May 22 (Bloomberg) -- Thai Airways International Pcl Chief Executive Officer Piyasvasti Amranand thought his annual review went well. That didn’t stop the board from firing him.
“I just want the board to explain the reason,” Piyasvasti said at a media briefing yesterday. “It’s ambiguous. The performance of the company during my term has improved in every aspect and I passed the evaluation at 86 percent.”
The board of Thailand’s biggest airline cited a breakdown in communications with Piyasvasti for terminating his contract after three years. 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 last year as fuel costs surged.
Communication problems between Piyasvasti and the board were hampering the company’s effort to meet a profit target of 6 billion baht ($192 million) to 7 billion baht this year, Chairman Ampon Kittiampon said yesterday. Ampon confirmed that Piyasvasti passed the company’s annual performance evaluation.
“Piyasvasti has done a great job, so there are concerns whether the new guy will be able to manage Thai Air as well as he did,” Sirima Dissara, an analyst at SCB Securities Co. in Bangkok, said yesterday by phone. Sirima said she will assess the new management and policies before reviewing her buy recommendation on the stock and the target price of 31 baht.
Thai Air has climbed 8 percent this year, compared with a 10 percent gain for Thailand’s benchmark SET Index. The stock increased 77 percent during Piyasvasti’s tenure, which started in June 2009. Today, the shares fell 5.3 percent to 21.6 baht, the lowest close since Jan. 17.
“The reasons that the board gave, that I have communication problems and differences of opinion with the board, are so strange,” said Piyasvasti, a former energy minister. “I am not that surprised, because the current political environment is like this.”
Piyasvasti’s removal comes a month after state-controlled PTT Exploration & Production Pcl replaced its CEO amid a management reshuffle at parent company PTT Pcl. Both Thai Air and PTT are 51 percent-owned by Thailand’s Ministry of Finance.
“Some work has not been in line with the board’s policies,” Ampon said. He rejected suggestions that the move was politically motivated, saying seven of the 12 board members at yesterday’s meeting were appointed by the previous government.
Of the 26 analysts covering the airline, 13 recommend buying the stock, nine advise holding it and four rate it sell.
Thai Air’s labor union plans to submit a letter to the finance and transport ministers and the Office of the Ombudsman today urging Ampon to fully explain the decision to terminate Piyasvasti’s contract, union leader Chamsri Sukchotrat said.
“There is no political interference in this issue,” Prime Minister Yingluck Shinawatra told reporters today, adding that the government has no one in mind to replace Piyasvasti.
Executive Vice President Chokchai Panyayong will become acting president effective immediately, and the company formed a committee that will take as long as three months to identify a permanent CEO candidate, Ampon said. When Piyasvasti was appointed to lead the carrier in 2009 it was after a seven-month search.
“I believe the board did this for the company’s benefit,” Finance Minister Kittiratt Na-Ranong said today. “I believe it’s not political interference because most of the board was appointed by the last government.”
Thai Air’s board approved a plan last June to acquire 37 new planes by 2017 at a cost of 118.6 billion baht. The company has 87.2 billion baht of debt, including 55 billion baht in loans due between 2014 and 2018, according to data compiled by Bloomberg.
The carrier’s Thai Smile unit will start July 7 to compete with budget competitors including AirAsia Bhd. Thai Smile will use four Airbus SAS A320 aircraft on routes to Macau and to Thai destinations including Krabi, Surat Thani, Chiang Mai and Phuket, Managing Director Woranate Laprabang said last month.
“I have worked with the board all along without any problems,” Piyasvasti said. “If I had problems with the board, the company wouldn’t have come this far.”
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