Thai Air Revenue Target In Doubt Due To Oil Rise

February 25, 2011

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Thai Airways is likely to review its target for 2011 revenue of about THB200 billion baht (USD$6.53 billion) because of the surge in oil prices, its president said on Friday.

The Thai flag carrier has no plans as of now to raise its fuel hedging from the present 40-50 percent of fuel needs, President Piyasvasti Amranand told a press briefing after a board meeting.

"The jump in oil prices is mainly due to Middle East unrest, not supply and demand... However, our revenue target should be reviewed," Piyasvasti said.

"We have to be careful with fuel hedging. We won't definitely jump in when oil prices are surging."

The flag carrier would also reconsider its offer price of 30 baht a share to buy a 10 percent stake in budget airline Nok Air from Krung Thai Bank, Piyasvasti said.

"We still want to raise our stake in Nok Air, but we have to review the price as costs have risen because of oil prices... and Nok Air itself has planned to buy new aircraft, which means it needs new capital," he added.

Thai Airways wants to raise its stake to 49 percent from 39 percent.

The carrier expected 2011 profit before foreign exchange and tax to be better than the THB8.4 billion baht made last year due to a recovery in the economy and tourism, and it forecast a cabin factor of 74 percent for the whole of 2011.

Thai Airways reported a worse-than-expected 67 percent fall in its fourth-quarter net profit, hit by higher wage costs and lower foreign exchange gains than a year earlier.

The airline is sticking to its plan to acquire 37 planes worth THB216 billion baht in 2011-2017, and plans to spend another THB241 billion baht to buy 38 aircraft in 2018-2022, Piyasvasti said.

It will increase the number of planes in its fleet to 105 by the end of 2017 from 85 now.

(Reuters)