Thai Airways reform to test business credentials of military government

Sun Jul 20, 2014 5:13pm EDT
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By Khettiya Jittapong and Amy Sawitta Lefevre

BANGKOK (Reuters) - Thailand's new military rulers have singled out the country's troubled flagship airline as the first state enterprise to undergo reform, an exercise that will test their unproven business acumen and ability to separate politics from business.

Thai Airways International Pcl has racked up four quarters of losses due to declining ticket sales, high operating costs and ruthless competition. Boardroom fights have also led to slow decision-making and a lack of coherent strategy, sources in the company say. 

The junta led by General Prayuth Chan-ocha has told the chief of the Royal Thai Air Force to fix the airline. Air Chief Marshall Prajin Juntong, who also oversees economic matters for the military government, said on Friday a detailed restructuring plan aimed at returning the carrier to profit will be considered by the board at a meeting on July 24.

The success or failure of Prajin, who has little practical experience in running a business, will have wider implications for the government. The junta needs to assure foreign investors of its ability to manage the economy and that it is not out to merely weed out allies of previous prime ministers.

"You are right in noting that Prajin is a military man with little experience in running a company," Monthon Satchukorn, a spokesman for the Thai Air Force and a Prajin aide, told Reuters in an interview.

"Prajin is a man whom he (the junta leader) can trust," Monthon said.

Prajin, who declined to be interviewed for this report, will be chairing the upcoming meeting with a smaller board this week. Five members have resigned since the junta came to power, reducing the board to 10 members.

Among the five who left was Ampon Kittiampon, who had been accused by the Thai Airways union of interfering with management and influencing executives whom he had close ties with. Ampon, who resigned as chairman in March but had remained on the board, has denied any wrongdoing.   Continued...

A Thai Airways plane prepares to land at Bangkok's Suvarnabhumi Airport July 17, 2014. REUTERS/Athit Perawongmetha