Thai Airways International’s outspoken president, Piyasvasti Amranand, has set the goal of transforming Thai into one of the world’s top five airlines. This will be tough to achieve, but not impossible.
The national carrier’s board this month approved an investment plan for 2011-17 in which 37 aircraft will be acquired to replace older types and aid expansion.
This is in addition to the seven Airbus A330s, eight Boeing 777-300ERs and six A380s the airline already has on order. It is unclear when the board will decide on aircraft types for the additional order, but the widebodies in contention are thes A330, A350, and A380, and 777, 787 and 747-8. Thai also wants to replace its 737-400 narrowbodies, and is looking at new A320s and 737s. It plans to add 11 narrowbodies in all, but some may be leased.
Thai will be hoping the new aircraft will elevate its standing in the minds of consumers. One event that will definitely grab the attention of the public is when Thai takes delivery in the latter part of 2012 of its first three A380s. The remaining three on order are scheduled to be delivered in early 2013.
The national carrier has always had the potential to be one of the world’s top carriers but, unlike rival Singapore Airlines, Thai has failed to offer a consistent level of service. Instead it has stumbled over the years and lost its way. This is evident in the make-up of its current fleet. It is still operating A300s, a type that most passenger airlines discarded long ago. There are also five 737-400s, too small a number to make any operational sense. As for widebodies, Thai has failed to keep to one engine manufacturer for each aircraft type. So, for example, some of its A330s are powered by Rolls-Royce engines, and others by Pratt & Whitney’s.
If you speak to Amranand, he will attribute the carrier’s problems over the years to excessive political oversight. Successive Thai governments have appointed the national carrier’s board and president and interfered in the running of the airline, he says. As a consequence, the national carrier has had myriad presidents and board changes.
But Amranand asserts that the status quo is about to change because he is working toward ensuring Thai is no longer a state enterprise. “If we lose the state enterprise status it will make a difference. The prime minister and the finance minister understand this well,” he says, referring to two Democrat Party politicians who also are his political backers.
The plan is for the finance ministry to reduce its Thai stake to 49% from 51% so it will no longer be classified as a state enterprise. Thai was unable to achieve this goal in the past because some of its loans have covenants requiring the finance ministry to be a 51% shareholder, says Amranand. But in recent months Thai has renegotiated many of the loans to have this provision taken out and—now that the airline is recapitalized—Amranand says he is hopeful the others will agree to do likewise.
The airline’s board, meanwhile, has undergone a major shift in how it operates. “There was a long history of intervention by the board and the board was doing everything,” says Amranand. “The board members were dividing up various jobs of the airline among themselves. You had one member negotiating with the banks, another doing fleet plans and yet another looking at seats. They were taking over the job of management and management stopped thinking and followed orders. I didn’t join Thai Airways to be chief operating officer but CEO,” he adds.
Amranand is also championing better corporate governance, a not-so-subtle reference to his clampdown on corporate corruption. Senior executives at the airline say he recently put the management team through a corporate governance course that was held over successive weekends. Amranand made a point of attending each class to see who showed up, add the executives.
“Corporate governance is crucial,” says Amranand, adding that bad corporate governance “is a problem in Thai Airways but the situation is improving.” He says management now knows that “no matter how high you are in the company, if you misbehave you cannot stay on with the airline. “This is the most important change I can make. If I don’t change the corporate culture, then when I go the carrier will just revert back to its old ways.”
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