Thai Airways embarks on major network and fleet restructuring but long-term challenges remain

Thai Airways is moving forward with a major restructuring aimed at improving the carrier's long-term outlook after incurring more than USD700 million in operating losses over the last two years. Thai has accelerated the phase out of A340-600s and Boeing 747-400 aircraft and is dropping freighter operations entirely as it cuts long-haul capacity.

The flag carrier has so far decided to axe three of its 15 long-haul passenger destinations. More network reductions are expected as the airline shrinks its widebody fleet by 17 aircraft over the next several months.

Most of the upcoming capacity cuts will focus on Europe, where Thai has been impacted by intensifying competition from Gulf carriers. The group strategically needs to maintain its presence in Asia-Pacific, particularly in the fast-growing Chinese and Japanese markets, but should down-gauge several underperforming regional routes by transferring them to regional subsidiary Thai Smile.