Thai Airways International Public Co (Thai Airways), the state-owned carrier of Thailand, posted net profit for the first time in four years. The net profit for the year ended December 2016 was Thai Baht (THB) 15 million, or about $429,000, a marked improvement from THB 13 billion loss reported in 2015.
Read: Thailand may go slow on plans to promote wedding destinations among Indians on account of King Bhumibol Adulyadej's death
The turnaround was attributed to lower fuel prices and efficient management of costs by the company that also reflected in higher operating profit for the year, though revenues fell 4.3 percent to THB 8,190 million. The number of passengers flown by the carrier rose 4.8 percent to 22.26 million during the year.
"...the financial performance in 2016 of THAI and its subsidiaries showed an operating profit of THB 4,071 million compared to last year's loss of THB 1,304 million or 412.2 percent, a vast improvement from last year," Thai Airways said in a statement on Wednesday.
A 21.6 percent fall in jet fuel prices and 7.7 percent decline in finance costs enabled to cut total expenses by 7 percent to THB 17,907 million.
The last quarter (October to December) saw yields drop 9 percent mainly due to the mourning period after King Bhumibol Adulyadej's death on October 17, 2016. The overall yield for 2016 fell 4.4 percent, according to an analysis note by Nomura.
"Had the yield drop been softer, we think 4Q performance could have been far ahead of forecasts," analysts at the Japanese brokerage said.
Thai Airways's financials during the year were also affected due to exceptional items. "Key exceptional items in FY16 were: THB 3.628 billion impairment loss due on 17 decommissioned aircraft along with provisions for impairment on engines of these aircraft and expense from the Transformation plan of THB 1,228 million (mutual separation plan and special incentive provision to employees)," Nomura analysts wrote in their note.
Outlook bright for current year
Thai Airways is poised for higher growth in revenues and margins this year on account of continued benefits from efficiency cost management and a spurt in tourist arrivals, especially from China.
The Thai Airways stock price closed 2.59 percent lower at THB 18.80 on the Stock Exchange of Thailand. It has a fleet of 95 aircraft, unchanged from last year. Usanee Sangsingkeo is the acting president of Thai Airways.
