Thai Airways reported a 2018 net loss of THB11.6 billion ($355 million), deepened from a net loss of THB 2.1 billion in 2017. Despite a 3.9% increase in revenue to THB200 billion, total operating expenses rose 10.3%, primarily because of rising fuel prices.

The airline said fuel costs increased 30.1% even with better fuel hedging performance than 2017. As a result, fuel expenses rose 19.7%. Non-fuel expenses went up 7.3% because of an increase in aircraft maintenance and overhaul costs, lease of aircraft and spare parts, and depreciation and amortization expenses.

In particular, Thai Airways pointed to disruptions in operations because of engine cracks found on Rolls-Royce Trent 900-powered Boeing 787-8/9s and Trent 1000-powered Airbus A380s. Engine replacement efforts during the winter schedule from Oct. 28, 2018 caused delays and frequency changes, which resulted in higher costs and revenue losses. The fleet’s Boeing 777-300ER GE90 engine overhaul also contributed to additional maintenance expenses, with the work coming “earlier-than-scheduled” because of “actual usage conditions.”

In 2018, the Star Alliance member carried 24.3 million passengers, down 1% year-over-year (YOY). Capacity, measured in ASKs, were up 2.9% along with the introduction of five Airbus A350-900s and the retirement of two 737-400s. Passenger growth was up 1% and load factors dipped 1.6 points to 77.6%. The airline said the recession in Chinese tourism to Thailand was one factor contributing to poor passenger carriage.

Thai Airways is facing stiff competition from domestic LCCs such as Nok Air, Thai AirAsia and Thai Vietjet. Passenger growth and revenue slid by 7.5% and 15.3%, respectively, and the airline cut capacity 8.7% to manage poor demand.

Thai Airways president Sumeth Damrongchaitham has reportedly said the state-controlled carrier wants to acquire as many as 38 new aircraft to reduce maintenance and fuel costs. However, aircraft acquisition must be approved by the Thai cabinet.

Chen Chuanren, chuanren@purplelightvisuals.com