THAI AIRWAYS INTERNATIONAL -
Executive summary
The global aviation industry for January-September 2015 has been growing continuously as announced by the International Air Transport Association (IATA) showing growth of both passenger traffic and production traffic increased by 6.7% and 6.0% respectively - causing the cabin factor to rise to 80.7%. The primary growth is from low-cost airlines that conquer 25.0%'s market share which rapidly expand in emerging markets including Asia Pacific and the Middle East. However, fierce competition along with the price of crude oil fell decreased approximately by 19.2% QoQ and about 51.4% YoY causing lower yield and ticket prices. World economic is still fragile due to many concerns such as the expectation of raising policy rate of The Federal Reserve (Fed) before the end of the year caused a stronger U.S. dollar and slowdown in the Chinese economy which has resulted the slowdown of economic partners countries, especially on the export sector which makes the freight load factor levels have not improved since mid-2009.
During the third quarter of 2015, as part of fleet Strategy under Transformation Plans launched in the first quarter of 2015, THAI decommissioning 1 aircraft (Airbus A330-300) while took delivery of 2 new aircraft (Boeing B787-8 and Boeing B777-300ER) bringing our total of 95 aircraft at present. The Mutual Separation Plan (MSP) for general employees and Golden Handshake scheme for flight attendants to manage manpower affected by the reduction of flights and routes in order to improve the personnel and cost structure and reduce overall costs in the long term were still under process. The first group of 428 staff joining these 2 programs, was affective on July 1, 2015.
With Thailand tourism sector in recovery path, the economic growth in several countries and the expansion of Chinese tourists traveling abroad from easing measures of the Chinese authorities, Thailand saw 8.99 million flying passengers via Suvarnabhumi airport, an increase of 20.3% over last year. However, this already included impact from Ratchaprasong incident on August 17, 2015 which decreased number of flying passengers in September down by 25.2% compared to that of August. The third quarter flying passengers by THAI were 5.15 million passengers showing an increase of 8.8% YoY. The passenger traffic increased by 3.9% while passenger production decreased by 0.8 % thus explained improve in cabin factor 71.1% last year to 74.4% this year. Cargo business was affected by the export downturn and reduction in freight production from the decommissioned freighter aircrafts. Therefore, the freight traffic amount fell 15.2% YoY.
THAI and its subsidiaries' financial performance for the third quarter of 2015 showed an operating loss of THB 2,786 million - a 27.3% improvement from the same period last year due mainly to 6.1% expense decrease primarily from fuel price. Total revenue was THB 44,342 million representing THB 2,029 million or 4.4% decline from last year mainly from 3.3% reduction in passenger and excess baggage revenue and 19.7% reduction in freight revenue. Main reasons for drop in revenue were from yield drop (6.9% in passenger and 5.2% in freight) resulting from the reduction of fuel surcharge and the intense competition.
Non-operating P&L items included THB 99 million aircraft impairment, THB 4,532 million loss on foreign currency exchange resulting from 8-10% weakening THB against major currencies, and THB 1,453 million net finance cost. Including all these items, the total
net loss for the quarter was THB 9,894 million. Loss attributable to owners of the parent amounted to THB 9,901 million. Loss per share was THB 4.54 compared to gain per share of THB 0.50 that of last year.
EBITDA was THB 1,963 million, THB 582 million (42.1%) higher from last year.
EBITDA margin was 4. 4%, as compared to last year's reported 3.0%.
- Summary of Operating Results for Thai Airways International PCL. and its subsidiaries Financial Performance
The consolidated financial statements for the third quarter of 2015 consists of THAI's financial statement and 5 subsidiary companies which are 1) THAI-Amadeus Southeast Asia Co.,Ltd., 2)Wingspan Services Co., Ltd., 3) THAI Flight Training Co., Ltd, 4) Tour Eurng Luang Co., Ltd., and 5) THAI Smile Airways Co., Ltd.
Financial Performance: THAI and its subsidiariesTotal operating revenues | 44,342 | 46,371 | -2,029 | -4.4 | |
- Passenger and excess baggage revenue | 36,639 | 37,903 | -1,264 | -3.3 | |
- Freight and mail revenue | 4,371 | 5,440 | -1,069 | -19.7 | |
- Revenue from other activities | 2,824 | 2,483 | +341 | +13.7 | |
- Other income | 508 | 545 | -37 | -6.8 | |
Total operating expenses | 47,128 | 50,205 | -3,077 | -6.1 | |
- Fuel and oil | 16,364 | 19,479 | -3,115 | -16.0 | |
- Non-fuel operating expenses | 30,764 | 30,726 | +38 | +0.1 | |
Operating Profit (Loss) | (2,786) | (3,834) | +1,048 | +27.3 | |
Less Net finance cost | 1,453 | 1,403 | +50 | +3.6 | |
Less Impairment loss of assets and aircraft | 99 | 1,220 | -1,121 | -91.9 | |
Add Gain (Loss) on foreign currency exchange | (4,532) | 7,379 | -11,911 | -161.4 | |
Profit (Loss) before tax | (8,870) | 922 | -9,792 | - | |
Net Profit(Loss) | (9,894) | 1,097 | -10,991 | - | |
Profit (Loss) attribute to owners of the parent | (9,901) | 1,086 | -10,987 | - | |
Net Profit (Loss) per share (THB) | (4.54) | 0.50 | -5.04 | - | |
Significant operating data | |||||
EBITDA (MTHB) | 1,963 | 1,381 | +582 | +42.1 | |
Number of passengers (Million) | 5.15 | 4.73 | +0.42 | +8.8 | |
Available Seat-Kilometers (Million) | 20,275 | 20,439 | -164 | -0.8 | |
Revenue Passenger-Kilometers (Million) | 15,089 | 14,523 | +566 | +3.9 | |
Cabin factor (%) | 74.4 | 71.1 | +3.4 | ||
Passenger yield (THB/RPK) | 2.39 | 2.57 | -0.18 | -6.9 | |
Available Dead Load Ton-Kilometers (Million) | 827 | 945 | -118 | -12.5 | |
Revenue Freight Ton-Kilometers (Million) | 476 | 561 | -85 | -15.2 | |
Freight load factor (%) | 57.5 | 59.4 | -1.9 | ||
Freight carried (Ton) | 130,859 | 139,260 | -8,401 | -6.0 | |
Freight yield (THB/RFTK) | 8.75 | 9.23 | -0.48 | -5.2 | |
Number of active aircraft/as at Sep 30 (Aircraft) | 95 | 104 | -9 | -8.7 | |
Flight hours (Hours) | 90,538 | 90,574 | -36 | - | |
Aircraft utilization (Hours/Aircraft/Day) Average foreign currency exchange rate | 10.8 | 10.1 | +0.7 | +6.9 | |
1 USD : THB | 35.2551 | 32.0995 | +3.1556 | +9.8 | |
1 EUR : THB | 39.2336 | 42.5247 | -3.2911 | -7.7 | |
100 JPY : THB | 28.8868 | 30.8661 | -1.9793 | -6.4 | |
Average jet fuel price | (USD/BBL) | 70.45 | 124.45 | -54.00 | -43.4 |
Note : EBITDA = Total Revenue (Exclude gain/loss on foreign currency) - Total Expenses (exclude finance cost, tax, depreciation and amortization, and one-time expenses)
: In 2015, THAI changed standard weight (statistical calculation for average weight of passenger and free baggage allowance) from 90 kilograms per passenger to 100 kilograms per passenger for comparison purpose both to the industry and restate standard weight in 2014 to be the same basis of this year.
Revenues of Thai Airways International PCL. and its subsidiariesFor the third quarter of 2015, total revenues decreased by THB 2,029 million (4.4%) from the same period last year with details as follows:
- Passenger and excess baggage revenuePassenger and excess baggage revenue decreased by THB 1,264 million(3.3%) as:
- Average passenger yield (including fuel and insurance surcharge) reduced by
THB/RPK(6.9%), approximately THB 2,720 million resulting from fuel surcharge in conjunction with strengthening THB when comparing to major revenue currencies namely EUR and JPY. If excluded FX effect and fuel surcharge, average passenger yield decreased by 4.0%. There was an increase in passenger traffic in Asia route; however, fierce competition from Low Cost Carriers(LCC) which operated with greater frequency, rendered the lower yield.
- Passenger traffic (Revenue Passenger-Kilometers - RPK) increased by 3.9% or approximately THB 1,455 million due to the increase of regional traffic in all routes. However, RPK for intercontinental routes decreased due to the discontinue of loss making Bangkok - Johannesburg, reducing frequency in some other European and North Pacific routes in order to matching traffic demand, and cancellation of non-profitable routes. Passenger production decreased by 0.8% resulting average cabin factor increased from 71.1% last year to 74.4% this year.
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Freight and mail revenue
Freight and mail revenue decreased by THB 1,069 million (19.7%) due to the, 15.2% or THB 785 million, decrease of freight traffic (Revenue Freight Ton-Kilometers - RFTK) while average freight yield (including fuel and insurance surcharge) decreased by 0.48 THB/RFTK (5.2%) over last year mainly due to the reduction of fuel surcharge. Also affected by the export decline due to the slowdown of the Chinese economy, the economy of the partner countries, especially with Japan and ASEAN 5 that rely on exports to China relatively high, impacted directly on Thailand's exports in conjunction with Generalized System of Preferences (GSP) cut for all products to EU also impacted the reduction of freight traffic. Freight production (Available Dead-load Ton-Kilometers - ADTK) was 12.5% lower than last year due to decommissioning of 2 Boeing B747F (freighter aircraft) in March 2015 resulting decrease in average freight load factor at 57.5% compare with 59.4% last year.
- Revenue from other activities
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Freight and mail revenue
Ground services, Catering, Cargo handling services, and other activities revenue increased by THB 341 million (13.7%) from last year. The increased revenues were mainly from Ground services and Catering due to increasing number of other customer airlines flights and number of passengers but revenue from cargo handling was decreased by the lower volume of cargo traffic.
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