A longer presentation on Thailand, as well as a brief comparison of international accounting at Thai Airways (THAI) and Southwest Airlines (LUV).
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1. Thailand and International Accounting 2007 Jesse Kedy
2. Overview I. Demographics II. Economy, FDI, and Terms of
Trade III. Tsunami IV. Leadership V. Thai Airways VI. Southwest
Airlines VII. Accounting Differences 2007 Jesse Kedy
3. Demographics Population: 65 million Mostly rural (82% in
provinces) Biggest city: Bangkok (about 6 mil.; 50% of GDP)
Ethnicities: - Thai 75% - Chinese 14% - Other 11% Major Religions:
- Buddhist 94.6% - Islam 4.6% 2007 Jesse Kedy
5. Economics (cont) Unemployment: 1.4% (2005) By sector: Labor
GDP Agriculture: 49% 9.3% (40% in 1980) Industry: 14% 45.1%
Services: 37% 45.6% Poverty rate: 10% Income disparity (Gini): 43.2
2007 Jesse Kedy
6. Gini Coefficient since WWII Income Disparity (0 = Perfect
Equality; 100 = Perfect Inequality)
7. World Map, Gini Coefficient
8. Foreign Direct Investment World's 4th most attractive nation
for FDI (2004-2007) (after China, India, and the US) FDI During
Asian Economic Crisis: 2007 Jesse Kedy
9. Declining Terms of Trade Export Revenue Growth Import Costs
Increase Source:
http://www.nesdb.go.th/econSocial/macro/outlook_data/econ_outlook_q2_48/q22548_press_eng_colour.pdf
2007 Jesse Kedy
10. 26 December, 2005: Tsunami 2007 Jesse Kedy
11. Impact 8,500 dead Massive destruction of property in
southern provinces of Krabi, Phangnga, and Phuket High oil prices,
weak demand from Western markets, severe drought in rural regions,
decline in tourism, lower consumer confidence 2007 Jesse Kedy
12. Leadership: Thaksin Shinawatra Shin Corporation Thais Love
Thais Anti-corruption campaign Rural Populism at the Expense of
Upper-class Prime Minister since 2001 2007 Jesse Kedy
13. Leadership: Thaksin Shinawatra (cont) Thaksinomics -
Subsidized universal health care - Village-managed development -
Low-cost universal access to funds HIV medication - Low-interest
agricultural loans - Privatized Oil & Gas GOES - Infrastructure
development in rural areas Who would these policies appeal to? 2007
Jesse Kedy
14. Thaksin: Results Controversy 1997 Economic Crisis PM or
Domineering CEO? Thailands savior Insider knowledge (1997) IMF loan
2 years early Near conviction GDP/ capita up 49% concealing
business Overall GDP up 45% assets (2001) Balanced budget Bribery?
Refused Tsunami Aid $667 million in tax savings Thailand is strong
enough to cope 2007 Jesse Kedy
15. Thai Airways (THAI) History Formed in 1951 as a national
airline Rapid growth early on Present Thailands biggest airline
Several operations (especially Cargo Division) Fleet: 87 Aircraft
(mixed) 72 destinations in 37 countries 2007 Jesse Kedy
16. Thai Airways Risks Tourism Recovering Rising Fuel Prices
Foreign Currency Exchange Revenue in 40 Currencies Investments New
Aircraft Suvarnabhumi Airport (new operations base) 2007 Jesse
Kedy
17. Southwest Airlines (LUV) Incorporated in Texas in 1967
Focus: Short, High-Frequency Flights Fleet: 445 Boeing 737 aircraft
61 destinations in 31 states Biggest US Carrier (Domestic Flights)
Lowest Operating Costs of all Major Airlines 1. Single Aircraft
Type 2. Point-to-Point Route Structure 3. Dedicated employees 2007
Jesse Kedy
18. Differences in the Detail Examples Thai Air Southwest Pages
per statement 2 1 CF, Operating Activities 26 Items 10 Items
Non-Current Assets 14 items PP&E Non-Current Liabilities See
Handouts Accountability The accompanying notes See are an integral
part of accompanying these financial statements. notes. 2007 Jesse
Kedy
19. Comparing Financial Statements Most differences based on
THAIs statements being more detailed. Why? Wouldnt an American
company be subject to stricter accounting standards than a Thai
company? 1. Internationalvs. Domestic Airlines 2. Additional Risks
(FX, Fuel, Tourism, Investments) 3. Global Investors (demand more
information) 4. US Financial Markets more popular 2007 Jesse
Kedy