United bails out on deal with THAI

Old Dec 24, 03, 6:59 pm
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United bails out on deal with THAI

From Bangkok Post

US airline's creditors reject `low' prices for used 747-400s

Amornrat Mahitthirook

United Airlines (UA) has terminated an agreement to sell seven used Boeing 747-400s to Thai Airways International, according to Transport Minister Suriya Jungrungreangkit.

He said that UA aborted the agreement because its creditors were unhappy with the low prices quoted.

The aircraft were reportedly to be sold for between US$51 million and $75 million each. The current base price of a new 747-400 is $185 million.

The American carrier recently entered Chapter 11 bankruptcy protection and is currently restructuring its debt. As a result, the agreement to sell the seven aircraft to THAI in October was not finalised.

However, THAI chairman Thanong Bidaya said after the company's shareholders' meeting yesterday that the deal was not terminated but postponed to March.

The delay in aircraft deliveries would not have an impact on THAI's operations as the airline could maximise the utilisation of its existing airplanes, said Mr Thanong.

``Normally, it would take a couple of years before the new aircraft would generate revenue to the company so the delay of any such delivery would not have an impact on THAI's performance,'' he said.

He said THAI was expected to have better performance next year if there were no unexpected crises such as the Sars outbreak or Iraqi war this year.

At the same time, THAI has to improve its service and marketing to retain and build its market share in the industry, said Mr Thanong.

Discussing the low-cost airline that is expected to begin operating next year, Mr Thanong said the venture would be a complementary business to THAI's core operation and was in line with the industry trend.

He said that the budget airline would not have much effect on THAI's domestic operation as the local market generated only 15% of the company's overall revenue.

Mr Thanong projected that the no-frills carrier would only take away 20-30% of THAI's domestic business.

For the 2003 fiscal year ending on Sept 30, THAI reported 134.5 billion baht in revenue and 12.45 billion baht in net profit, up 22.3% from the the previous year. Earnings per share rose to 8.9 baht from 7.27 baht last year.

As a result, shareholders approved a dividend payment of one baht per share for the year, in addition to an interim dividend of one baht that was announced earlier.

THAI president Kanok Abhiradee said the dividend would be paid within 30 days and the share register for the rights to receive the additional dividend would be closed on Jan 5.

Last month, the national carrier sold 442.75 million shares at 50 baht each, reducing the stake held by the Finance Ministry from 93% to 70%.

THAI shares closed yesterday on the Stock Exchange of Thailand at 46.25 baht, down 75 satang, in trade worth 146 million baht.

Meanwhile, THAI's board of directors has appointed a new director, Dr Suchai Charoenratanakul, a professor of medicine at Siriraj Hospital. He succeeds Adm Taweesak Somapa, a former commander-in-chief of the Royal Thai Navy.

Four other directors have been reappointed to the board including Mr Thanong, Mr Kanok, Krung Thai Bank president Viroj Nualkhair and ACM Kongsak Wantana, a former commander-in-chief of the Royal Thai Air Force.

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