Higher revenues from passengers and cargo helped Thai Airways to significantly lower its second-quarter loss from last year. It also produced its first positive EBITDA since it operated under the Rehabilitation Plan that was implemented a year ago. Reopening of Thailand improves fortunes Thai Airways.
Thai reported a -3.213 billion baht net loss compared to a 23.3 billion profit for the same period last year, but this result was flattered by gains on debt restructuring and investments. One-off gains totaled 1.982 billion baht this Q2.
The operating loss before financial costs was -1.299 billion baht compared -4.449 billion baht in Q2 2021. EBITDA after deduction of aircraft leased was 168 million baht, a huge improvement over -9.212 billion baht last year.
Passenger and cargo revenues for Thai Airways and its subsidiaries were 21.5 billion baht, up from 5.6 billion baht in 2021 when Thailand was still largely in lockdown and international traffic allowed only to restricted areas of the country. Pax revenues were 13.4 billion baht (2021: 921.000 baht), cargo revenues 6.4 billion baht (1.8 billion), and the rest from other revenues. Capacity was 366 percent higher this Q2 compared to last year and the airline carried two million passengers at a load factor of 60.3 percent versus 15.1 percent in 2021. Note that Thai operated more charter flights.
Revenues were offset by higher expenses of 22.8 billion baht excluding one-off transactions costs, with fuel more than ten times higher to 8.9 billion baht from 846 million. The airline says it is hedged at a minimum of twenty percent.
For January-June, Thai Airways reported a -6.456 billion net loss (2021: 11.121 billion baht profit), an operating loss of -23.2 billion baht (14.3 billion profit), and total revenues from operations of 31.8 billion baht (8.3 billion baht). The group ended June with 13.5 billion baht in cash and cash equivalents, up from 5.5 billion baht in December. Thai reported a 55.1 billion baht profit for 2021 compared to -141.2 billion in 2020 and already reduced its operating loss in Q3.
Restructuring of balance sheet and debt continues
The further reopening of Thailand (only proof of vaccination is required) and Asia makes Thai Airways optimistic for the rest of the year. It has already further grown capacity in July and reached a load factor of 77.7 percent. Thai continues to work on the Rehabilitation Plan, which focuses on the restructuring of its balance sheet, the restructuring of aircraft leases, and the repayment of its debt to 36 groups of creditors that stood at 24.2 billion baht (consolidated) by the end of June. This is mainly caused by 29.1 billion baht in deferred revenues.
“In addition, the Group and the Company have a capital deficiency of Baht 77,727 million and Baht 71,069 million in the consolidated and separate financial statements, respectively. However, the Company resumes the increasing operation of the airline and has the financial liquidity as the normal course of business”, the auditor remarks in its report. “The Company is currently in the process of implementing the rehabilitation plan. However, completion of the rehabilitation plan depends on the ability to implement the plan and must meet all conditions as specified in the rehabilitation plan.” These conditions are that Thai within five years needs to secure new capital and a new credit facility, and produce two consecutive years with an EBITDA of twenty billion baht.
Part of the Rehabilitation Plan is a reduction of the fleet, which stood at 103 aircraft for Thai and Thai Smile in September 2021. Right now, Thai Airways Group has 91 aircraft, of which twenty Airbus A320ceo’s are with low-cost subsidiary Thai Smile that have been leased from the parent airline. Thai itself disposed of four aircraft in the past six months but got permission from the court to bring back three A330s to service. Of the 91 aircraft, only 23 are owned.
