THAI Announces Progress on the Airline’s Rehabilitation Plan

On 1 November 2021, Thai Airways International Public Company Limited (THAI) organized a press conference to announce the progress on its Rehabilitation Plan, chaired by Mr. Piyasvasti Amranand, Chairman of the Plan Administrators and Mr. Theeraj Attanavanich, Chairman of the Creditors Committee.

Mr. Piyasvasti Amranand, Chairman of the Plan Administrators said in the past year, THAI's operational performance has progressed satisfactorily in many aspects including cost reduction, organization restructuring and revenue generation. New vision and mission have been established to drive the Company forward through new strategy, new business models and approaches. THAI's new vision is "High Quality Full Service Carrier with Strong Thai Brand, Connecting Thailand to the World and Generating Consistently Healthy Profit Margin." The mission is defined as four pillars: 1. Customer Centric; 2. Commercial Excellence; 3. Cost Competitiveness; and 4. Continuous Improvement. THAI's Transformation Initiatives projects, 400 of which were put together through a number of brainstorm sessions among THAI employees from various work units, achieved 44,800 million baht or 77% of the target in the Plan. THAI places special emphasis on those initiatives that helped reduce significant amount of operating expenses. The People Rightsizing Initiatives helped THAI cut down its expenses by 16,000 million baht, Fleet Reconstruction and Fuel Efficiency 12,000 million baht, Aircraft Lease and Engine Negotiation 11,300 million baht, Procurement Plan 1,100 million baht; Flight Technical Development 719 million baht; Technical Department Development 802 million baht; and other Initiatives 3,200 million baht.

Under the cost efficiency strategy, THAI has continued with its organizational restructuring and downsizing plans with significant progress. The Company received great support from the employees who willingly accepted new employment conditions and salary schemes and cooperatively participated in organizational restructuring projects such as "Leave without Pay" and "Mutual Separation Plan", with over 6,000 applications. In 2019, the Company recorded 29,500 permanent and outsourced employees with monthly personnel cost of 2,600 million baht. Currently, THAI has 14,900 employees and monthly personnel cost is reduced to 600 million baht. All managerial levels were cut down by 35% resulting in a more flexible and effective work process.

Following a reduction in the number of employees, the Company is able to rearrange the allocation of its Head Office space and office branches in other provinces. Unused properties were planned for rent or sale to boost Corporate cash flow and liquidity such as Laksi, Larn Luang, and Phuket offices, as well as a vacant land in Chiang Mai.

In addition, THAI enhanced Key Performance Indicator rating scale methods. New organization culture was introduced through new Core Values. Cancellation and reduction of benefits for employees and executives was executed such as complimentary air tickets for Board members, active and retired employees, employee tax payment, upgrading of employees' class of travel, executive transportation budget, medical expense reimbursement to be replaced by the Social Security Welfare, and vacation compensation. Salary structure and overtime wage calculation method has been adjusted.

Debt restructuring in the Rehabilitation Plan includes the extension of debt repayment period between five to seven years, the suspension of capital and interest repayment between two to three years, the reduction of existing interest debt to 1.5%, the reduction of aircraft lease contract/hire purchase contract, and the increase of debt repayment alternatives.

As for the fleet efficiency plan, THAI planned to discharge 42 aging aircraft that wasted fuel consumption. Lease and hire purchase contracts of 16 aircraft were discontinued leaving 58 aircraft in the current fleet including 20 of A320 aircraft, operated by Thai Smile Airways. THAI's current fleet is highly efficient, modern and less fuel consumption. The Fleet Reconstruction and Fuel Efficiency helped cut down expenses by 12,000 million baht compared to that of the same period in 2019. The aircraft type is reduced from nine to four.

Performance records for October 2021 showed that THAI achieved the highest operating revenue since the COVID-19 pandemic in April 2020 reflecting promising and better prospects of aviation business. During April 2020 - October 2021, THAI has generated revenue of 10,000 million baht from cargo and mail services. During the same period, the Aviation Business Unit also provided services to 80 customer airlines and generated 4,800 million baht in revenue. THAI Catering department is expanding its business through Master Franchise of Puff & Pie project nationwide.

As THAI strives to maintain its liquidity through revenue generating and selling secondary property, the operating loss in the first six months of 2021 was 3,973 million baht lower than that of the previous year. With one-time revenue, THAI recorded 11,121 million baht of net profit, which was 39,151 million baht higher than that of the previous year. Since June 2021, the Plan Administrators have made all possible efforts in managing THAI's financial liquidity while ensuring that THAI's operations and business are exercised according to Rehabilitation Plan and Business Reformation Plan resulting adequate cash flow for the Company.

In order to support and encourage the Government's Country Reopening policy on 1 November 2021, THAI resumes winter flight operations in 36 routes from 31 October 2021 - 26 March 2022. In Q1/2022, flight operations include 19 Asian destinations, nine European destinations, one Australian destination, and 14 domestic destinations operated by Thai Smile Airways. THAI is prepared to resume full services including 24 hours a day THAI Contact Center, THAI Royal Orchid Lounge at Suvarnabhumi Airport, in-flight entertainment, pre-select meals for business class in international routes, special coffee menu and other beverages, e-magazine and e-newspaper. All THAI cabin crew are vaccinated. Hygiene Excellence standard is applied at every contact point of travel.

THAI is committed to carry out its business operations according to the Rehabilitation Plan and ready to provide full services to our passengers. THAI hopes to be part of the efforts in driving Thailand's economy and tourism industry. THAI, as the national flag carrier, will be the pride of Thailand and the Thai people, connecting the world to Thailand and Thailand as one.

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