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THAI will keep board but demands revised fleet acquisition strategy

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October 4th 2019

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Leasing to be considered. Read More »

It has been a season of false starts for Thai Airways International (THAI). August was looking promising for the carrier after the country’s transport ministry approved the airline’s long-overdue fleet renewal plan for 38 aircraft, split between Airbus and Boeing and scheduled for delivery from 2021 to 2026.

Transport minister, Saksayam Chidchob, then said he reserved the right to soon change the boards of state companies under his supervision, including the national carrier. The changes would have included the chairman, Ekniti Nitithanprapas.

The situation with both of those matters has reversed, reported the Bangkok Post. Saksayam announced he only would look at replacement of retiring board members.

Media reports said the prime minister’s office intervened to stop board changes at THAI and Airports of Thailand (AoT). There are differing accounts about whether the directors, including the THAI chairman, offered to resign or merely prepared a letter.

“Substituting chairmen of the boards [of THAI and AoT] is difficult because it involves shareholders and requires their approval since both are listed companies,” Saksayam said.

So THAI keeps its board, but the directors have more work on their hands after the carrier’s fleet plan was rejected and the board gave THAI’s president, Sumeth Damrongchaitham, six months to come up with a new one that could include leasing aircraft.

The ministry’s initial approval was notable because it overrode THAI’s boisterous unions, whose membership objected to the fleet plan. They argued it would saddle THAI with more debt. The strategy was unproven, they said, and cited THAI’s unprofitable A340-500 and A340-600 acquisitions.

The board echoed the union’s first claim about debt and determined the fleet plan would add strain to THAI’s loss-making operations. Sumeth said aircraft could be “rented”, the Bangkok Post reported.

Sumeth appears to still favour a 38-aircraft plan. THAI’s budget would have to be adjusted accordingly and the size of the aircraft could vary under a revised plan, he said.

The acquisition plan included an upcoming lease of three 777-300ERs, which would remain, THAI told Air Transport World. The aircraft are due at the carrier at the end of 2020. The plan’s immediate priority is covering 20 aircraft THAI wants to retire.

"THAI will review its aviation plans and existing fleet, as well as the decommissioning of its planes and the number it needs. These must be in line with its financial plan," Sumeth said.

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