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Thai Airways International at Risk of Shutting Down After Continued Losses

Updated: Jan 11, 2020

The Bangkok Post reported today that if the loss-making airline’s turnaround plan isn’t successful, Thai Airways International (THAI) is in danger of closure. Competition from low-cost carriers has brought Thailand’s flagship airline to the brink.

Thai International Airways A350XWB - Courtesy Airbus

Amid a financial crisis, information from Thai Airways has been sparse. Today, the company announced the resignation from their board of directors by Mr. Pitipan Tepartimargon, effective November 1, 2019. However, an article in the Bangkok Post, reveals just how serious the situation is. Thai International Airways President Sumeth Damrongchaitham explains in the article that airline’s turnaround plan must be fully supported by company employees because the airline is facing risk of collapse. According to the article, during a training session at the company’s Bangkok headquarters, Mr. Sumeth stated,

“Today I want staff to be united to overcome the obstacles. Otherwise, the national airline must close down. There is still time for a solution, but there is not much time. Explaining that THAI had lost market leadership to low-cost carriers, particularly on Northern routes, Mr. Sumeth continued, The competition is very fierce this year. THAI is really in a crisis. Next year it must do its best. If staff are still unaware and do nothing, they will not have enough time to fight back. Today, very little time remains. Today there is no comfort zone. Everyone will die if the vessel sinks. There will be no other rewards for the staff because the top prize is the survival of the company.”

Thai Airways isn’t the only “flag carrier” facing the new reality of low-cost carriers, while bearing legacy costs and other operational disadvantages. Legacy carriers such as Air India and Alitalia have been losing money for years and are struggling to implement successful turnaround plans. The financial situation at THAI has gone from bad to worse, as evidenced by their second quarter earnings report, the last one currently available. According to the Bangkok Post, THAI lost 6.88B baht ($227M) compared to a loss of 3.1B ($102.2M) baht in Q2 2018 and for the first half of the year, the company had a net loss of $6.44B baht ($212.4M), compared to a half year loss of 381.6M baht (12.6M) in 2018. The company attributed the widening losses to a global economic slowdown, a strengthening baht and fierce competition from low-cost carriers.

Source(s) Thai International Airways, Bangkok Post

Update (10/23/2019): On Wednesday, the Bangkok Post reported that Thai Airways International President Sumeth Damrongchaitham pushed back strongly against the idea that the airline was in danger of shutting down. Mr. Sumeth said his message to company executives on Tuesday was misconstrued and "THAI confirms its capability to perform exceptionally amidst tough airline competition."



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