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Thai Airways net profit drops in Q2

Thai Airways net profit drops in Q2

BANGKOK: Thai Airways International Plc says its net loss in the second quarter deepened to 5.2 billion baht, from 2.9 billion a year earlier, due mainly to a jump in currency-exchange losses.

Ailing flag carrier Thai Airways International posted a net quarterly loss of 5.211 billion baht ($156.7 million) in the April-June period after it recorded a marginal net profit in the first quarter, according to Bangkok stock exchange filings on Friday.

The net quarterly loss expanded by nearly 80% from a year ago. For the first half of 2017, net losses amounted 2 billion baht compared to a net profit of 3 billion baht in the same period last year.

The loss was mainly blamed on higher fuel prices, which have risen by 20% on average compared to a year earlier. Stiff price competition also squeezed passenger yields, Usanee Sangsingkeo, the airline’s acting president, said in a statement.

Foreign exchange losses of 2.431 billion baht, compared to exchange gains of 595 million baht, also contributed to the loss. A stronger baht against the euro, which accounts for 10% of income, mainly caused the foreign exchange loss.

All these factors wiped out improvements on the operational side. The cabin load factor rose to 78.5% from 69% a year ago, the highest in 10 years, the company said. A 29% increase in passenger traffic pushed up operating revenue by 9.6% from a year ago. The April-June quarter was also a tough one for other airlines.

Asia Aviation, the operator of Thailand’s largest low-cost carrier, Thai AirAsia, saw net profits fall 60% on the year despite an improved cabin load factor of 86%, up from 83% from the same period last year. Average fares fell 7%, which reflected intense market competition.

The net loss in the first half of the year poses a big challenge for Thai Airways in staying profitable for a second year in a row. The company managed to return to profitability in 2016, largely helped by lower fuel prices, after posting losses for three consecutive years.

This year marks the last year of the airline’s three-year rehabilitation plan. Although much of its cost-cutting plans are still underway, the company is increasingly looking to expand.

In November, it will launch a Bangkok-Vienna route offering four roundtrip flights a week. It will also take delivery of five new aircraft in the second half of this year, while decommissioning two operating lease aircraft.