Thai Airways sinks to 1H loss on weak 2Q performance

A weaker second-quarter performance has dealt a setback to Thai Airways’ financial turnaround efforts, dragging the carrier into the red for the first half of the year.

The airline reported a net loss of THB5.2 billion ($156.6 million) for the three months through June 30, which was 79% higher than the THB2.9 billion loss in the same period a year earlier. This was enough to outweigh its first-quarter profit, and tip the airline into a THB2 billion loss for the first six months of the year. This is a reversal from a THB3.1 billion profit in 2016.

Thai is partway through a multi-year turnaround plan. In 2016, the airline managed to return to the black with a slim THB47 million profit, versus a THB13 billion loss in 2015. The latest results will make it more difficult for the airline to build on last year’s improvement.

Despite the higher net loss, the carrier managed to reduce its 2Q operating loss by 13.5% to THB1.5 billion. However, it was also faced with more special items, such as losses from foreign exchange shifts and the dilution of its ownership share in Nok Air.

Other factors contributing to the 2Q net loss were a 20% year-over-year increase in fuel prices, and a 10.9% drop in passenger yield. The airline achieved good demand in the quarter, with traffic up 21.9% on a 7.1% capacity increase. Second-quarter revenue rose 9.6%. Load factor was up 9.5 points to 78.5%, which the carrier said was its highest in 10 years.

Thai increased its fleet to 97 aircraft by June 30, thanks to the delivery of two Airbus A350s and no retirements. The total includes the 20 A320s operated by subsidiary Thai Smile. During the second half of 2017, Thai is scheduled to take delivery of five new aircraft—three A350s and two Boeing 787-9s. It will also phase out two leased Airbus A330-300s during this period.