BANGKOK: Thai Airways will hold a board meeting this week to consider further contingency measures as rising oil prices linked to unrest in the Middle East put fresh pressure on the airline’s costs, fares and booking outlook.
Chai Eamsiri, chief executive officer of Thai Airways International Plc, said management had spent the past week assessing the impact of the crisis and preparing short-term response plans, with the next step to be discussed with the board in the coming days.
Board to consider next contingency steps
The airline is expected to focus on near-term survival measures, including tighter cost control and a delay to non-essential investment, until the situation becomes clearer.
Chai said Thai Airways was seeking to preserve as much as possible of its Bt120 billion cash position as uncertainty over fuel prices and demand continues to grow.
If the crisis persists, the airline may need to take additional steps beyond delaying investment, including revising its operating plan, adjusting fares further, reducing flight frequencies and suspending services to some destinations.
Jet fuel surge drives up pressure
The clearest impact so far has been the sharp rise in jet fuel prices, which Chai said had jumped from around US$80 per barrel to about US$220 per barrel.
In response, Thai Airways has gradually increased air fares by 10-15% to reflect higher fuel costs.
Chai warned that if the conflict drags on for another two months, or until May, and oil prices climb to US$240 per barrel, the airline would need to revise its plans more aggressively and adjust ticket prices to better cover costs.
Demand shows early signs of strain
Although Thai Airways’ average passenger load factor remains strong at around 90%, the Middle East crisis has started to affect travel sentiment.
Advance bookings have fallen by about 10% from the same period last year, suggesting that higher costs and broader uncertainty are beginning to weigh on passengers’ travel decisions.
For now, Chai said the situation was still less severe than during the Covid-19 crisis, when airlines were unable to operate and revenue collapsed. He added that Thai Airways could still maintain flights on other routes despite the disruption.
Revenue target at risk if crisis drags on
If the situation continues beyond May, Thai Airways may also have to revisit its business targets for 2026.
The airline had previously set a revenue target of Bt200 billion this year, representing growth of about 5% from the previous year. Chai said a prolonged crisis would inevitably put that goal under pressure.
He stressed that cash on hand remained the most important safeguard for an airline facing prolonged uncertainty.
Brief background
Airlines worldwide are closely watching the Middle East conflict because it has pushed up energy prices and raised concerns over fuel supply and travel demand.
For Thai Airways, the immediate impact has come through much higher jet fuel costs, softer forward bookings and the need to prepare contingency plans in case the crisis lasts longer than expected. - The Nation/ANN
