Flag carrier back in black helped by cheap oil, forex gain in Q1
YUKAKO ONO, Nikkei staff writer
BANGKOK -- Ailing flag carrier Thai Airways International said Tuesday that it was back in the black in the first quarter of 2015 thanks to cheaper oil prices, higher passenger traffic and foreign exchange gains, sending shares climbing nearly 7% from Monday's close.
In the January-March period, Thai Airways logged a net profit of 4.541 billion baht ($134 million) compared to a loss of 2.6 billion baht a year earlier.
Fuel and oil expenses, which account for nearly 25% of the total, fell 30% on the year as the average jet fuel price was down by 40%. Also, a stronger baht led to a 10-fold increase in foreign currency exchange gains as a result of translating outstanding foreign currency loans into the local currency.
Improvement in operations helped too. Some 5.62 million passengers flew with Thai Airways in the first quarter, 17% more than a year ago. Foreign tourists to Thailand rose compared with the same quarter last year when anti-government protestors were blockading streets of Bangkok.
The airline, which is 51% owned by the Thai finance ministry, is one of the top priorities in the military government's state-owned enterprise reforms.
Under a rehabilitation plan endorsed earlier this year, the national flag carrier slashed its loss-making routes -- including Bangkok-Johannesburg, Bangkok-Moscow and Phuket-Seoul -- in the first quarter. It also decommissioned 11 aircraft while buying just two new ones, bringing down the number of active aircraft to 93. The fleet will be further downsized, with at least 16 aircraft to be sold by July.
Further restructuring efforts are aimed at reducing operating costs. Daytime flights to Frankfurt have been cancelled since May 1 and those to London will be abandoned, too, on July 1.
Thai Airways recorded its second straight year of losses in 2014.
Shares have dropped more than 2% from a year ago, while the benchmark Stock Exchange of Thailand index rose more than 8%. On Tuesday, shares closed at a two-week high of 12.8 baht.