Since the start of COVID-19, Thai Airways has seen it's first profit.
Thai Airways announced its half-year results on Monday, revealing the airline's first net profit since the outbreak began. In order to survive, the airline is currently under judicial supervision as it restructures and raises funds. Here's everything you need to know about the airline's performance.
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Given that Thai Airways has been stopping flights and working on debt restructuring in recent weeks, the airline's half-year financials appear unexpectedly solid. The airline earned 11.1 billion baht ($333 million) in net profit. It lost 28 billion baht ($840 million) in the first half of last year. Despite exhibiting signs of improvement, the airline's revenue from other services, such as baggage and passenger fees, mail, and freight, fell from 40.2 billion baht ($1.2 billion) to 8.3 billion baht ($250 million) in comparison to the previous year. Fuel costs fell from 11.5 billion baht ($340 million) to 1.7 billion baht ($51 million).
The airline has spent barely 2 billion ($60 million) on employee benefits this year, compared to nearly 11 billion ($330 million) for the same period last year, thanks to a massive cost-cutting operation. Expenses for the crew were also reduced from 1.3 billion dollars ($40 million) to slightly about 205 million dollars ($6 million). Total expenses fell from 58 billion ($1.7 billion) to 6 billion ($180 million), which is not surprising given the airline's 50 percent employee reduction. Although severance pay had a substantial influence on the airline's bottom line, costing the company 613 million baht ($18 million). The airline's liabilities have also been decreased, from 337 billion baht ($10 billion) in December 2020 to 285 billion baht ($8.5 billion) at the end of June 2021. A decrease of around 16%. However, this is in line with last year’s results which were at similar levels.
The preliminary results point to a favourable recovery for the airline as it rebounds from the crisis. Despite this, the airline is still in a precarious position. Recently, there has been an increase in incidences that have harmed the airline's network in Thailand. Flights to popular tourist destinations such as Phuket have been temporarily halted, reintroduced, and adjusted on a regular basis to meet demand. Despite its profitability, the airline is undertaking restructuring and debt management. The restructuring process was allowed by the courts in June, and the airline will now attempt to handle its 400 billion baht ($12.86 billion) debt. Last year's record loss followed a streak of loss-making years. The airline has failed to post a profit almost every year since 2012.
As the airline tries to recover, it will continue to restructure over the summer. Thai Airways, on the other hand, will most certainly be a considerably smaller enterprise in the future. The airline has cancelled 16 lease agreements and plans to cut its fleet size from 103 to about 86 aircraft by 2025. Thailand is seeking to open its doors to tourists by the middle of October. This means the airline will have to contend with potentially poor demand for at least another month. Furthermore, several of the airline's debt repayment schedules have been extended, implying that they must still be paid. From May to December 2020, all late payment costs were erased and recorded as a gain in the current figures. Perhaps painting a slightly rosier picture than the reality.
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