Thai Airways profits soar but fuel a worry
Bangkok Post: 26 Feb 2011
THAI profits soar but fuel a worry
Thai Airways International finished 2010 with a 109% surge in net profit, buoyed by foreign-exchange gains and improved performance, but the outlook for this year is blurred by soaring fuel prices.
The national carrier posted net earnings of 15.35 billion baht (8.39 baht a share), up from 7.34 billion baht (4.32 baht a share) a year ago, on revenues of 184.27 billion baht, an increase of 12.4%.
Foreign-exchange gains increased to 9.10 billion baht from 5.93 billion a year earlier.
Further profit gains were capped by a 26.4% increase in fuel prices, an early-retirement programme costing 2.26 billion baht, and a three-month bonus paid to staff, president Piyasvasti Amranand said yesterday.
Recent increases in oil prices on the back of unrest in the Middle East and North Africa have pushed the cost of jet fuel to US$130 a barrel, creating a significant risk concern for the airline, he said.
"High oil prices have overshadowed the domestic political uncertainty in terms of risk for us," he said, adding that 2011 business projections would now have to be revised.
"The oil price spike will have enormous impact on the global economy and may have consequential effects on the travel and airline industry," he added.
THAI earlier projected revenue of about 200 billion baht this year, based on an assumption that fuel price increases would be modest.
So far, travel demand has remained healthy, with THAI filling 77.8% of its seats last month, said Dr Piyasvasti.
The airline raised the fuel surcharge on its passenger ticket prices on Feb 17 and is hedging about 50% of its jet fuel contracts.
The THAI board yesterday approved a plan to acquire 75 aircraft plus spare engines over the next 11 years at an estimated cost of 457 billion baht as part of its fleet renewal.
The acquisition will be made in two stages, with the first involving 37 planes (11 narrow-body types and 26 wide-body), at 216 billion baht, for delivery between 2011 and 2017.
Another 38 wide-body jets capable of flying intercontinental and regional routes, at a cost of 241 billion baht, are due between 2018 and 2022.
The board also agreed to acquire two Boeing 747-400 passenger planes converted to dedicated freighters to put into its cargo fleet in the second half of next year.
THAI shares closed yesterday on the Stock Exchange of Thailand at 37.25 baht, up 75 satang, in trade worth 548.2 million baht.
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