BANGKOK, 4 November 2021: Thai Airways International recouped THB44.8 billion mostly from massive cuts to the workforce and aircraft leases according to the airline’s latest rehab progress report.
Rehabilitation Plan chairman, Piyasvasti Amranand, delivered the progress report saying: ” THAI’s operational performance has progressed satisfactorily in many aspects including cost reduction and organisation restructuring.”
He noted that THAI adopted 400 priority projects that cut operational expenses by THB 44,800 million, representing 77% of the rehab’s target.
Massive savings resulted from a so-called “people rightsizing”. THAI cut its workforce from 29,500 in 2021, with a monthly wage bill of THB2,600 million, to the current level of 14,900 staff, costing THB600 million a month.
Staff cuts have saved the airline THB16 billion according to the rehab progress report, followed by fleet restructuring and fuel costs down by THB12 billion. Aircraft lease returns and engine negotiations cut costs by another THB11.3 billion.
Lease and hire purchase contracts on 16 aircraft ended while 42 “ageing fuel-guzzling aircraft are up for sale or disposal. It leaves the airline with 38 operational planes of four rather than nine types. Another 20 A320s continue to operate under the subsidiary low-cost airline, Thai Smile, giving the group 58 aircraft.
The reduction in staff resulted in the airline “rearranging space allocations at the head office while vacant properties are up for sale or rent in Bangkok, Phuket, Chiang Mai and Chiang Rai. The bottom line is the national airline is out of the property market and could even rent floors of its head office tower block as cost-cutting measures continue.
Commenting on the savings, Piyasvasti concluded:” Since June 2021, the Plan Administrators have made all possible efforts in managing THAI’s financial liquidity while ensuring that THAI’s operations and business are exercised according to Rehabilitation Plan and Business Reformation Plan achieving adequate cash flow for the company.”
Other cost-cutting measures cancel or reduce employee benefits such as complimentary business or first-class tickets to board members, and retired employees and their close relatives.
Performance records for October 2021 showed that THAI achieved the highest operating revenue since the Covid-19 pandemic in April 2020, reflecting promising and better prospects for the aviation business.
From April 2020 to October 2021, THAI has generated revenue of THB10,000 million from cargo and mail services. During the same period, the company’s Aviation Business Unit also provided services to 80 customer airlines and generated THB4,800 million in revenue.
The operating loss in the first six months of 2021 was THB3,973 million, lower than the previous year. Due to “one-time” revenue, THAI recorded THB11,121 million in net profit, which was THB39,151 million higher than last year.