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Thai Airways' cargo unit braces for US$3m loss

Publication Date : 28-09-2012

 

Because of the flood crisis last year and the wider effects of the global economic downward trend, Thai Airways International's cargo business is forecast to lose 100 million baht (US$3.24 million) this year.

The business' total revenue is also predicted to miss its 30-billion baht target by 5 per cent this year. Its fuel cost has also been reduced by 4-5 per cent from the lower volume of goods. However, revenue is forecast to grow to 31.5 billion baht next year thanks to greater air-cargo demand and the return of aircraft after their leases expire.

Pichai Chunganuwad, managing director of the cargo and commercial mail business, said yesterday that the loss had been carried over from last year's devastating flood, further suspensions of manufacturing and export delays. Manufacturers are also worried that their imported materials arriving at Suvarnabhumi Airport cannot be transported to their production plants.

The airline has faced more competition from logistics operators using articulated trucks to carry electronic goods to Vietnam, mainland China, Hong Kong and Singapore. They can offer door-to-door delivery at a lower cost than air freight to attract customers.

To strengthen competitiveness, the company has adjusted its business plan to cope with the changing environment by installing advanced information technology to help manage business by assessment, laying down a marketing plan, and improving efficiency of the warehouse system. It will also manage the follow-up of goods. The strategy also aims to reduce operating costs.

THAI is planning to lease aircraft cargo space for one year, which is scheduled for early next month.

Its air cargo department manages two aircraft as well as space in commercial planes, its main marketing channels.

It is forecast that the air-freight service will pick up in the coming fourth quarter, which is the strong purchasing season for Christmas. Total loading volume this year is nearly the same as last year's 700,000 tonnes, which is mainly carried on commercial aircraft, of which 5-10 per cent is delivered by air cargo.

THAI's new IT system will be implemented next April 1 as planned to comply with the International Air Transport Association. The company has to pay an average of 100 million baht for the technology system's development over an eight-year contract. However, it is expected to break even within three years.

*US$1=30.8 baht 

 

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