No cash to pay new airplanes, airports closure, economic downturn… Thai Airways is crashing

2008 Annus Horribilis is certainly appropriate for Thai Airways…

After the oil shock, the airports closure, and other goodies, the national carrier starts to feel the economic downturn.

The most worrying sign is that Thai Airways has to beg Airbus for 3 more months of credit term… They just don’t have the cash to pay new aircrafts…

THAI chairman Surachai Tansitpong, who is also the permanent secretary of the Transport Ministry, said all units of the airline needed to submit cost-trimming details within one month. […]

In line with the slowdown in air traffic demand and easing financial burdens, the airline’s board yesterday instructed management to ask the European manufacturer Airbus to delay the delivery of the six new A330-300 wide-body jets due this year for as long as possible.

The delay would mean that the airline could defer the initial payment for new aircraft, thus providing some relief on financing costs.

Recently, Airbus reportedly agreed with THAI’s request to postpone the first payment for the six jets, among eight A330-300s worth at least US$700 million ordered more than a year ago. The first payment will be postponed to April from January and subsequent payments will also be delayed three months.

The airline wants to put off the decommissioning of ageing aircraft, namely six A300-600s and two Boeing 747-300s that have been in use for more than two decades and are supposed to be replaced this year by the new A330-300s. […]

The national carrier is bracing for its first loss in 45 years in 2008. The eight-day airport shutdown was estimated to have cost THAI about 20 billion baht in lost revenue and cancellations. (Bangkok Post)

4 Responses to “No cash to pay new airplanes, airports closure, economic downturn… Thai Airways is crashing”


  1. 1 fall 8 January 2009 at 2:03 pm

    Air craft is not something that got purchase and pay on a whim. It require legal contracts and, most importantly, budgetting. There is just no freaking way Thai had not accumulatively reserve money for payment since last budget year. Unless Thai is in such a dire state that they already planned not to pay within this year, hence no budget. Or they got stuck so bad that the budget need to be use for something else?

    This news smell fishy.

  2. 2 Bedwyr 8 January 2009 at 2:56 pm

    “In line with the slowdown in air traffic demand and easing financial burdens, the airline’s board yesterday instructed management to ask the European manufacturer Airbus to delay the delivery of the six new A330-300 wide-body jets due this year for as long as possible.

    I have a sudden attack of schadenfreude right now. How long is it since the Thais were strutting around and driving hard bargains? Npw they go, cap in hand asking for time?

    I bet they enjoyed that no end.

    It may not be the first domino to fall but it sounds like it may be one of the first. What price Thai dignity?

    I bet royal eyes fondly turn towards Bhutan. Where Thailand may be going, the third world will look like the height of ambition.

    Bedwyr

  3. 3 ThaiCrisis 9 January 2009 at 1:13 am

    Fishy ? It’s on the cards since a few months already. My point : it’s not new.

    “First losses in 45 years” and the black swan of the airports closure… this should explain everything . They don’t have the cash, and they even want to postpone the decommissioning of old airplanes…

    Perfectly logic.

    And Airbus seems to be… flexible… They are terrified that airlines might cancel or postpone orders for the A380…

  4. 4 Mark Lamerton 22 January 2009 at 5:11 am

    I agree. It’s not fishy at all. Sure, aircraft replacement costs are budgeted for, but no business in Thailand had planned for the airport closure – and this hit Thai Airways particularly hard. All their substantial operating costs continued – but with no revenue, and a significant downturn in passenger numbers projected for this year.

    If they had any spare reserves lying around they have probably been used up by now. Thai Airways is also a national carrier, and, as such, is enormously inefficient. It deserves to go down the drain.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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