THAI President on roadshows with overseas investors lays out tough measures

Thai Airways International Public Company Limited's new President Mr. Piyasvasti Amranand is on roadshow meetings with international investors to lay out his vision for THAI and to strengthen relationship with the investment community.

Mr. Amranand laid out a tough, but realistic, recovery plan encompassing the reduction of the level of debt, enhancing internet sales, reviewing loss-making routes, seeking options to increase capacity, reducing non-fuel costs and reducing staff benefits.

Laying out his vision for THAI, which he called "a national treasure that we must help protect," Mr. Amranand said his aim is to lower the Company's debt to-equity ratio from 3:1 to 2:1 [outstanding debts now total THB 160 billion]. Consideration of a recapitalization will be dependent on planned investments, operating results and other financing options.

THAI is expected to cut non-fuel expenses by THB 18 billion this year.

Mr. Amranand also warned that challenges being posed by the economic slowdown, political uncertainty in Thailand, fuel price fluctuation and the higher level of competition "will be difficult with the increase in number of regional competitors, increased competition from Middle East airlines as well as the rapid growth of low cost airlines."

THAI is also focusing on measures to enhance revenue - yield management, niche marketing, enhance customer data mining, inflight product enhancements while strictly controlling operating costs. Mr. Amranand also pointed that with fuel constituting a major part of THAI's cost and is subject to many global economic factors largely beyond THAI's control, fuel hedging ratio should be appropriate to cushion fuel cost impact. Fuel cost for THAI in 2009 is expected to be THB 48 billion against THB 90 billion last year.

Other major financial measures Mr. Amranand wants to implement include:

- More leasing rather than outright purchasing of aircraft.
- Increasing proportion of internet sales from 4% to 15% of total sales by the end of 2010. Ticket prices to better reflect demand and supply.

- More cooperation with Star Alliance partners and Nok Air, THAI's low cost subsidiary carrier to increase passenger numbers.

- Senior executive and staff benefits are all on review including seat perks and other benefits.

Mr. Amranand said the four year strategic plan includes a fleet and capital plan which are to be completed in December 2009 for implementation in 2010.

Mr. Amranand laid out five strategies for THAI's recovery and growth:

- Aligning customer service to better suit customer needs, such as inflight menus to be more in line with customer preference and to take greater care of customers affected by cancelled/delayed flights.

- Better cooperation between THAI business units through a restructured business plan to deliver an outstanding customer experience compared to peers.

- A more dynamic and responsive organization structure improving response to rapid changes in the industry.

- A focus on revenue enhancement by improving sales distribution effectiveness and a revised pricing policy offering more standardized fares through both direct and agency sales.

- Introducing of a "whistleblower policy" to enhance internal governance.