Tue, Sep 11, 2001 page24

• Prime Minister Thaksin sacks Thai Airways' president, board of directors

  NOT SO SMOOTH An exploding Boeing 737 and financial losses have incurred the wrath of Thailand's leader as political meddling and quarreling among pilots and workers go on

  • AP
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  For an airline that describes itself as ``Smooth as Silk,'' it's been a rough year for Thai Airways.

  As if financial losses, political meddling and quarreling between pilots and workers weren't enough, the airline also has confronted two bomb threats and one exploding plane.

  

  A Thai Airways plane prepares to take off.

  PHOTO: AP

  Fed up with the problems, Prime Minister Thaksin Shinawatra sacked the airline's president on Thursday and forced the entire board of directors to resign before an expected management restructuring. A new board is expected to be appointed in 30 days.

  Analysts say that, this time around, the national carrier has to be serious about resolving internal problems if it wants to compete in an increasingly globalized aviation industry.

  "It has gone from being good to a mediocre airline," said Imtiaz Muqbil, a travel industry analyst and writer based in Bangkok.

  Other state-run Asian airlines such as Malaysian, Garuda, Philippines and Air India are also being bogged down by their governments.

  "These carriers will have to make a choice. If they don't become properly run commercial corporations ... they will end up being regional operators playing second string to big players," said Tom Ballantyne, the chief correspondent of Orient Aviation, a trade magazine published in Hong Kong.

  Thai's leading competitors are Singapore Airlines and Cathay Pacific, which were the third and fourth most profitable airlines in the world during the financial year 1999-2000, according to Air Transport World, a global trade magazine published in Washington.

  Singapore Airline's net profit in that period was US$742 million. Cathay's was US$641.691 million. Thai ranked 19th, with net profits of US$113 million.

  But since then revenues have slid dramatically and the company lost 935 million baht (US$20 million) from October of last year to March this year. The airline's accumulated debt reached nearly US$3 billion.

  In Thailand, the need for improvement takes greater urgency as the state-owned airline gets ready for a long-awaited privatization plan, including the sale of a minority 13 percent stake to a foreign airline later this year.

  Thai Airways' service, punctuality and safety are still rated one of the best in Asia -- apart from three delayed flights, customers have not been affected -- but behind the scenes the airline has struggled with self-inflicted problems.

  Muqbil and other analysts blame them on excessive government interference.

  In some instances, powerful politicians have used the airline almost as a personal toy.

  Critics point at the government's unwillingness to stop unprofitable domestic routes for fear of upsetting constituents or powerful lobby groups. The government recently permitted domestic fares to be raised 4 percent when managers said a 50 percent hike was needed to turn in profits.

  The company blamed its losses on rising fuel prices and a devaluation of the Thai currency. But analysts point at the management's failure to hedge fuel costs by buying supplies in advance as many other airlines do.

  Thai Airways is 93 percent owned by the Finance Ministry, but its operations are under the Communications Ministry, an arrangement that often causes conflict as each ministry vies for control and plum jobs.

  Earlier this year, deputy Communications Minister Pracha Maleenond nominated three board members with connections to a company controlled by his family.

  He also removed airline president Bhisit Kuslasayanon, said to be close to the Finance Ministry, from the board.

  After protests by the media and the union, whose members attacked Pracha's car, the changes were reversed.

  Thaksin has been a rabid critic of the airline since he and other passengers on a domestic flight narrowly escaped death on March 3 when a parked Boeing 737 exploded at Bangkok airport a half-hour before they were supposed to board it.

  US investigators blamed an overheated fuel tank.

  The company stressed the need for "good governance and corporate transparency."
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