Thai Airways International Public Company Limited (THAI) and its subsidiaries announced their results for 2017 with an operating profit of THB 2,856 million (29.8% lower than the same period last year) due to 24.2% increase in jet fuel prices, while average passenger yield decreased by 7.7% due to the heavier competition and the reduction of fuel surcharge even through average cabin factor was higher than last year. After 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 the net loss of THB 2,072 million.
Flt. Lt. Kanok Thongpurk, THAI Executive Vice President, Legal Management and General Administration, on behalf of Acting President, said that THAI continued to implement the third phase of its transformation plan in 2017; “Sustainable Growth.” which consists of 6 strategies in operation: 1) Develop a competitive flight network, increase profitability and reduce complexity of the fleet, 2) Increase competitiveness and revenue, 3) Excellent service ring building strategy, 4) Competitive cost and efficient operation strategy, 5) Corporate culture building to sustainability and human resources development to excellence strategy, 6) Portfolio management and new business development for sustainability. To do so, THAI launched the direct flight to Vienna, Austria as well as increased the flight frequency in high potential destinations.
THAI also increased the regional routes under the brand THAI Smile. In 2017, THAI took delivery of 7 aircraft while decommissioned 2 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 5 aircraft higher than on December 31, 2016. Aircraft utilization increased from 11.5 hours 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% which 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. Furthermore, the Rolls-Royce TRENT 1000 engines installed in the 6 Boeing 787-8 had issues with their turbine blades. This incident occurred not only with THAI but affected all airlines worldwide. Hence, THAI had to gradually ground each affected aircraft in order to send engines for overhaul. As a result, flight service was affected and flight schedule was impacted. This resulted in increased cost and revenue loss from plans. However, THAI is in the process of negotiating compensation for such effects.
In 2017, THAI and its subsidiaries had the total revenue of THB 191,946 million, increased by THB 11,389 million (6.3%) resulting from the increase in passenger and excess baggage revenue, freight and mail revenue, and revenue from other activities. The total expense of THB 189,090 million showed an increase of THB 12,604 million (7.1%) resulting from the increase in fuel expense by THB 4,879 million (10.8%) affected by 24.2% rising jet fuel prices and increase of traffic production. However, the fuel risk management performed better than last year. 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. Consequently, 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.