Thai Airways faces collapse threat


Thai Airways still doesn't have a president, after Thaksin ousted the board of an airline he thinks "sucks"

By staff and wire reports

BANGKOK, Thailand -- Thai Airways needs to change the way it works or risk extinction in the next three years, according to its chairman.

The company, which is scurrying to clarify his thoughts, is likely to report a sharp decline in profits with its annual earnings, due on November 28.

The carrier last week closed seven offices in the United States, a move it blamed on the falloff in traffic after the September 11 attacks.

As of November 15, its only American office is in Los Angeles, with the offices in Seattle, San Francisco, Dallas, Chicago, Washington D.C., New York and Toronto shutting down.

It also scaled back flights from Bangkok to Los Angeles, to six per week from seven. But the whole airline could be in jeopardy if it doesn't turn itself around.

Chairman warns

"If we continue managing the way we have, I can guarantee that in no more than three years, the company will collapse," Chairman Virabongsa Ramangkura noted at a recent staff meeting, as quoted by the Bangkok Post.

While the company doesn't contest the quote, a Thai Airways spokeswoman said Monday that his remarks need to be viewed in context.

They come on the heels of sharp criticism from Prime Minister Thaksin Shinawatra, who in May said that the national carrier "sucks" and that he is "very happy" when he doesn't get a seat on what he called a terrible airline.

Virabongsa feels the company needs to overhaul its operating structure and its working culture, and will face severe difficulties if it does not.

But the company issued a statement that the chairman intended to stress the need for change by saying it could collapse, rather than make a "grim prediction."

Sessions once a month

The company is in a hiring freeze and is scurrying to rein in operations, faced with a $2 billion debt load. But it has no plans for layoffs.

One way Virabongsa hopes to focus employees is by continuing to seek their input. He made his remarks at his first open-door session with Thai Airways workers, a process he plans to continue once a month.

Analysts expect Thai Airways to post a net profit of between 1 billion and 3 billion baht ($22 million to $67 million) when it reports its figures for this fiscal year, according to Reuters.

September 11 not factored

That is well down from last year, when it earned a net profit of 4.7 billion baht ($106 million). Its fiscal year runs through September.

But that means its numbers have yet to show the effects of September 11. Prospects are not good for fiscal 2002 as a result, experts say.

Goldman Sachs recently recommended avoiding the stock until the company gets a turnaround plan in place. The company still has no president, after Thaksin fired the entire board in September.

Asia Pacific airlines have been suffering heavy turbulence following the U.S. attacks. The Indian government has scrapped plans to sell off a large chunk of Air India. The CEO of Australia's flagship carrier, Qantas, said last week he would forego his bonus, after the airline announced 2,000 layoffs.

But airline stocks have risen the past two trading days, as oil prices drop.

Thai Airways stock was up 1.2 percent on Monday at 17.10 baht, outdoing the benchmark Thailand composite index's 0.5 percent gain.