Thai Air's Fired CEO Says Profit Goal `Easily' Achievable
Thai Airways International Pcl (THAI)’s outgoing chief executive officer said the carrier may “easily” achieve this year’s 6 billion-baht ($188 million) profit target, after the company fired him saying communication problems were hampering efforts to meet the goal.
Passenger traffic is increasing and June forward bookings are better than a year earlier, Piyasvasti Amranand, who will leave the airline after June 21, said in a Bloomberg Television interview in Bangkok yesterday. Gains from fuel hedging may also reach $8 million a month at current prices, he said.
Piyasvasti is sticking to the goal after Acting President Chokchai Panyayong said May 25 the carrier may not meet the profit target. The board of Thailand’s biggest airline cited a breakdown in communications with the CEO for terminating his contract last week after almost three years.
“Strategies like capital raising, equity increase, funding for new aircraft, all these measures have been implemented during my 2 years and 7 months at Thai Airways,” Piyasvasti said. “If I couldn’t communicate, then there was no way I would have been able to push through all these measures.”
Piyasvasti oversaw a fleet modernization and cost cuts in 2009 that helped Thai Air rebound from its largest ever loss the year before to a record profit in 2010. The carrier slipped to another loss in 2011 as fuel expenses jumped.
Thai Air’s board approved a plan in June last year to acquire 37 new planes by 2017 at a cost of 118.6 billion baht. The company has 87 billion baht of debt, including 54.8 billion baht in loans due between 2014 and 2018, according to data compiled by Bloomberg.
Thai Air fell 0.5 percent to 21.5 baht at close of trading in Bangkok yesterday. The stock has gained 7.5 percent this year compared with an 11 percent gain for the benchmark SET Index.
Piyasvasti’s removal comes a month after state-controlled PTT Exploration & Production Pcl (PTTEP) replaced its CEO amid a management reshuffle at parent company PTT Pcl. (PTT) Both Thai Air and PTT are 51 percent-owned by Thailand’s Ministry of Finance.
The decision to dismiss him could have come from “the top of the political spectrum,” Piyasvasti said. “That is something which I would like the board to shed the light on.”
Prime Minister Yingluck Shinawatra and Finance Minister Kittiratt Na-Ranong have said there wasn’t any political interference in the airline’s decision. The company has formed a committee that will take as long as three months to identify a permanent CEO candidate.
Thai Air has filled about 72 percent of seats in May as passenger traffic gained 17 percent from a year earlier, Piyasvasti said. Advanced bookings indicate that as much as 75 percent of the seats may be filled in June, he said.
The increase in passenger traffic was helped by the carrier’s strategy last year to shift capacity to Asia from Europe, where demand was slowing because of the debt crisis, Piyasvasti said. Demand is also rising on its medium-haul flights, especially to South Korea and Japan, he said.
The carrier is also trying to win market share at home with its new Thai Smile unit, which will start operations on July 7 with flights to Macau. It will also service Thai destinations including Krabi, Surat Thani, Chiang Mai and Phuket.
Thai Smile, which will have a fleet of 11 Airbus SAS A320 aircraft, will take delivery of the first four jets this year, according to its website.
Piyasvasti said he has no desire to get into politics after he steps down.
“What do I do next?” Piyasvasti said. “I take a rest.”
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