High-flying Thai Airways began the week eyeing an ambitious ฿840 billion deal for 80 Boeing Dreamliners, signalling a grand comeback from bankruptcy. Amid robust financial gains disclosed in its recent third-quarter financial report, two PR disasters struck the airline. A severe coffee scalding incident and a Business Class downgrade causing a formal passenger complaint, sparked online outrage leading to apologies and clarifications.
High-flying Thai Airways which while still operating under the protection of Thailand’s Bankruptcy laws since May 2020, was reported this week to be looking at a staggering deal to purchase 80 Boeing Dreamliner jets in a lofty deal that could be worth ฿840 billion. However, the airline led by Chief Executive Officer Chai Eamsiri, ended the week buffeted by turbulence with two public relations disasters caused by disappointed passengers.
Thai Airways, the national carrier with a robust financial recovery on track since its bankruptcy in May 2020 was this week reported to be dreaming of acquiring 80 Boeing 787 Dreamliner jets in a potential ฿840 billion deal, has been hit with two public relations disasters that have garnered significant media attention.
Previously, at the beginning of the week, Thai Airways made headlines for contemplating a colossal deal with Boeing as reported by Reuters.
Flush with cash in the bank but still with negative shareholder equity already planning what appears to be a sky-high and extremely expensive expansion
The airline, flush with cash from its ahead-of-schedule recovery plan but still with negative shareholder’s equity, was reported to be in advanced talks to purchase 80 wide-body 787 Dreamliner jets, marking a significant step towards expanding flight routes to and from Thailand.
The Dreamliner family, known for its efficiency and popularity, comes with a hefty price tag ranging from $248.3 million to $338.4 million each, making the potential deal worth a staggering ฿840 billion.
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Boeing’s lead in fleet renewal talks ahead of Airbus and its Airbus A350 model positioned the airline to make a substantial investment in its future, boosting regional routes at a time when international airlines are hesitant to restore pre-pandemic flight connectivity to Thailand, a factor which is of critical importance to Thailand’s vital foreign tourism industry which has failed to recover the momentum it saw before the pandemic.
Irate online chatter after passenger on Bangkok to Chiang Mai route this week reported a severe coffee scalding incident which made the media headlines
However, the week took a sharp turn when a passenger on a Thai Airways internal Bangkok to Chiang Mai flight suffered severe burns and scalding injuries due to a spilt cup of hot coffee. The incident, posted on social media, sparked outrage as the passenger detailed the lack of first aid and inadequate care from Thai Airways flight attendants.
The passenger also reported that aside from not being given professional first aid care by the flight crew, he was afterwards directed by someone not to consider legal proceedings as there was no remote TV footage and recommended to consider instead legal action against the person sitting next to him on the flight.
Ironically, the other passenger showed absolute concern for his welfare and even travelled with him to the hospital where he sought medical care after the flight landed and he was taken off in a wheelchair provided by the airline.
The victim reported that the flight attendant hand-delivered the hot coffee instead of placing it on a tray, a departure from usual procedures.
Airline offered apologies for the incident and promised to pay for the passenger’s medical treatment and expenses after he suffered second-degree burns
The airline acknowledged the incident, expressed deep apologies, and promised compensation for medical expenses. The passenger, who suffered second-degree burns, criticised the flight attendant’s response, claiming a lack of professionalism and care during the incident.
Thai Airways, in its official statement, stated that it was thoroughly investigating what happened, emphasising its commitment to passenger safety and well-being. The airline pledged to keep the public informed of the investigation’s progress and the measures taken to prevent such occurences in the future.
Adding to the turmoil, a passenger who purchased a Business Class ticket with Thai Airways was allegedly downgraded to an economy seat on the return leg of their journey. This prompted the passenger to file a complaint with the Civil Aviation Authority of Thailand (CAAT), alleging a breach of service agreement.
Thai Airways management also acknowledged a second complaint from a passenger who bought a Business Class ticket but was offered an Economy seat home
Thai Airways management acknowledged the complaint and assured the public that they were actively addressing the issue.
The airline again apologised for any inconvenience caused to the affected passenger and stressed its commitment to resolving the matter promptly.
It also made it clear that the confusion arose due to the integration of its former subsidiary Thai Smile into a combined airline service and the conditions attached to its Thai Silk flight packages.
The airline said it was reaching out to all potential passengers who may be impacted by the potential issue up to the end of December to ensure there was no further danger of passengers facing disappointment.
Airline faced enquiries from Civil Aviation Authority after passenger filed a complaint over the service provided related to the flight ticket sold
The Civil Aviation Authority of Thailand (CAAT) launched an investigation into the incident involving the alleged downgrade of a passenger from Business Class to Economy.
Thai Airways, during discussions with the state oversight agency, revealed that the restructuring of its aviation business involved replacing various Thai Smile Airways routes with Airbus A320 aircraft.
The airline introduced Silk Class tickets for passengers who originally booked Thai Smile Airways’ Smile Plus tickets.
Thai Airways clarified that Silk Class tickets, which include services comparable to Business Class, still provided Economy Class seats, ensuring passenger comfort by leaving the middle seat unoccupied. However, the airline admitted that the initial communication about the service changes was unclear, affecting passengers’ ticket choices.
The airline assured that affected passengers would be contacted and provided with details about their travel, services, and compensation options. Thai Airways expressed its commitment to improving service clarity, ticket sales operations, and publicising changes to prevent similar incidents in the future.
Challenge for Thai Airways to rebuild trust after the May 2020 bankruptcy of the airline is a challenge that must be faced as well as financial progress
As Thai Airways navigates these PR challenges, the airline faces the dual task of maintaining its hard-earned financial progress and protecting its reputation while addressing the concerns raised by affected passengers.
Thai’s reputation, however, has already suffered somewhat because of the May 2020 bankruptcy and the long delay in refunding passengers, many of them foreign nationals and regular travellers to Thailand who prepaid flights before that date.
The high-profile Boeing deal, coupled with robust recovery plans, contrasts sharply with the incidents that have triggered public outrage.
The airline’s success in handling these crises will determine its ability to retain and attract passengers in a highly competitive industry.
Stunning financial performance has impressed airline industry insiders and stakeholders but there is still a long way to go to arrive at its destination
At the same time, in what can only be described as a stunning financial turnaround, Thai Airways International Public Company Limited, still seen abroad and at home as the Kingdom’s flag carrier, although it is technically no longer a state enterprise, has reported a stellar performance for the third quarter of 2023, leaving industry analysts and stakeholders in awe.
The company and its subsidiaries posted an operating profit of a whopping ฿7.719 billion before financial costs, excluding one-time items. This marks a staggering increase of ฿3.799 billion compared to the same period last year.
Total income soared to ฿37.008 billion, reflecting a remarkable surge of ฿4.148 billion, an impressive 12.6% higher than the previous year.
The primary driver behind this extraordinary success story is the substantial growth in revenue from passenger transportation, which experienced a meteoric rise of ฿6.458 billion, a remarkable 26.4% increase.
This surge is attributed to the company’s strategic decision to augment flight frequencies on highly sought-after routes. Additionally, income from other business sectors witnessed a commendable uptick, climbing by ฿232 million (12.5%).
Airline parent company reported a solid profit this year of ฿0.70 per share following a loss last year of ฿2.19 after one-off losses and financial costs
However, this stellar financial performance was not without its challenges.
Total expenses for the third quarter amounted to ฿29.289 billion, a modest increase of ฿349 million (1.2%) from the previous year.
The rise is partially attributed to increased production and transportation volumes, accompanied by escalated fixed expenses.
Financial costs, per Financial Reporting Standards No. 9 (TFRS 9), accounted for ฿3.722 billion, a 1.4% increase from the prior year.
Despite these challenges, the company reported one-time transactions totalling ฿2.732 billion, primarily stemming from losses incurred due to foreign exchange rates.
The net result of these financial manoeuvres was an impressive net profit of ฿1.546 billion, representing a remarkable surge of ฿6.326 billion from the previous year.
The profit attributable to the parent company stood at ฿1.538 billion, translating to earnings per share of ฿0.70. This is a significant improvement from last year’s loss per share, which was ฿2.19.
Positive cash flow as airline works to expand its flight network while keeping passenger loads high while also meeting creditor recovery plan commitments
Thai Airways reported, at the beginning of the year, that it was running ahead of schedule to achieve a full rehabilitation of its business by the end of 2024 and a return of its shares for trading on the Stock Exchange of Thailand (SET) by 2025.
This was according to Chief Executive Officer Chai Eamsiri.
He revealed that the airline predicts a strong positive cash flow of ฿30 billion this year and may only now need half the ฿25 billion extra working capital requirement anticipated as it continues to expand its activities with a further boost to its income and profitability.
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In its latest results, as of 30 September 2023, the company and its subsidiaries have total assets of ฿234.290 billion, an increase of ฿36.112 billion from 31 December 2022 (18.2%).
Flight load in the third quarter was 77.3%
Total liabilities were ฿288.996 billion, an increase of ฿19.794 billion from 31 December 2022 (7.4%).
Shareholders’ equity in the company and subsidiaries were, however, still negative in the amount of ฿54.706 billion, a decrease from 31 December 2022 of ฿16.318 billion.
There were a total of 68 aircraft in use for flying across its network in the third quarter of 2023, the aircraft utilisation rate was 12.1 hours. In addition, passenger production volume (ASK) increased by 21.5%. Passenger transport volume (RPK) increased by 22.0%. Furthermore, passenger load (Cabin Factor) averaged 77.3%, higher than the previous year’s average of 77.0%, and the total number of passengers transported was 3.27 million, an increase of 22.0% from the previous year.
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Further reading:
Passengers to finally get refunds from high-flying Thai Airways still facing financial turbulence
Flying high at Thai Airways as numbers skyrocket as it flies tourists into the kingdom from Europe
Thai Airways seeking business rehabilitation plan that has the unanimous support of it’s creditors
