Thursday, October 28, 2010

THAI's Q3 profits plunge 90%

Thai Airways International would have shown huge profits in the third quarter without the huge foreign-exchange losses of Bt2.8 billion, DBS Vickers Securities (Thailand) said yesterday.

The securities house expects THAI's net profit to plunge 90 per cent from the previous quarter to Bt154 million due to the forex losses plus a Bt445 million write-off of spare parts and inventory. Though net profit was down, it was a strong turnaround from the Bt4-billion net loss in the same quarter last year.

In the third quarter, THAI's passenger cabin factor continued to improve to 74.7 per cent from 73.9 per cent in the third quarter and 64.7 per cent in the second quarter. It boosted its yield to Bt2 per kilometre from Bt1.9/km in the same quarter last year. The freight factor rose, while operating expenses remained under control.

Fourth-quarter results are expected to be better, as tourism enters the high season. During the first 10 days of this month, the cabin factor remained robust at 74 per cent, up from 73 per cent a month ago, while bookings for November 10 are already at 65 per cent. The yield also improved to Bt2.1/km from Bt1.98/km on September 10, and should continue to rise as special offers and promotions offered during the low season would be phased out.

"The small third-quarter net earnings might disappoint the market, but core earnings are a big improvement. We remain optimistic about THAI, as the turnaround is both external (rising travel demand from easing political tensions and improving economy) and internal (restructured operations)," it said.

DBS projects the airline's share price rising to Bt47.25. The stock closed yesterday at Bt45.50. While reporting that global international passenger traffic showed a 10.5-per-cent year-on-year increase last month, the International Air Transport Asso-ciation said Asia-Pacific carriers posted a 8.6-per-cent traffic increase over the previous September against a capacity increase of 6.9 per cent.

While the region led the recovery with an early surge in demand, growth this year has been largely flat. Traffic in the region remains 2 per cent below the pre-crisis peak of early 2008.

Tisco Securities expects THAI to report quarterly operating net profit of Bt3.54 billion, which marks a sharp improvement from the operating net loss of Bt1.25 billion in the same quarter last year. Its operating net profit is expected to be the highest among listed transport companies.

In the transport sector, Regional Container Lines is expected to turn in a quarterly net profit of Bt80 million, compared to a Bt681 million net loss in the same quarter last year. BTS Holdings Group should swing back to a net profit of Bt155 million against a Bt150 million net loss, and Airports of Thailand should report a profit of Bt158 million against a Bt4 million loss. Bangkok Expressway's net profit is expected to advance slightly.

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