UPDATE 3-Thai Airways sees earlier return to profit; plans job cuts

Thu Aug 14, 2014 9:02am EDT

Related Topics

* Thai national carrier plans 1,500 job cuts this year

* Plans to shed over one quarter of full-time employees by 2018

* Airline sees return to profit by Q4

* Chairman to resign Aug 20, vice chairman to replace (Adds chairman stepping aside, Q2 earnings in paragraphs 6-8)

By Manunphattr Dhanananphorn and Khettiya Jittapong

BANGKOK, Aug 14 (Reuters) - Troubled national airline Thai Airways International expects to return to profit earlier than expected in the fourth quarter, it said on Thursday, aiming to cut 1,500 jobs this year under its newly approved restructuring plan.

The airline also said it would shed more than a quarter of its full-time employees by 2018, the first major job cuts announcement since the plan was given the go-ahead last month.

Thai Airways had previously said it aimed to cut costs and prioritise certain routes to return to profit as soon as the middle of next year.

The airline, which employs 25,000 people and another 5,000 in sub-contracted staff, was singled out as the first state enterprise to undergo reform by Thailand's military rulers who took over in May from a government accused of corruption.

"We expect to see profit in the fourth quarter," Air Chief Marshall Prajin Juntong, currently chairman of Thai Airways and the military government's head of economic affairs, told reporters.

The airline said Prajin is to step down as chairman on Aug. 20, making way for vice chairman Areepong Bhoocha-oom to take over. It gave no further details.

Areepong, a former senior official at the Finance Ministry, is also permanent secretary of the Energy ministry.

The airline has racked up five successive quarters of losses due to high operating costs and a continued decline in passengers as the country's tourism industry suffered from prolonged political unrest.

It aims to cut operating costs by 4 billion baht ($126 million) and increase revenue by 3 billion baht, Prajin said, helped by more visitors flying to Thailand as the political unrest has subsided.

"Japanese and Indian customers are returning and European routes are doing better," Montri Chamrieng, vice president of engineering, told reporters. "The route that is (still) of concern is the Australian route."

"The recovery plan will take root over the next two to three months and we will see in the next five years that Thai Airways will return to become a world-class carrier once more," he added.

Thailand's tourism industry took a hit from the months of street protests that helped lead to the ousting of Prime Minister Yingluck Shinawatra.

Even though the airline expects to benefit from an anticipated increase in tourists during the year-end holidays, it still expects to report a slightly bigger loss for 2014 than last year's 12 billion baht deficit, Prajin added.

"Profit is less than targeted due to the lower number of passengers," he said.

Shares in Thai Airways declined 3.11 percent on Thursday following the announcement. Brokers said the drop was due to investors taking profits on the 7.5 percent surge in the company's stock since the restructuring plan was first announced. ($1=31.9 Thai baht) (Writing by Orathai Sriring; Editing by Miral Fahmy and Greg Mahlich)

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