Thai Airways profit hit by strong baht

BANGKOK : Thai Airways International said on Wednesday that despite increased traffic, first quarter net profit fell 31 percent from a year earlier as a rising baht undercut offshore earnings.

Thailand's flag carrier said net profit dropped to 4.2 billion baht (121 million dollars) in the three months to March, while pre-tax profit tumbled 31 percent to 6.0 billion baht.

Revenue, meanwhile, rose 7.6 percent year-on-year to 43.4 billion baht, while passenger traffic grew 13.1 percent.

"The lower profit was mainly caused by a stronger baht compared to the same period of last year and came despite the fact that oil prices eased," said a senior company official.

The baht was at about 39 to the dollar in March last year, against 35 this year.

Thai Airways posted a lower gain on its foreign operations, mostly arising from converting outstanding loans into baht, of almost 1.5 billion baht, compared to 3.8 billion baht in 2006, he added.

Total expenditure was 7.0 percent lower than the same period last year due mainly to lower fuel prices, which amount to about a third of the carrier's total expenses, he said.

Higher revenue largely reflected increased flight frequencies to serve growing demand for air travel on both regional and intercontinental routes.

The airline launched new flights to Johannesburg in South Africa as well as Hyderabad, Bodhgaya and Varanasi in India, Thai Airways said in a statement to the stock exchange.

Some 90 percent of the airline's revenue comes from international flights, with Bangkok to London, Frankfurt and Tokyo among the most profitable routes.

Costs rose 7.1 percent to 43.4 billion baht in the quarter due partly to an increase of personnel and other operating expenses at the new Suvarnabhumi Airport.

The carrier shifted its all commercial flights to Suvarnabhumi when it was opened in late September but later moved some domestic flights back to Bangkok's old Don Muang Airport due to lingering problems at the new hub.

Net profit for the last six months, marking the first half of the airline's fiscal year, was down 17 percent to 8.2 billion baht.

Analysts, however, were still upbeat on Thai Airways, saying its full-year target could be achieved due to lower oil prices and improving tourism.

Tourist arrivals to Thailand rose 4.4 percent in the first three months to 3.8 million, according to Siam City Securities.

"Given the higher arrivals, Thai Airways' load factor has surged while oil prices would not a major threat to the airline's operating costs this year," Siam City airline analyst Siriwan Naphawaranon told AFP.

Siriwan said Thai Airways remained on track to achieve total revenue of 180 billion baht this year with a net profit of 12.7 billion baht.

The flag carrier is controlled by the Thai government with a 54.21 percent stake. - AFP/de

Source: Channelnewssia.com