A Tupolev

THAI reconsiders costly jumbo jet deal

By: BOONSONG KOSITCHOTETHANA
Published: 9/06/2009 at 12:00 AM

KUALA LUMPUR : Thai Airways International (THAI) seems poised to cancel its order of six A380 superjumbo jets, which it considers not viable for its operations and, at a total cost of about US$1.8 billion, too expensive to fund.

Wallop Bhukkanasut, chairman of THAI's executive board, revealed the national carrier's revised stance on procuring the world's largest civil aircraft, which it agreed to purchase back in 2007 when the carrier was struggling to weather its worst financial crisis in 49 years.

"It is not economically viable to have and deploy this aircraft in our network," Mr Wallop said at the sidelines of the International Air Transport Association (IATA) annual general meeting being held in Kuala Lumpur.

Airlines operating A380s have found it difficult to achieve the yields they expected due to the global economic crisis, high operating costs and a lack of flexibility in moving the aircraft through airports, he said.

"It is a special mission airplane and can currently operate through eight airports around the world, meaning you can't put the aircraft on routes as you may wish," he said.

With THAI's planned configuration of the A380, the airline must fill 88.8% of 501 seats just to break even, he said.

"We need to make a major turnaround decision," he said.

He added that the final decision rests with the Thai government and the issue needs to be addressed by the Finance and Transport Ministries.

Top Airbus executives have already sensed THAI's new stance on the A380 and are reportedly seeking a meeting with Prime Minister Abhisit Vejjajiva.

"From the operating point of view, the A380 does not make economic sense. My immediate preoccupation is to enable THAI to survive the current storm and later to sustain the airline," he said.

When THAI puts its first A380 in the air in late 2011, the aircraft's novelty may have worn off. The plane may therefore no longer appeal to passengers as it currently does for Singapore Airlines and Emirates Airlines, which have A380s with more luxurious features - such as shower rooms for first-class passengers, in the case of Emirates.

"It could be a case of Johnny comes lately," Mr Wallop quipped.

THAI may be unable to compete effectively with other A380 operators on routes that the flag carrier has had in mind for some time, he said.

The airline planned to fly A380s on its long-haul routes, such as Bangkok to London, Paris and Frankfurt.

Yet Airbus may not be able to consign the megajets to THAI as scheduled in the latest timetable, he said.

THAI is prepared for "some acceptable" penalty arising from the contract breach with Airbus, but Mr Wallop said negotiations could take place on substituting the double-decker A380 jetliners with other Airbus aircraft.

"There is no contract that can't be broken or re-negotiated," said Mr Wallop, who retired as THAI's executive vice-president for commercial affairs two years ago and recently became chairman of the airline's executive board.

Financing the megajets, each costing about $300 million, as well as other new aircraft under the airline's re-fleeting programme will be a great burden for the airline.

THAI may have to extend the service years of its fleet, now averaging 12 years, to 20 years to reduce the expense of procuring new jets, said Mr Wallop.

"Instead of buying new planes, we can maintain THAI's appeal by refurbishing the cabins, which costs much less," he said.

The flag carrier, which has more than 80 aircraft, previously planned to procure at least 46 planes over the next decade and to retire 24 aircraft more than 20 years old in the next five years.

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A Tupolev

A380 may join this exclusive club.

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1:200Freak

They wanted to get rid of the Airbus A340-500s at one time, but retained them. Hopefully at least some A380s may make it to their fleet. Bangkok is a very touristy destination.

A Tupolev

It's the kinky sex capital of the world. David Carradine approved!

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gospodin

What I'd like to know is why would Carradine bangkok in Bangkok by himself?

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Steve







It's possible that the whole purpose of your life is to serve as a warning to others...

MarinerOne

Hey ... BUY your cutaway model of it before it's DISCONTINUED!!!

It'll make a GREAT 'show and tell' piece for your children or grandkids someday ... they will say ...

"Remember back in the first decade of the 2000s when Airbus built this overblown airliner called the A380 ... well they ONLY built 29 of them, but Revell made this REALLY cool model and here it is!"

Flyin' Hawaiian

I think I'm gonna postpone buying a GJ Thai A380 now.

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Horizon CRJ700

Meh, IMHO its mostly posturing. By 2013, they will need these jets, if slots continue to disappear as they did in the last boom. Poor foresight, acting quickly. Poor decision.

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MarinerOne

Perhaps you might consider 'investing' in a Hogan B747-8I ... at least you know they'll build and fly one of these prototypes for sure ...