????

[findlay13]

Upbeat on Thai Airways,Upbeat on tourist arrivals,Upbeat on the economy,Upbeat on lowering the road toll. Everything is great then.Relax everybody.

[spidermike007]

More than likely, any airline or affiliate of Thai Airways will always lose money. State owned monopolies do not work. The Soviets proved that, the Cubans continue to prove that, and yet they have not figured this one out. They give away tens of thousands of tickets to government officials, members of the army, and anyone with "special connections". And they continue to over charge, despite attempting to be a less expensive alternative to the parent airline. New management, private ownership, and visionary thinking will allow this airline to get out of debt. Will that ever happen? One tends to doubt it, as it would require vision and imagination. 

[hotchilli]

1 hour ago, Cadbury said:

Thai Smile is a fully owned subsidiary of Thai Airways which also owns 22% of Nok Air. Why they part own an airline with which they compete against is a bit of a mystery. Nok Air is a loser in it's own right which will probably means the government will have to partially prop them up as well

Trying to monopolise the passengers movements in the area... own them all you get all the business.
But that only works if the strategy is correct and run efficiently.

[nong38]

Well he would say that wouldn't he. I don't see a plan that works and turns things around and I doubt if he does either, no worries the pay is still coming in.

[dallen52]

They took the eye of the ball in the name of fat cats profits.

The service is down,  baggage allowance is strictly adhered to.

Confusing tickets and allowance. 

In flight drinks etc. is down. 

Staff are not really interested. 

And the price is expensive. 

[Cadbury]

45 minutes ago, nong38 said:

Well he would say that wouldn't he. I don't see a plan that works and turns things around and I doubt if he does either, no worries the pay is still coming in.

Not all of the pay is still coming in. I think the execs for the corporation took a pay cut just the other day.

But envelopes are sure to be still rolling in on commissions for new aircraft purchases. Even more so if they are fitted with Rolls Royce engines.

[bronzedude]

It seems that Thai smile and Nok Air's major domestic and regional competition is Bangkok Airways. It also seems that Bangkok Airways turns a nice profit. I always fly with them to Phuket, Chiang Mai, Siem Reap, Phnom Penh and Luang Prabang. And I always will.

[Srikcir]

7 hours ago, webfact said:

Thai Smile Sumeth Damrongchaitham, president of Thai Airways International Public Company Limited (THAI), is confident of Thai Smile turning profitable by next year.

 

7 hours ago, webfact said:

By next year, we plan to further increase the capacity to 10.30 hours per aircraft per day, which will be the breaking point for Thai Smile.

A "breaking point" is the mark where, if surpassed, there will be a net operating profit.

Thai Smile must exceed the breaking point for profitability but it's not making any prediction as to what and how that will be done. So how Sumeth can be confident turning profitable next year is not apparent.

[new2here]

".. further increase the capacity to 10.30 hours per aircraft per day, which will be the breaking point for Thai Smile." I would guess writer meant "break even point", but....
I dunno, 2 more hours in the air per day means 2 hours less time maintenance can be ignored. Just remember "a smile is just a frown turned upside down" as they'd tell us kids on the Mickey Mouse Club

Given Smiles fleet age, I doubt this is an issue, A and B checks aren’t all that labour intensive and be easily scheduled in to the natural aircraft rotation schedule. True, adding sectors will mean cycle-based maintenance will come due sooner, but to me that’s a good thing.

As I see it, upping their utilization rate seems to be prudent - especially since they’re mostly short haul.. and designed largely as a feeder for TG mainline, it’s far easier to add capacity on domestic short-haul as you usually don’t run into governmental restrictions/permits like is common with international operations. Look at Southwest who runs somewhere around 10+/-hrs per aircraft util rate.

https://www.swamedia.com/pages/corporate-fact-sheet


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[RichardColeman]

Well, I have a message for this man - I'm in the middle of booking a flight to BKK, and guess what ? Thai will not be getting my business, simply as they are £100 more on a one way flight than EVA ! When you - a national airline - are being undercut by another company by 25%, charging more may be the thai way to get back lost business, but it is a bad business model and wont work

[elgenon]

So instead of spending more to improve the customer experience, they will reduce costs. So the customer will expect to pay a premium for a reduced experience. Am I reading this correctly?

 

Does Thai still have a nonstop between BKK and LAX?

 

Cathay was a very good airline once. My experience was that they let the planes fall into disrepair. I read they were working on it. Don't know. The closing of the airport cost them a few bucks.

 

Other airlines have taken their places in the rankings.

[55Jay]

Watching a perpetual train wreck in slow motion. 

 

Only because it's the airline industry, reminds of the Gulf Air mess coming to a head around 2011/12.  Finally hit rock bottom, but I suppose the reality was they'd been bumping and bruising along down there for a long time.  It was ugly.

 

Who knows, maybe new computers and software will be the "secret sauce" for Thai. ????

[trainman34014]

No need to read beyond ''Teaming up with Thai''....recipe for complete failure !

[dallen52]

1 hour ago, RichardColeman said:

Well, I have a message for this man - I'm in the middle of booking a flight to BKK, and guess what ? Thai will not be getting my business, simply as they are £100 more on a one way flight than EVA ! When you - a national airline - are being undercut by another company by 25%, charging more may be the thai way to get back lost business, but it is a bad business model and wont work

I recently booked Bangkok to Manchester one way.

Qatar. £430. Ignore the exchange. 

Thai was £720 one way. 

With no direct connection. 

Code share.

It's cheaper to book return in many instances and cough up the change fee. 

Plus, Thai has put 20kg baggage allowance on some lower cost fares.

And a whopping $45us per kg excess baggage charge.

 

Flew return with Etihad. 

30kg plus 7kg cabin plus 5kg personal allowance. £445.

 

When you extract the actual fare cost from all the incidental on costs, it's an eye opener. 

[Burma Bill]

So, if you are a business class passenger with a Star Alliance airline and your final destination is a Thai domestic airport, say Khon Kaen International, you will not be able to fly business class throughout as Thai Smile is a "low cost" airline with no business class!

[Swedenlars]

4 hours ago, peter14 said:

They cut bkk manila route... so  I fly Air Asia.... shame..

Who says so? I can book MNL - BKK - MNL with no problem on Thaiairways website. But maybe you know more.

[bbbbooboo]

Hmmm.... is it correct that the more often you say something that is untrue, the more likely it is to become true?. TIT

[dallen52]

It sort of throws me a little when you fly into Bangkok and see literally a hundred Thai airways planes parked up all over the place. 

Then you get to your arrival gate, only to be off stand and need to be bus transferred to the terminal. 

 

Normally at a location about 500 metres from passport control..

 

That's a lot of underutilized capital investments sat sitting there. 

 

When with the Blue Oval I was involved with major capital investments, and the utilization for virtually every piece of equipment was based on 2x 10 hour shifts, and overall equipment use costs were added to the initial investment amount. Manning levels etc.

So, 20 hours a day 5 days a week. 

Or 14.28 hours on a 7 day week.

 

You have to go some to achieve the minimum utilization just to cover the investment and working life costs.

It's a saturated market and aircraft manufacturers are virtually offering new planes at unreal deals, just to keep the factory's open. 

 

Not sure who does Mr. Thai airways figures and calculations?

But I wouldn't mind a work permit and the challenge of conducting some value stream analysis of returning to profitability a once great airline name.

 

Something smells a bit here.

[tso310]

I find it hard to understand why they are under utilising their fleet so heavily. Take a look at any low cost operator in the world and a/c utilising is a lot higher. The Southwest model is only over 35 years old.

 

I have to agree on the number of THAI a/c one always sees parked up at BKK. 

 

One big question is how has Bangkok Airways lasted for over 50 years and grown. It couldn't possibly be down to good planning and management.

[Chazar]

14 hours ago, webfact said:

teaming up with THAI in both sales and marketing

Guaranteed  to succeed  then..... oh wait??

[Chazar]

38 minutes ago, dallen52 said:

Not sure who does Mr. Thai airways figures and calculations?

I heard is was a Mr M.Mouse?