High fuel costs, competition drive THAI into the red

Thai Airways International Plc (THAI) went into the red last year as it felt the impact of fierce market competition and higher fuel costs.

The national carrier posted an overall net loss of 2.072 billion baht in 2017, despite making an operating profit of 2.856 billion baht -- marking a drop of 1.215 billion baht or 29.8% from 2016, according to Capt Kanok Thongpurk, the executive vice-president of THAI in charge of legal management and general administration.

The airline blamed jet fuel prices which rose 24.2% last year, a 7.7% drop in passenger yields resulting from stepped-up competition and a reduction in the fuel surcharge as major contributors to the negative performance.

It also faced other issues such as foreign-exchange losses and impaired aircraft and assets.

THAI's revenue last year rose 6.3% to 191.94 billion baht due to improved passenger fares, air freight charges and other service fees, it said.

However, the airline's expenses totalled 189.09 billion baht, up 12.60 billion baht or 7.1%, largely as a result of rising fuel costs, Capt Kanok said.

Operating costs, excluding fuel costs, increased to 8.31 billion baht (6.6%) due mainly to more routes being added and higher aircraft maintenance costs, he said.

THAI entered the third phase of a rehabilitation plan last year. The focus is on developing a competitive flight network to achieve greater profits as well as streamlining its fleet and increasing competitiveness. The airline also aims to become more efficient, create a corporate culture that supports sustainability and improve staff quality, it said.