Thai Airways narrows Q2 operating loss

Singapore
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Thai Airways International has narrowed its second quarter operating loss to Bt7.9 billion ($247.7 million), down from the Bt8.88 billion loss incurred in the previous corresponding quarter.

Total revenue for the three months grew marginally to Bt44.4 billion, aided by a Bt1 billion gain on foreign currency exchange. This is despite an 11% decline in revenue from passenger and excess baggage to Bt34.5 billion. Operating expenses declined 1.4% to Bt52.3 billion.

The carrier was also able to narrow its attributable net loss to Bt7.66 billion, as compared to a net loss of Bt8.44 billion for the previous corresponding period.

In the six months to 30 June however, the carrier’s operating loss swelled significantly to Bt10.3 billion, from Bt850.7 million.

Total revenue for the period declined 11.2% to Bt95.4 billion from Bt107.4 billion, as it failed to record gains from items disposed, as compared to the previous year. Total expenses dropped 2.4% to Bt105.7 billion on lower operating expenses and impairment loss of aircraft.

At the same time, attributable net loss grew significantly to Bt10.3 billion from Bt156 million.

The carrier's cash and its equivalents as of 30 June amounted to Bt10.4 billion, down from Bt34.4 billion compared to figures from a year ago.

Thai attributed the poorer results on the political unrest in Thailand, which caused a fall in the number of foreign tourists into the country. Low-cost carriers (LCCs) also started services to markets such as China, Japan and Korea, intensifying fare competition.

In its outlook, Thai says it expects the world's economy to recover steadily in the next six months, though it would still likely be "low and fragile". Tensions between Russia and Ukraine would likely affect the foreign currency exchange, fuel prices and security measures - key to Thai's operations. Though tourism numbers to Thailand are likely to recover, expansion of services by the LCCs will “boost the competitive situation.”

Thai has also prepared a business turnaround plan, and a meeting on 18 August is set to finalise and approve the plan. It also disclosed that the Ministry of Finance will be providing funding for the carrier to maintain liquidity, to be implemented in the second half of 2014.

Measures taken in the next two years will focus on areas such as liquidity adjustment, revenue increment, cost reduction and control, and risk management, says Thai. This it hopes, will generate a sustainable operating profit in the future. The carrier did not provide a profit guidance.