BANGKOK -- Troubled flag carrier Thai Airways International aims to clear away accumulated losses of $750 million by 2022 on its way to restoring profitability, new President Sumeth Damrongchaitham, who took a helm vacant for nearly two years, said on Sept. 20.
Addressing employees at headquarters in Bangkok and via social media, Sumeth also said the airline will achieve "sustainable profits" by 2027. The company has lost money for most of the past decade owing to intensifying competition with low-cost carriers.
"In the past, Thai Airways was Thailand's No. 1 carrier and could make huge profits even with inefficient cost management," Sumeth said. "But in today's context, if our cost management is not as competitive as our peers', we will continue making losses."
Deputy Prime Minister Somkid Jatusripitak, who also took the stage at the event, urged employees to feel a sense of urgency. "Don't think that the airline will not go bankrupt because it is government owned," he warned. "We are serious this time."
Thai Airways' accumulated losses as of the end of June reached 24.44 billion baht ($755 million), up from 24.23 billion baht a year ago. To clear that by 2022, the company would have to generate an average of 4.8 billion baht in profit every year.
For the first six months of 2018, it booked a net loss of 381 million baht. Cheaper fuel prices helped lift airline into black in 2016 for the first time in four years, but annual losses resumed in 2017. Sumeth declined to comment on company's earnings outlook.
The new chief, an airline industry outsider who took the post on Aug. 31, will submit a detailed plan for achieving his goals to the State Enterprises Policy Commission for approval within the next three months. Thai Airways is 51% owned by the government of Thailand.
One measure that Sumeth revealed on Sept. 20 was replacing old aircraft, which tend to have higher maintenance costs. Under the previous turnaround plan issued in 2015, the airline had been cutting back on new aircraft purchases.
Transport Minister Arkhom Termpittayapaisith said in an interview with the Nikkei Asian Review on Sept. 13 that the ministry backed the airline's plan to buy 23 new aircraft for 100 billion baht. Local media recently reported that a capital increase of up to 20 billion baht was being weighed to finance the purchases.
Sumeth, however, said that he will review the aircraft purchase plan, as it was drawn up before he took the job. "We may not need as many as 23 planes," he said adding that financing plans had yet to be decided.
Sumeth also aims to expand non-core businesses such as aircraft maintenance and catering, which account for around 10% of total revenue, to as much as 20%. The company agreed with European aerospace group Airbus to build a maintenance, repair and overhaul center at U-Tapao Airport, located southeast of Bangkok, which is being expanded into a commercial airport.
Thai Airways was also certified earlier this year by Rolls-Royce to handle maintenance of the company's Trent 700 engines at Bangkok's Don Mueang Airport.
"We are not a monopoly in the passenger business anymore so we must try to generate revenue from any business related to aviation," Sumeth said.
The president's seat had been left vacant since February 2017 when former President Charamporn Jotikasthira retired.