Thai Airways

Transcript

1. Thai Airways Reports Huge 2018 Losses
2. Agenda Company background Problem Causes of problem Solution Group analysis Suggestion
3. Company Background
4. Founded 1 April 1988 Main Hubs Bangkok–Suvarnabhumi Phuket Alliance Star Alliance Subsidiaries Thai Smile Nok Air Company slogan Smooth as Silk / I Fly THAI Parent company Ministry of Finance (51%) Revenue 200,586 million baht (2018) Net income 11,625 million baht (2018) Company background
6. Transport • Passengers service, products service, pre flight and post flight preparation • In-flight meals and beverages service • Aircraft maintenance service • Flight administrator service • Duty-free products and souvenir merchandise Main business Other business Passengers Goods Postal Parcels via Thai major cities to the primary cities around the world.
7. From passengers and good transportation From other supporting enterprises Main revenue of Thai Airways 95% 5%
8. 10 Domestic destinations +BKK & 63 international destinations
9. Brief history of Thai Airways 1977 2000s 2018 1991 2013 Thai government bought out the remaining shares of Thai Airways from Scandinavian based airline SAS Thai Airways listed on SET with the Ministry of Finance. The majority ownership of more 50% of airline company Achieved profitability Thai Airways was about to show sign of loss Major big losses happened
10. Current Situation
11. THAI : THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED Q’3 2019 net loss THB 11.b Billion (USD 380 Million) (5 times more than 2017) Debt THB 100 Million (USD 3.3 Billion)
12. Causes of Problem
13. Causes of problem (Internal) Depreciation and amortization cost are higher than Thai AirAsia (AAV) and Bangkok Airways (BA) Unnecessary cost of building, equipment and land 01 (M.Baht) THAI BA AAV Total revenue 100,950.44 14,486.93 20,896.24 Total expense 151,381.99 12,743.34 19,330.97 Depreciation & amortization 11,928.98 677.37 808.99 Depreciation (% of total revenue) 11.82% 4.68% 3.87% Depreciation (% of total expense) 7.88% 5.32% 4.18%
14. Causes of problem (Internal) Cost of ASK (available seat per kilometres) are becoming uncompetitive Unnecessary cost 01 Airline ASK Thai Airways 3.70 Baht Bangkok Airways 2.90 Baht Bok Air 2.40 Baht Thai Air Asia 1.65 Baht
15. Causes of problem (Internal) Using high cost suppliers and unproductive middlemen 02 Not use the best alternative choice of quality and price Insufficient system of procurement Too many middlemen in process eg. partnership limited
16. Causes of problem (Internal) Thai Airways’s subsidiaries are at loss 03 Thai Airways hold 15.94% of Nok Air shares Nok Air continue to make loss while the cost keep increasing
17. Causes of problem (Internal) Thai Airways’s subsidiaries are at loss 03 • Thai Airways holds 100% of Thai Smile share • Makes loss 1,600 - 2,000 Million Baht Every year LOSS Year 2015 - 1.85 Billion THB Year 2016 - 2.08 Billion THB Year 2017 - 1.63 Billion THB
18. Causes of problem (Internal) State-owned enterprise 04 • Discontinuity of policy • Different policy run by new operation board • Laws for the state-owned enterprise make it hard to perform various actions • Interventions and blockage in improvement • A lot of unprofitable routes and procurements
19. Thai exports and tourism industry is affected by the trade war between the world’s two biggest economies, US and China Thai Airways reported that its cargo-based income fell 12.9 percent in the first quarter due to the effects of the US-China trade war and pricing competition Causes of problem (External) 01 Impact of trade war
20. • Low cost carriers(LCC) have emerged in the market since the success of the Southwest Airlines • With the technology development overtime, competitiveness of New Airlines have exceeded Thai Airways • The nature of the market has become fiercely competitive according to 5 forces model Causes of problem (External) 02 Emergence of LCCs
21. Top competitors or alternatives Thai Airways is in highly competitive industry Source: https://www.owler.com/company/thaiairways Causes of problem (External) 03
22. Solutions
23. cut “cost” Implemented 6 strategies #SaveTG Announcing new routes 38 new planes purchase plan and increase “revenue”
24. SaveTG Co-Creation 6 strategic plans 01 • Cost-control strategy • Does not hinder quality of service • Open to suggestion and ideas Zero Waste Management 02 • Save and create a circulation of resources • Reduce food waste New marketing strategy 03 • New and lower cost route • Direct flights to Sendai
25. Digital channels strategies 6 strategic plans 04 • Digital marketing and communicating channel • Boost awareness • Mobile application and website THAI Synergy Strategy 05 • Partnership and collaboration for synergy TG Group Strategy 06 • To make THAI and THAI Smile stronger together
26. Other strategies • Excess baggage allowance • Travel insurance • Airport limousine service • Car rental and hotels eCommerce Selling ancillary products • Selling travel essentials and branded merchandise online THAI Smile Connectivity • Adjust work structure • To be centralized
27. open “European route” Lease 3 new planes Retire 4 planes and Announcing new route
28. New aircraft purchase • Estimated cost of 56 bn • To keep the national carrier competitive Buy or lease 38 new planes
29. Group analysis on implemented plans
30. 1. Save TG co-creation The systems of state-owned does not allow Right direction to cut cost BUT suggestion from the employees and passengers are not enough Need help from professionals (i.e. consulting firms)
31. 2. Zero waste management • The state that is the goal the company needs to achieve • Right direction towards goal • Minimize the waste in the operational process
32. 3. New marketing strategy A really great idea for opening newer routes (i.e. Sendai, Japan and European route) Wasteful old routes should have gotten rid off Can reduce competition
33. 4. Thai Synergy Strategy They should partner with the the global scale leaders (low cost expert) Borrow their expertise to cut cost The company made the right choice to form partnership with other company BUT they are forming with wrong partner
34. 5. Digital marketing strategy Absolutely on point!!! Because Thai airways are slow to adapt to the modern marketing The faster, the better
35. 6. TG Group Strategy This is not a strategy!! But the goal
36. Other strategies • Selling ancillary products • eCommerce • THAI Smile connectivity
37. New aircraft purchase Trade the retired aircrafts for new one The plan to buy 38 new aircrafts is a must to keep up with competition and safety issue Need competent agent to lay off retired aircrafts
38. Suggested Solution
39. • Less intervention • Continuity in policy implemented • More effectiveness in management • Reduce unnecessary cost Advantages PRIVATIZATION
40. • No obstacles for the partnerships or the intervention of the professionals from external source • More effective procurement system, less conservative benefit gainers (suppliers and middlemen) • Reduce cost to ask, raise competitiveness and eventually, reduction of loss PRIVATIZATION Advantages (cont’d)
41. Thank You