Thai Airways planning to buy almost 30 new jets

JITTERY INVESTORS::Concerns that the new aircraft purchases could weigh on the firm’s financial health hurt its shares, which fell as much as 5.6% yesterday


Tue, Jun 27, 2017 - Page 11

Thai Airways International PCL said it plans to modernize its fleet by replacing almost 30 older aircraft over the next five years, adding to the climbing demand for planes in Asia.

The state-run airline is seeking new generation aircraft offering greater comfort and fuel efficiency, and is talking with both Airbus SE and Boeing Co, Thai Airways chairman Areepong Bhoocha-Oom said in an interview with Bloomberg Television’s Haslinda Amin.

“The portfolio of our airline will have new aircraft almost 100 percent,” Areepong said. “It’s the right step for Thai Airways partly because fuel costs could be volatile in future, even though they are low currently.”

Thai Airways’ purchases would add to the hundreds of aircraft worth billions of US dollars ordered by Asian airlines, such as AirAsia Bhd and IndiGo in India, amid a surge in the number of people traveling by air in the region.

Boeing forecasts a US$6.05 trillion jetliner market in the next two decades globally.

The Bangkok-based carrier is trying to turn around its performance after posting losses in three of the past four years. The company’s shares fell as much as 5.6 percent yesterday, the most in more than a month, and are down about 75 percent from a high in 1999.

The stock has eight sell recommendations, nine holds and one buy rating, according to data compiled by Bloomberg.

Concerns that the aircraft purchases could weigh on Thai Airways’ financial health appear to have hurt the stock, Bangkok-based Phillip Securities (Thailand) Co analyst Siam Tiyanont said.

“The airline’s financial status has recently improved after years of challenges,” he said. “The plan for new aircraft purchases may be too early and could result in a jump in debt.”

The shares slid 4.7 percent as of 11:46am yesterday in Bangkok, compared with a 0.4 percent climb in the benchmark SET index.

Thai Airways presently has a 100-strong fleet and is to seek Cabinet approval for the plane replacement plan by the end of next month, Areepong said in an interview on Thursday last week.

Airbus’s A380 super jumbos are to remain a significant part of the company’s fleet, while older Boeing 747s are to be replaced in the years ahead, he added.

An overhaul of marketing and reservation contributed to record passenger cabin factor of about 85 percent in the first quarter and the full-year target is 80 percent, Areepong said.

The airline’s goal is to exceed last year’s net income, Areepong said.

Thai Airways swung to a profit of 15.1 million baht (US$445,000) last year. It lost money in each of the three prior years.

The airline needs new airplanes to modernize its fleet and boost competitiveness, Bangkok-based KT Zmico Securities Co analyst Raenoo Bhandasukdi said.

Thai Airways is expected to bolster its profits this year, which would be a good outcome given that some other full-service carriers have struggled against competition from low-cost rivals, he said.