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Thai Airways to Give Details of Aircraft Buy

Our Bureau - : Feb 20, 2024 - : 2:38 am

Thai Airways International Public Company Limited (THAI) will acquire 45  mid-range and long-range wide-body aircraft from Boeing Co. and engines from GE Aerospace. 

THAI, along with Boeing and GE Aerospace, is expected to announce the details of the aircraft acquisition including aircraft type and engine specification at the ongoing Singapore Airshow. 

The airline recently entered into an agreement with Boeing and GE Aerospace to acquire mid-range and long-range widebody aircraft and engines; consisting of a firm order of 45 aircraft, along with options for additional aircraft to be incorporated into the THAI fleet, with deliveries starting from 2027, under the ten-year timeframe of 2024-2033 according to THAI’s route network plan. 

In 2023, THAI issued the Requests for Proposal (RFP) to aircraft and engine manufacturers (OEMs) in accordance with its route network plan and long-term fleet strategy to consistently generate revenue, aligning with its financial projections and targets.

The long-term aircraft acquisition plan is crucial for replacing gradually expiring leased and aging aircraft. It is quintessential for sustaining growth and retaining market share, the airline said. 

The THAI fleet consisted of 100 aircraft in 2013. The Company decommissioned and discontinued the lease of aging and less-fuel-efficient aircraft during its Rehabilitation process after the COVID-19 outbreak to decrease maintenance and operating costs.  In addition, deteriorating cabin equipment and maintenance costs have become a severe burden for the company. The decommissioning of aircraft resulted in 64 operating aircraft at the end of 2022, a 36 percent decrease compared to 2013. 

In response to the market’s rapid recovery and increasing travel demands, THAI bolstered its fleet by acquiring additional aircraft through operating leases in 20222023. From Q2/2023 onwards, THAI secured 21 additional wide-body aircraft, primarily Airbus A350s equipped with Rolls-Royce Trent XWB engines. 

Additionally, THAI plans to introduce Airbus A321neo aircraft into its fleet starting in Q4/2025. This growth strategy aims to accommodate increasing demands and enhance service quality. THAI fleet consists of 70 aircraft in 2023, increasing to 79 in 2024, and is projected to reach 90 aircraft by 2025. 

Considering the number of aircraft scheduled for decommission and lease expiry, the aircraft order backlog, aircraft production capability, and the significantly increasing demand for aircraft in the aviation industry, THAI’s fleet, without this long-term aircraft acquisition, would decrease to only 51 aircraft in 2033, a 49% decrease from its 2013 size. This would not generate the revenue needed to repay debts to its creditors. However, with the acquisition of 45 aircraft, THAI’s fleet would reach 96 aircraft, which is still less than in 2013. 

Regarding the financial strategy for financing the acquisition of aircraft and engines, THAI’s current financial health and projected liquidity are adequate to support the procurement within the aforementioned timeframe. 

THAI said it will carefully evaluate the source of funds and select the most appropriate financing method based on liquidity, market dynamics, and financial viability. THAI remains open to considering various funding models including operating and financial leases, aiming to strike a balance that optimizes financial flexibility and operational efficiency.  This acquisition will not affect the ability to repay debts to the creditors.

According to airline officials, through meticulous research and a transparent RFP process, the company negotiated directly with the aircraft and engine manufacturers, adhering to the industry standard practices adopted by other leading international airlines.

Photo: byeangel, Wikimedia Commons.

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