Thai Airways hits air pocket

Loss-making Thai Airways International Plc (THAI), one of the largest airlines in Asia, has stripped its president of power and set up a new management committee to run the company. The dramatic corporate shakeup comes just days before the national carrier is expected to post quarterly losses of about seven billion baht (US$171 million) – far worse than expected.

…Although its planes have an average load factor of 75%, the airline blames rising fuel prices – accounting for 31% of its operational costs – for its losses.

It has recently been trying to cut costs by fuel hedging – the practice of buying fuel well ahead of need at a fixed price to protect itself against sudden fuel-price rises. Kanok said that at one point, 75% of the fuel used by THAI was bought with hedging. “Hedging has been done on a daily basis, but prices are too high now to hedge,” Kanok said, adding that hedging currently accounts for 16% of the fuel used by the airline.

Asia Times