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Thai junta to reform national carrier

July 22, 2014

Published on Jul 22, 2014

Thailand's Air Force Chief is to lead reform at Thai Airways International (THAI)

After four quarters of consecutive losses, Thailand's new military government is targeting the national carrier for reform.

Leader of the National Council for Peace and Order (NCPO) General Travel Daily AsiaPrayuth Chan-ocha has charged the chief of the Royal Thai Air Force with the task of turning the national carrier around.

Air Chief Marshall Prajin Juntong, who also oversees economic matters for the military government, said on Friday a detailed restructuring plan aimed at returning the carrier to profit will be considered by the board at a meeting on Thursday July 24.

This is a major test for the Junta, and Air Chief Marshall Prajin who has little practical experience in running a business.

While a firm reform strategy is not yet in place, early reports show that the restructuring will be tackled in two phases. First operational efficiencies and service quality will be improved. The second phase will then focus on cost cutting.

According to the Bangkok Post, declining ticket sales, high operating costs, and ruthless competition have inflicted heavy losses on the airline. Tackling employee expenses will be a primary task, as this overhead accounts for approximately 20% of operating costs.

Meanwhile, a deteriorating bottom line has prompted investors to dump the airline's shares, causing the company's market value to drop by a third in the past year to below US$1 billion.

Meanwhile, changes in leadership and boardroom fights have also led to slow decision-making and a lack of coherent strategy. A further five board members have resigned since the military took power.

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