BANGKOK, 2 March 2018: 2017 turned out to be tough year for Thai Airways International hit by rising fuel cost, reduced fuel surcharge earnings and fierce competition in the region.
It saw the airline, including its subsidiaries, announce a reduced operating profit of THB 2,856 million, down 29.8% for the year.
The main culprit was a 24.2% increase in jet fuel prices while average passenger yield decreased by 7.7% due to the heavier competition.
After a deduction of one-time expense, which was mainly from the impairment of assets and aircraft and the loss on foreign currency exchange, THAI and its subsidiaries reported a net loss of THB 2,072 million.
THAI executive vice president, legal management and general administration, Kanok Thongpurk, said THAI had identified core strategies to develop a competitive network, increase profitability, revenue and reduce aircraft types.
One bright spot was the introduction of the direct flight to Vienna and an increase in flights to high potential destinations in Asia.
THAI also transferred some regional routes to its subsidiary brand THAI Smile, a low-cost airline that critics claim under performs when compared with competitive regional carriers.
Thai Smile needs to improve its network contribution to the parent airline and there is a loss of travellers who book THAI for a long-haul flight to the Bangkok gateway and then connect with flights to destination in Thailand and Southeast Asia on other carriers than its subsidiary.
In 2017, THAI took delivery of seven aircraft while decommissioned two operating lease aircraft (Airbus A330-300) resulting in a total number of 100 active aircraft in THAI’s fleet as of December 31, 2017, which was five aircraft higher than on December 31, 2016. Aircraft use increased from 11.5 hours daily last year to 12.0 hours this year.
Production traffic (ASK) increased by 6.4%, while passenger traffic (RPK) increased by 14.7%.
Average cabin factor was 79.2% higher than last year’s 73.4%. It was the highest level in the last 10 years with 24.6 million passengers carried representing 10.3% increasing from last year.
In 2017, THAI encountered challenges from higher fuel prices and fierce domestic and international competition from competitor airlines.
THAI and its subsidiaries generated revenue of THB 191,946 million, increasing by THB 11,389 million (6.3%) due to an increase in passenger and excess baggage revenue, freight and mail revenue.
Total expenses of THB 189,090 million showed an increase of THB 12,604 million (7.1%) resulting from the increase in fuel costs by THB 4,879 million (10.8%) due to a 24.2% rise in jet fuel prices and an increase of traffic production.
Non-fuel operating expense increased by THB 8,313 million (6.6%) due to the increase of traffic production and passenger traffic.
Maintenance and overhaul expenses also increased. Net financial cost decreased by THB 588 million (11.5%), resulting from cash management and financial restructure that began last year.
THAI and its subsidiaries had an operating profit of THB 2,856 million, THB 1,215 million lower than last year.
This year, THAI and its subsidiaries had a one-time cost item that totalled THB 979 million, recognized the impairment loss of assets and aircraft of THB 3,191 million, and a foreign currency exchange loss of THB 1,581 million.
Consequently, THAI and its subsidiaries reported a net loss of THB 2,072 million. Loss attributable to owners of the parent amounted to THB 2,107 million. Loss per share was THB 0.97 while last year’s profit per share of THB 0.01.
As of December 31, 2017, total assets were THB 280,775 million, a decrease of THB 2,349 million (0.8%) when compared to December 31, 2016. Total liabilities as of December 31, 2017 totalled THB 248,762 million, a decrease of THB 774 million (0.3%) when compared to December 31, 2016. Total shareholders’ equity amounted to THB 32,013 million, a decrease of THB 1,575 million (4.7%) resulting from loss in operating results.