Post-rehabilitation, Thai Airways revamps fleet to ride Asia-Pacific travel boom

[BANGKOK] Thai Airways International is turning to Airbus jets to fill gaps in its fleet-renewal plans and tap Asia-Pacific’s travel boom, as Boeing delivery delays – first sparked by the pandemic and now potentially due to US tariffs – loom, said its top executive.

“The potentially growing market is the Asia-Pacific, and we have already secured that market with our narrow-body aircraft… 32 A321neos (new engine options), said Thai Airways chief executive Chai Eamsiri in an interview with The Business Times.

Shares of the airline, Thailand’s market leader, resumed trading on the Stock Exchange of Thailand (SET) on Aug 4, with analysts expressing cautious optimism over the carrier’s streamlined operations and sharper growth strategy following a five-year rehabilitation exercise.

Central to that strategy is a plan to expand the fleet from the current 78 aircraft to 150 by 2033, a target complicated by delivery delays by both Boeing and Airbus.

At the end of 2023, Thai Airways signed a contract to purchase 45 Boeing 787 Dreamliners, with an option for another 35.

“At first we were expecting the first delivery of the Dreamliners in mid-2027, but (according to) the latest schedule (it) will be (at) the end of 2027,” said Chai. “So the first one will now be delivered (at the end of) 2027, and then, afterwards, (there will be) more steady delivery in 2028.”

The choice of Boeing, Chai stressed, was made long before the trade deal between US President Donald Trump and the Thai government was struck on Aug 1, which saw Thailand being hit with 19 per cent tariffs on its exports to the US, in line with its South-east Asian peers.

“It was the best solution for (Thai Airways),” he said of the decision made in 2023 for its long-haul routes.

In the meantime, Airbus will play a crucial role in bridging the capacity gap. “The first one will be delivered by November 2025 under an operating lease. By 2028, all 32 will be delivered,” added Chai.

By 2033, Thai Airways expects its 150-strong fleet to be split, with 60 per cent of the aircraft supplied by Boeing and 40 per cent by Airbus.

As part of its rehabilitation plan, the airline is also streamlining operations to improve efficiency and cut maintenance costs by reducing the number of aircraft types from eight to four (two from Airbus, two from Boeing), and engine types from nine to five.

The balanced mix between Boeing for long-haul and Airbus for regional routes supports Thai Airways’ strategy of enhancing connectivity between its key markets in Europe and the Asia-Pacific.

Stock-market comeback

On its first day back on the market, Thai Airways’ share price surged 216 per cent, closing at 10.50 baht – up from 3.32 baht before the suspension. By the end of the trading session on Friday (Aug 15), the stock had climbed to 16.50 baht.

“I think they (investors) are mostly retail investors, because we are not in the SET top-50 yet; so many institutional investors will not buy because of their internal regulations,” posited Chai, who has been the national carrier’s boss since February 2023.

Maybank Securities, in a note issued this month, said that a leaner Thai Airways is emerging from rehabilitation, with a streamlined fleet, sharper route focus, and plans to grow capacity by 50 per cent in five years. The house cited strong cash flow, a solid balance sheet, and high returns as the airline’s advantages over regional peers, especially on European and Japan routes.

The long restructuring journey culminated on Jun 16 this year, when the Central Bankruptcy Court officially ended the process, paving the way for shares in Thai Airways to resume trading.

The carrier, once ranked among the world’s top airlines, was forced to file for protection under the Bankruptcy Act in May 2020, after reporting heavy consecutive losses between 2017 and 2019 and seeing its equity turn negative in the first quarter of 2020. SET suspended trading of Thai Airways shares soon thereafter.

After a painful recovery process that included cutting nearly half of its 30,000-strong workforce, selling about 10 billion baht (S$395.3 million) in assets, and losing its state-owned enterprise status when the finance ministry’s equity stake fell below 50 per cent, Thai Airways returned to profitability in 2024 with a core profit of 21.5 billion baht.

For the second quarter of FY2025, it posted a core profit of 6.78 billion baht. Its total revenue of 43.31 billion baht for Q2 was down about 14 per cent from the previous quarter, but up nearly 1 per cent year on year. This came as passenger revenue fell about 16 per cent on the quarter and was flat year on year on narrower average fares.

Thailand’s foreign tourist arrivals hit 16.6 million, down 4.6 per cent on the year in the first half of 2025, led by a near 40 per cent drop in Chinese tourists. Arrivals tend to increase in the second half of the year, which is deemed peak season.

“We believe Thai Airways’ top line has bottomed out in Q2 2025 and will continue to grow in Q3 2025, driven by increasing travel demand and seasonality,” said Finansia, FSS International Investment Advisory Securities.

But headwinds lie ahead.

CGS International noted jet fuel price volatility, weaker-than-expected passenger yields and delays in new aircraft deliveries as downside risks in a recent report.

Maybank Securities cited government intervention, especially on aircraft acquisitions, and “global unrest” as other downside risks. 

The skies ahead

Another project Thai Airways has in the wings is a 10 billion baht joint venture with Bangkok Airways to build a maintenance, repair, and overhaul (MRO) centre at U-Tapao International Airport, in Sattahip, part of the Eastern Economic Corridor.

Bangkok Airways is a private carrier that serves the domestic market mostly, via its privately owned airports at Koh Samui, Krabi and Sukhothai – all popular tourist destinations.

“There is good synergy between Thai Airways and Bangkok Airways. We carry passengers from Europe to Bangkok, and connect their flights to Sukhothai, Koh Samui,” said Chai.

Construction on the MRO centre is scheduled to begin in late 2025, with completion targeted for 2027.

“We will have 150 aircraft, plus Bangkok Airways’ 30, so that’s almost 200,” noted Chai. “That already meets the feasibility study. And the rest of the capacity we can fill (with a) third party.”

It will be Thai Airways’ first major investment as a majority privately owned airline.

Under the current equity breakdown, the Thai finance ministry and state-owned banks hold 42.9 per cent of the airline’s equity, making the government the largest single shareholder.

The airline’s plummet into rehab was partly blamed on excessive political interference, which remains a worry given the finance ministry’s high stake.

But Chai is confident that the rehabilitated carrier can avoid political turbulence.

“How can they influence us?” he asked.

He noted: “The Thai Airways’ management has to stick to business principles. If they make a decision in response to outsiders’ influence that harms the company, then they have to take responsibility… they have to answer to the shareholders at the shareholders meetings. We are transparent.”