It is no surprise that after promising profits for 2018, Thai Airways ended up losing far more than expected. This is Thai Airways after all, where there remains eternal optimism in king and insanity.
While Thailand is still mourning the loss of King Bhumibol Adulyadej through ubiquitous billboards and memorials, it has a new reason to mourn: state-backed Thai Airways keeps digging itself into a deeper hole. And yet the optimistic turn-around plan has largely involved maintaining status quo. Doing the same thing and expecting a different result sounds like a textbook definition of insanity to me.
Thai Airways just reported a $365 million loss for 2018. In 2017 the carrier “only” lost $66 million and vowed to be profitable in 2018 by slashing unprofitable routes and reducing its fleet size. Instead, it has cut very few routes and actually grown its fleet size. This has caused load factors and yields to drop. But don’t worry! Thai now projects it will be profitable by 2022.
But while I’m just an American analyst, count me skeptical. After all, Thai Airways has more fleet diversity than flavors of ice cream and just failed its FAA safety inspection…again.
Why are people booking away from Thai? One reason is high prices for an inferior product. Thai’s business class seat is deplorable on many routes and yet the carrier often charges more than its rivals. The airline also has older, inefficient aircraft and labor contracts that are no longer regionally competitive. Stories of graft and nepotism abound. Accountability is dependent upon who you know, not clear and transparent rules.
It is not surprising that all that leads to losses. And of course, regional competition continues to increase.
I am still rooting for Thai Airways. No one wants to see any airline fail. But I grow increasingly pessimistic this poorly-run airline can ever turn itself around, absent government policy that shuts out all competition from Thailand. That won’t happen…
(H/T: One Mile at a Time)