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Turmoil in Thailand: Another Thai Airways President sidelined - briefly

27-Jun-2008
  • Board transfers Apinan to non-management functions over carrier’s poor performance;
  • Chairman reverses move, citing potential disunity among staff;
  • Decision on Nok Air’s future was due on 04-Jul-08;
  • Thai turmoil could mean Nok reprieve.

In August 2005, Thai Airways President, Kanok Abhiradee, was suspended by the government after the carrier reported a USD220 million loss in the June quarter. Roll forward almost three years and the Board has again moved to sideline the airline’s President (Kanok’s eventual replacement, Apinan Sumanaseni), although this time, the Chairman has intervened, opening up a potentially damaging boardroom split.

In Aug-05, oil prices were hovering around USD65 per barrel. With oil now at USD140 per barrel, Thai does not have the same room to move. Realising the gravity of the situation, President Apinan has ratcheted up fuel surcharges, announced plans to dump the airline’s expensive experiment with A340-500 ultra long range services to the US, and was apparently preparing to dump non-performing budget unit, Nok Air.

Thai’s Chairman, (and permanent secretary for Transport in the Thai Government), Chaisawat Kittipornpaiboon, stated the Board was not satisfied with the President's performance and transferred him to oversee non-management issues. He denied the move was politically motivated. The board also appointed Executive VP Norahat Phloiyai as ‘Co-president’.

But hours later, Chairman Chaisawat reversed the decision and reinstated Apinan following a meeting with Thai Airways’ Labor Union, which represents over half of the company's 26,000 employees

He stated, the Board’s decision had created confusion among staff, adding, “if I let this problem go on, it could lead to disunity within the organisation”.

Further turmoil in Thailand appears inevitable in coming days. Thai Airways was to officially inform Nok Air’s board of Thai’s future involvement in the budget carrier on 04-Jul-08 (US Independence Day). Whether President Apinan is still around to deliver the message is unclear, meaning Nok Air could gain a reprieve.

Meanwhile, losses will inevitably be mounting at Thai. The carrier has weathered previous downturns with little regard for the need to restructure. This time, the situation is more serious. And decisive leadership will be vital.


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