Thai Airways cuts operating costs… maybe

Thai Airways International foresees revenue falling 18.18 per cent this year, from Bt220 billion to Bt180 billion, due to the economic turmoil.

Board chairman Surachai Tansitpong said the airline planned to reduce annual operating costs 5-10 per cent. They can be cut 3 per cent immediately, saving about Bt6 billion alone.

The company waived annual commission payments and froze salary adjustments in last year’s budget.

Facing disaster (read here), the national carrier (majority owned by the thai state) has no alternative. The party is over. All airlines in the world are preparing themselves for the worst. Even very well managed companies. And that’s one of the biggest challenge for Thai Airways : the company is not managed... I mean : normally and properly.

With an increasing market every year, it was easy to hide the truth. Now that the recession (depression ?) is here, the dirty laundry is showing up…

Overstaffed and full of friends and buddies of generals, colonels… Thai Airways has to evolve to survive.

THAI will now also implement a hiring freeze until performance recovers.

“The company expects this year’s financial results to return to positive territory,” said Surachai.

THAI is expected to post a net loss of more than Bt10 billion for 2008, due to the global economic crisis in general and the shutdown of Bangkok’s airports in particular. (Nation)

A “hiring freeze” ? ! Of course the company has to freeze hirings ! What a bunch of clowns. The real plan would be : how many employees should be fired.

As for the forecast made by the chairman… we should remain cautious… The worst is still ahead. At that point, it’s a fantasy to believe that millions of tourists, with their pockets full of money, will pour in Thailand by planes, and that businesses will use air freight to ship goods they don’t produce anymore to customers who don’t buy anymore. 😉

UPDATE
It wasn’t long… Labour union appears exactly like the military : selfish, incompetent and totally disconnected from reality. Honestly, that’s a lot for a single company…

The Thai Airways International labour union is threatening protest action after the board decided against awarding staff any pay increases. […] The union threatened to resort to “every means” necessary to pressure management to grant salary hikes, saying staff are simply protecting their rights. (Bangkok Post)

Those guys should be fired, on the spot. US style. The economy is crashing. But those profiteers protest because… they don’t receive a pay rise ? !

3 Responses to “Thai Airways cuts operating costs… maybe”


  1. 1 Bedwyr 14 February 2009 at 2:14 am

    @TC:

    Those guys should be fired, on the spot. US style. The economy is crashing. But those profiteers protest because… they don’t receive a pay rise ? !

    Well yes, but they are probably aware that those of the top of the tree will find a way to continue giving themselves pots of dosh. Tea money, cash disguised as expenses etc. Things that the ordinary employee does not have the opportunity to enjoy.

    Or are you really saying that the trotters-in-the-trough incompetents at the top of the tree have suddenly had an epiphany about the need for proper fiduciary responsibility?

    I personally doubt it.

    Bedwyr

  2. 2 Marvo 14 February 2009 at 12:23 pm

    Don’t worry, chairman Surachai has it all under control 😉

    With a fall in revenue of 18%, he’s going to fix the problem by reducing operating costs by 5-10%

    I see his thinking too, to be able to boast saving the company 3% instantly – by cutting his cronies’ rake off no doubt.

    Love his quote though…
    “The company expects this year’s financial results to return to positive territory,”

    Looks like Thai Airways is going to be a financial model for the whole world to follow.

  3. 3 A.F. 16 February 2009 at 3:44 am

    It’s notable and laughable that the cause of distress is always given as “due to the economic turmoil”. Never is there a mention of what a fantastic job Thailand did of cutting its own throat by permitting the PAD airport debacles. (In Thailand, it’s always somebody else’s fault, you see…)

    Now those 300,000 stranded travelers have returned home and begun to tell their stories to others who might have considered Thailand as a holiday destination, and those reports are going to be almost universally negative. Word-of-mouth advertising has a degree of impact that no slick ad campaign can ever match. The phrase “som nam naa” comes to mind.

    On the matter of pay increases, it’s not clear if these were previously promised cost of living adjustments or not, or if they were or were not promised in the labor contract. Maybe we shouldn’t be too quick to judge.

    But what is sure is that if the airline wanted to increase profitability it should just cut its bloated payroll. Per-worker productivity is (anecdotally) awful, but that’s to be expected in a quasi-feudal system where a top manager is measured by the size of the work-force he controls rather than the quantity or quality of work that gets done.
    -A.F.


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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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