Thai Airways International (THAI) is planning to spin off certain business units into subsidiaries to foster company growth.
Chai Eamsiri, president of THAI, stated that the airline has the opportunity to enhance several business units with the potential to operate independently as subsidiaries. Initially, this strategy will focus on divisions responsible for aircraft maintenance and catering.
These business units are projected to have an average profit margin of nearly 20% per year, which indicates strong potential for profitability, surpassing the main airline sector’s annual profit margin of approximately 5-6%.
The spin-off will provide clearer visibility on the performance of each business unit, making it easier to identify which have promising futures. As subsidiaries, they will need to compete with other firms to secure contracts with Thai Airways and other organizations.
Mr. Chai expressed confidence that employees in these business units would support the initiative, explaining that becoming subsidiaries could lead to better compensation for staff, potentially exceeding earnings from THAI’s core airline operations.
Each business unit features its own workforce structure, work environment, and responsibilities, which would reduce the managerial burden on THAI’s management team. This approach aligns with global practices within the airline industry.
Additionally, this move supports THAI’s plan to establish the U-Tapao Aircraft Maintenance, Repair and Overhaul (MRO) center, as Mr. Chai noted. The airline is interested in investing in an MRO center located on a 200-rai plot in the Eastern Economic Corridor (EEC), which spans parts of Chon Buri, Rayong, and Chachoengsao. The MRO center is part of the government’s larger initiative to develop an aviation city in the EEC.
Mr. Chai mentioned that the MRO center will bolster THAI’s competitiveness while also aiding the government’s objective to designate U-Tapao International Airport in Rayong as Thailand’s third major international airport.
When questioned about the possibility of THAI operating as a state enterprise again, Mr. Chai remarked that he has carefully considered input from creditors, the public sector, and society, yet no clear suggestion has been made for the airline to revert to a state enterprise status.
He emphasized that over the past four years during its rehabilitation, THAI has proven its ability to function effectively, making it unnecessary to transition back to being a state enterprise. He pointed out that the airline has become more agile and equipped with a stronger business perspective, allowing employees to adapt and make decisions quickly.
During the last year, THAI served approximately 13.8 million passengers, a significant rise from 9 million the previous year. The airline’s net income reached 165.49 billion baht in 2023, a 57% increase from 105.21 billion baht in 2022, with a recorded net profit of 28.12 billion baht, contrasting with a net loss of 252 million baht in 2022.
By the end of this year, THAI aims to complete its restructuring, with plans to relist on the Stock Exchange of Thailand in the second quarter of the following year. The airline also seeks to support the government’s strategy to position Bangkok as a regional aviation hub.
With the Asia-Pacific region projected to experience the fastest growth over the next 20 years, THAI intends to expand its fleet from the current 103 aircraft to 143 by 2029 to meet rising demand. The airline plans to enhance its long-haul flight offerings, especially to Europe. New flight routes connecting Bangkok to Milan and Oslo were launched on July 1, and THAI anticipates flying to Brussels later this year, making it the 11th city in Europe served by the airline.
Next year, there are plans to acquire an additional 13 aircraft, including both wide-body and narrow-body models. “Thai Airways is a well-regarded brand in Asia, Europe, and Australia. We are confident in our ability to continue expanding,” Mr. Chai concluded.
