THAI : Annual Report 2006

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1Thai Airways International Public Company Limited

Contents

Message from the Chairman 2

Message from the Management 4

General Information 6

Outstanding Achievements in Fiscal Year 2006 8

Financial Highlights 10

Operations of the Company and its Subsidiaries The policies of Associated Companies 13

Revenue Structure 17

The Company’s Operating Results 19

Operations at Suvarnabhumi Airport 45

Competition in the Global Commercial Aviation Industry 49

Risk Management and Risk Factors 51

Shareholder and Management Structure 54

Good Corporate Governance Committee Report 70

Good Corporate Governance Compliance Report 73

Audit Fee and Related Expenses 89

Other Factors Affecting Investment Decisions 89

Related Parties Transactions 92

Management’s Discussion and Analysis 102

Business Operation and Strategies 113

Five-Year Review 114

Board of Directors’ Duties on Financial Disclosure 116

Audit Committee’s Report 117

Financial Statements 120

Notes to the Financial Statements 128

Board of Directors 158

Management Team 162

2 Annual Report 2006

Message from the Chairman

The year 2006 was a memorable one in the country’s history and

also that of Thai Airways International Public Company Limited (THAI).

The Company, as the national flag carrier, has given full support to the

national policy of promoting Suvarnabhumi Airport to be the aviation

hub of Southeast Asia. On 29 July 2006, THAI flew its maiden commercial

flight TG 1881 from Donmuang Airport to Suvarnabhumi Airport. This

was followed by six other domestic flights on 15 September 2006 and the

first four international flights to two international destinations on 22

September 2006. Marking a new page in the history of Thai aviation and

THAI was the successful relocation of the Company’s base of operations

from Donmuang Airport to Suvarnabhumi Airport providing passenger, cargo

and mail transport services.

The year 2006 marked the Company’s 46th anniversary while

recording 42 consecutive years of profitability despite higher competition,

record high fuel price and dramatic exchange rate fluctuation along

with other factors bearing impact on the commercial airline industry.

The Company adopted more proactive marketing strategies and

comprehensive good corporate governance principles to further enhance

readiness in its key operations. Organization restructuring through

elimination of redundant tasks and line of responsibility, streamlining

channel of authority to enhance flexibility and clarity of job function.

The changes are geared towards upholding the principles of good

corporate governance. Tight measures have been implemented to

control cost and maximize utilization of existing resources while

optimizing the Company’s benefits. A more non-traditional marketing

approach was taken to counter the increased competition from low

cost carriers through expanding network sales, increasing flight

frequency and launching new promising destinations. Products have

been upgraded and services have been enhanced to reflect the

Company’s vision of the “First Choice Carrier with Touches of Thai” to

ensure long-term success, which enabled the Company to achieve


a satisfactory level of profit during the third quarter, which is the seasonal

lull for tourism (April - June 2006). Record cabin factor was achieved

during the third quarter, which must also be recorded as part of the

Company’s history.

Another highlight for the year and to the pride of all THAI staff is

the success in moving the Company’s base of operations from Donmuang

Airport to Suvarnabhumi Airport. The success reflects not only the

Company’s strength in planning and organization skills but also reflects

the level of commitment on the part of the Company’s employees. It

further demonstrates the ability of the Company’s senior management

and staff of all levels to accomplish tasks of such magnitude and

sophistication.

The successful changes undertaken during the year were

achieved mainly through steadfast and unwavering commitment to

upholding the principles of good corporate governance in spite numerous

obstacles. These changes form a solid base for the Company to move

forward, enabling the Company to be successful in any arena of competition

while playing a key role in the development of Thai commercial aviation

at the international level.

On behalf of the Board of Directors of THAI, I would like to take

this opportunity to thank our shareholders, customers and business

partners for their ongoing support and the confidence bestowed upon

the Company. A special word of thanks also goes to THAI’s management

and staff for their unwavering commitment and hard work resulting in

this year’s successes.

Wanchai Sarathulthat

Chairman of the Board of Directors


Message from the Management

In fiscal year 2006, THAI faced many challenges - high fuel price,

exchange rate fluctuations, higher interest rates and increased competition

from low cost airlines. This has been responded to by quickly adjusting

to market conditions to minimize the impact of these challenges in an

efficient manner, resulting in stronger performance.

The Company has focused on “Strength and Growth for the Future”

by restructuring the organization, adopting transparent corporate

management and streamlining working procedures.

Additionally, the Company has optimized the use of corporate assets

while minimizing operating costs. Strategies employed include effective

aircraft utilization, expansion of alliance networks, increasing flight

frequency and expansion of routes into markets of high potential

such as China, India, Japan, Australia and European destinations from

which the Company expects to attract more first and business class

passengers. THAI also plans to earn more revenue from cargo transport

as contribution from the business has grown considerably over the past

few years.

The Company has enhanced competitiveness by adopting

proactive marketing strategies to retain the existing customer base while

finding new ones, especially premium class passengers and corporate

clients. THAI has emphasized network sales of the “Pre-Paid Value Card”

and “Pre-Paid Value Plus Card” to provide added value for customers

and has also offered new premium “Royal Orchid Holidays” packages

featuring various tourist attractions. As a result of these promotion

campaigns, average cabin factor in the third quarter, the low season of

the year, increased significantly reflecting the remarkable success of

THAI’s marketing strategy.

Moreover, the Company has enhanced its service quality - the heart

of the aviation business - by implementing “Customer Centric” policies,

which place great importance on customer satisfaction by providing new


and efficient service along with product development. Under the magic

service ring concept, the Company has provided customers with warm

service with “Touches of Thai” at every customer touch point so as to

offer convenience and create an impression beyond expectation. As a

result, THAI has won numerous awards for quality service. The latest was

“Best Cabin Service Overall” given by Skytrax, an internationally accepted

research company. This recognition emphasizes once again THAI’s status as

a first choice carrier with excellence and “Touches of Thai” service.

The successful relocation of THAI’s base of operations to Suvarnabhumi

Airport reflects the Company’s ability to plan and execute and reflects

the dedication of its executives and staff at all levels. As the national flag

carrier, THAI played an important part in the Country ’s history of

commercial aviation by operating an inaugural commercial flight to

Suvarnabhumi Airport on 29 July 2006. On 28 September 2006, the

opening day of Suvarnabhumi Airport, THAI commenced operations of all

flights from the new airport. This represents a major step in establishing

Suvarnabhumi Airport as the aviation hub of Southeast Asia.

Without the support of shareholders, business partners and

customers as well as the dedication of the Company’s executives and

staff, these successes would not be possible. On behalf of Thai Airways

International Public Company Limited, I wish to take this opportunity to

express my heartfelt thanks to each and everyone for your ongoing support

and unwavering commitment.

Flying Officer Apinan Sumanaseni

President


General Information

Company Names Business Type Share Type

Affiliated companies in which the Company’s shareholding exceeds 10%

Paid-upAuthorized Shares

(million baht)

Thai-Amadeus Southeast Asia Company Limited On-line Ticketing Ordinary 15.00 55.0The Offices at Centralworld 999/9 Unit 3406-3412, Services and Other34th Floor, Rama 1 Road, Pathumwan, Pathumwan, Travel ServicesBangkok 10330 Thailand to AgentsTel. 66 (0) 2207-9090 Fax. 66 (0) 2207-9191

Donmuang International Airport Hotel Company Limited Hotel and Restaurant Ordinary 120.00 40.0333 Moo 10, Chert Wudthakas Road, Donmuang,Bangkok 10210Tel. 66 (0) 2566-1020-1 Fax. 66 (0) 2566-1941

Phuket Air Catering Company Limited Airline Catering Ordinary 100.00 30.010/3 Moo 6, Sanambin Road, Tambon Mai Khoa,Amphoe Thalang, Phuket 83000Tel. 66 (0)-7632-7497-506 Fax. 66 (0)-7632-7123-4

Royal Orchid Hotel (Thailand) Public Company Limited Hotel and Restaurant Ordinary 937.50 24.02 Captain Bush Lane, Charoen Krung Road,Siphya, Bangrak, Bangkok 10500Tel. 66 (0) 2266-0123 Fax. 66 (0) 2236-6646

Bangkok Aviation Fuel Services Public Company Limited Aviation Fuel Services Ordinary 425.00 22.6171/2 Moo 10, Vibhavadi Rangsit Road,Sikan, Donmuang, Bangkok 10210Tel. 66 (0) 2565-3811-8 Fax. 66 (0) 2565-3825

Suvarnabhumi Airport Hotel Company Limited Hotel and Restaurant Ordinary 1,017.78 30.0333 Chert Wudthakas Road, Sikan,Donmuang, Bangkok 10210Tel. 66 (0) 2535-1111 Fax. 66 (0) 2535-4061

Nok Air Company Limited Aviation Transport Ordinary 500.00 39.0183 Rajanakarn Building, 17th Floor, ServicesSouth Sathorn Road, Yannawa, Sathorn, Bangkok 10120Tel. 66 (0) 2627-2000 Fax. 66 (0) 2286-9830

Percentof Interest

Company Name Thai Airways International Public Company Limited

Business Aviation transportation services and other related services

Head Office 89 Vibhavadi Rangsit Road, Jompol, Jatujak, Bangkok 10900

Registration Number 0107537001757

Home Page www.thaiairways.com

Telephone 66 (0) 2545-1000

Ordinary SharesAs of 29 September 2006, the Company has :

Registered capital: 1,700,000,000 shares with a par value of 10 baht per share or a total of

17,000,000,000 baht

Paid-up capital: 1,698,896,150 shares with a par value of 10 baht per share or a total of

16,988,961,500 baht


References

Securities Registrar THAILAND SECURITIES DEPOSITORY CO., LTD.

62 Ratchadapisek Road, Khlong Toei, Bangkok 10110

Tel. 66 (0) 2229-2800, 66 (0) 2654-5599

Fax. 66 (0) 2359-1262-3

Debenture Holders’ Representative 1/2546 KASIKORNBANK PLC.

Securities Service Department

F.20, 1 Soi Kasikornthai, Ratburana Road

Bangkok 10140

Tel. 66 (0) 2470-3687, 66 (0) 2470-1986 Fax. 66 (0) 2470-3684

Debenture Registrar 1/2546 KASIKORNBANK PLC.

Securities Service Department

F.20, 1 Soi Kasikornthai, Ratburana Road

Bangkok 10140

Tel. 66 (0) 2470-1981-3 Fax. 66 (0) 2470-1998

Debenture Holders’ Representative 1/2547 NATIONAL FINANCE PLC.

F.10-11, MBK Tower, 444 Phayathai Road

Pathumwan, Bangkok 10330

Tel. 66 (0) 2217-8149 Fax. 66 (0) 2217-8417

Debenture Registrar 1/2547 SIAM COMMERCIAL BANK PLC.

Corporate Trust Operations Division

9 Ratchadapisek Road, Jatujak

Bangkok 10900

Tel. 66 (0) 2544-3943-48 Fax. 66 (0) 2937-7750

Debenture Holders’ Representative 1/2548 BANKTHAI PLC.

44 Langsuan Road, Lumpini, Pathumwan

Bangkok 10330

Tel. 66 (0) 2626-7000 Fax. 66 (0) 2626-7543

Debenture Registrar 1/2548 TMB BANK PLC.

Registrar and Paying Agent

393 Silom Road, Soi 7

Bangrak, Bangkok 10500

Tel. 66 (0) 2230-5487, 66 (0) 2230-5731 Fax. 66 (0) 2230-6093

Auditor OFFICE OF THE AUDITOR GENERAL OF THAILAND

Rama 6 Road, Phayathai, Bangkok 10400

Tel. 66 (0) 2273-9674-91 Fax. 66 (0) 2618-5769-70


Outstanding Achievements in Fiscal Year 2006

Celebrated the 46th anniversary of successful operations and maintaining profitability for the 42nd

consecutive year

Launched its new route from Bangkok to Islamabad (the Islamic Republic of Pakistan)

Commenced direct flights from Bangkok to Los Angeles (L.A. Express)

Launched the “Thai Grand Season Campaign 2006” to promote Thailand as a year-round tourist destination

and to attract tourists to co-celebrate the 60th anniversary of His Majesty the King’s accession to the throne

Introduced the “Thai Value Card” to promote domestic tourism

Opened the “Thai Contact Center” (0-2356-1111), to provide fast and convenient response to customer

inquiries and requests

Signed a memorandum of understanding (MOU) with Gate Gourmet Switzerland GmbH to cooperate in IT

solutions and cooperative marketing to enhance THAI Catering’s food preparation process and expanding

customer base

Flew its maiden flight to Suvarnabhumi Airport on 29 July 2006 and flew two flights between

Donmuang-Suvarnabhumi. Flight was flown going from Chiang Mai-Suvarnabhumi-Phuket and the other

flight was from Suvarnabhumi-Phuket-Suvarnabhumi

Commenced domestic flights on 15 September 2006 to Pitsanulok, Ubon Ratchathani, Chiang Mai from

Suvarnabhumi Airport

Flew its maiden international flight from Suvarnabhumi Airport to Seoul, Korea on 22 September 2006

28 September 2006 marked the successful move of THAI’s base of operations to Suvarnabhumi Airport

providing full services

Awards Received in Fiscal Year 2006

ASEANTA Award for “Best ASEAN Travel Article” from ASEAN Tourist Association

Norwegian Grand Travel Award 2006 for the best international airline

Swedish Grand Travel Award 2006 for the best intercontinental airline determined by the Travel Trade Jury

made up of more than 600 Swedish travel agents

Certificate for food safety from the Ministry of Public Health

2nd place winner of the Danish Travel Award 2005 for the best intercontinental airline-given by a research

institute in Denmark


Best Product Award for Royal Orchid Holidays (ROH) from a Korean magazine, Metro Seoul-selected from 70

unique and popular products offered in Korea

Award for the best intercontinental airline from RES magazine, the biggest travel magazine in Sweden-

voted by more than 11,000 readers

Award for “World’s Best Cabin Staff” from Skytrax, an internationally renowned research company in the

airline and aviation transportation business-from a survey of passengers

PATA Gold Award for “Consumer Travel Brochure-Royal Orchid Holidays” from the Pacific Asia Travel

Association

Travel Award for “Business Class-Best Airline” of 2005 from Travel Trade Gazette (TTG), the most popular

magazine for travel and airline professionals

Award from the website www.smarttravelasia.com for “One of Five Most Popular Airlines of 2005”-judged

in five categories: the most popular airline, the most popular business class, the most popular economy

class, the most popular on-board service and the most popular catering service

Thai National Occupational Safety & Health Award 2006 from the Department of Labour Protection and

Welfare, Ministry of Labour and Social Welfare

Avion Award for “Best In-seat Entertainment System” from World Airline Entertainment Association (WAEA)


Financial Highlights


Consolidated

2006 2005 2004

Unit : Million Baht

Total Assets 249,034 231,638 193,211

Shareholders’ Equity 65,681 59,212 54,324

Share Capital 16,989 16,989 16,850

Revenue from the Sale of Goods and the Rendering of Services 178,607 162,488 152,603

Profit from the Sale of Goods and the Rendering of Services 8,364 10,824 20,498

Profit before Interest and Tax 17,273 14,235 19,205

Net Profit 8,992 6,777 10,077

Amount per Share (Baht)

Par Value 10.00 10.00 10.00

Net Profit 5.29 4.00 6.14

Total Assets 146.59 136.70 117.66

Shareholders’ Equity 38.66 34.94 33.08

Financial Ratios

Net Profit per Revenue from the Sale of 5.0 4.2 6.6

Goods and the Rendering of Services (%)

Debt-Equity Ratio (Times) 2.8 2.9 2.6

Return on Average Total Asset (%) 3.7 3.2 5.6

Return on Average Equity (%) 14.4 11.9 22.2

12 Annual Report 200612 Annual Report 2006


Operations of the Company and its Subsidiaries

The policies of Associated Companies

Thai Airways International Pcl. is a state enterprise under the jurisdiction of the Ministry of Transport

and is Thailand’s national flag carrier flying domestic and international routes. Since November 2001, the Company

restructured its operations into key business units.

Aviation Business

The Company’s key business is the transport of passengers, cargo and mail on regularly scheduled

flights as well as chartered flights to domestic and international destinations.

Operations of Business Units Related to Air Transport

Operations supporting air transport needs to be managed systematically to ensure timely departures

and arrivals, flight safety, quick and convenient services to enhance passengers’ trust and confidence in the

Company. The operations of business units are as follows:

Ground Customer Services

- Reception and check-in service

- Passenger baggage tracking service

- Baggage loading service

- VIP Lounges

- Limousine service

Ground Support Equipment Services

Passenger Crew and Baggage Services

- Transfer of passengers and crew between terminal and aircraft via ramp bus

- Transfer of passengers’ baggage between terminal and aircraft

Aircraft Services

- Aircraft towing tractor service to and from jet bridge or parking bay

- Mobile ramp service for passenger boarding and disembarking

- Aircraft potable water service

- Aircraft cabin, toilet and galley cleaning service

- Air conditioning service for aircraft on the ground

- Power generation service for aircraft on the ground

- Baggage handling service

- Cargo transfer service between warehouse and aircraft

- Transfer of containers to and from aircraft



Maintenance Services

- Periodic maintenance checks of ground equipment and vehicles

- Container repair service in accordance with international best practices

Cargo and Mail Commercial Services

- Cargo and mail reservation service

- Space control and load planning for cargo, mail and baggage

- Warehouse storage service

- Cargo and mail weighing service

- Cargo and mail sorting service

- Cargo and mail loading and transfer service

- Cargo and mail documentation service

- Cargo and mail manifesting service

- Compilation of shipment documents and submission of reports on inbound and outbound

aircraft to the Customs Department

- Cargo tracing service

- Transfer of electronic information to customer airlines and overseas stations

- Import and export statistics and data service

- Unit load device control service

Catering Services

- Food and beverage preparation for in-flight services for THAI and customer airlines

- Restaurant and snack bar operations at Suvarnabhumi, Chiang Mai, Phuket, Chiang Rai and

Krabi airports

- Internal and external banquet services as well as the operation of “Puff & Pie” bakery outlets at

state institutions and government agencies

- Food and beverage preparation for meetings at the Company’s head office

- Meal box service for special occasions

- Food preparation at staff canteens at the head office, maintenance buildings, crew center and

OPC building at Suvarnabhumi Airport

- Cooking and bakery courses for the general public

Technical Services

- Technical, line and light maintenance checks for aircraft in transit or on overnight stop at Bangkok

International Airport (24-hour service) and at other domestic and overseas airports

- Heavy maintenance checks (C and D-Check) for Boeing aircraft (B747, B777, B737), Airbus

aircraft (A300-600, A330, A340) and for MD-11 as well as ATR 72s


- Passenger seat retrofitting and installation of new in-flight entertainment systems for Boeing

747-400 and Boeing 777-200 aircraft. These are performed at the Donmuang maintenance center

in Bangkok and at the Utapao maintenance center in Rayong

- Maintenance of General Electric engines, namely CF6-80 and CF6-50 series and other aircraft

equipment

- Maintenance service for Nok Air Company Limited’s fleet, the fleet of the Police Aviation Division

and major government agencies

- Sending aircraft engineers as Company representatives to Toulouse, France and to Everett, U.S.A.

to coordinate with Airbus and Boeing companies overseeing the specification requirements of

Airbus A340 and Boeing 777-200ER aircraft

Transport Support Activities

The goal of the Transport Support Services is to support the Company’s marketing efforts by providing

customer convenience and enable passengers to purchase additional services with ease. Such services include:

Dispatch services that provide information about flight routes and weather conditions to ensure

safe landing

Sale of duty free goods on board

Sale of souvenir products at THAI shops

Operations of Subsidiaries and Associated Companies

1. Thai-Amadeus Southeast Asia Company Limited (Subsidiary)

(55.0% shareholding)

Registered on 1 October 1997, Thai-Amadeus Southeast Asia Company Limited provides customers

with computerized reservation services and other related travel services including accommodation.

2. Royal Orchid Hotel (Thailand) Public Company Limited


Registered on 26 July 1979 and was listed on 15 April 1994 as a public company-operates a hotel and

restaurant business. It is the operator of the Royal Orchid Sheraton Hotel.

3. Donmuang International Airport Hotel Company Limited


Registered on 21 May 1981, Donmuang International Airport Hotel Company Limited operates

hotel and restaurant. It is the owner and operator of Amari Airport Hotel.


4. Bangkok Aviation Fuel Services Public Company Limited


Registered on 30 December 1983 and was listed on 28 September 1995 as a public company-

provides fuel storage and aircraft refueling services at Bangkok International Airport (Donmuang).

5. Phuket Air Catering Company Limited


Registered on 14 February 1992, Phuket Air Catering Company Limited provides in-flight catering

services at Phuket Airport for a number of airlines on international routes.

6. Suvarnabhumi Airport Hotel Company Limited


Registered on 24 October 2003, Suvarnabhumi Airport Hotel Company Limited operates a hotel and

provides service facilities for passengers and the general public at Suvarnabhumi Airport Hotel.

7. Nok Air Company Limited


Registered on 27 February 2004, Nok Air provides domestic low cost flight service, commencing

operations on 23 July 2004.


Details of the Company’s total revenue are as follows:

1. Revenue from passengers and excess baggage for each route including charter flights

2. Revenue from freight by weight, category, size and destination

3. Revenue from mail

4. Revenue from business units and support activities

5. Revenue from subsidiaries

6. Other income

2006 2005 2004

MTHB % MTHB % MTHB %

Revenue from domestic transportation

Passengers and excess baggage 12,030 6.59 10,581 6.41 11,524 7.48

Freight 397 0.22 378 0.23 377 0.24

Mail 8 - 9 0.01 8 0.01

Revenue from other activities - domestic

Business Units 7,388 4.05 6,667 4.04 6,193 4.02

Supporting 772 0.42 686 0.41 284 0.18

Total operating revenue - domestic 20,595 11.28 18,321 11.10 18,386 11.93

Revenue from international transportation

Passengers and excess baggage 131,372 71.96 118,653 71.89 110,942 72.02

Freight 25,252 13.83 24,041 14.57 21,873 14.20

Mail 1,028 0.56 1,070 0.65 987 0.64

Total operating revenue - international 157,652 86.35 143,764 87.11 133,802 86.86

Revenue from subsidiaries

Thai-Amadeus Southeast Asia Co., Ltd. 360 0.20 403 0.24 415 0.27

Total operating revenue 178,607 97.83 162,488 98.45 152,603 99.06

Other income

Share of profit from associated companies 256 0.14 127 0.08 158 0.10

Interest income 317 0.17 362 0.22 336 0.22

Others 3,388 1.86 2,071 1.25 955 0.62

Total other income 3,961 2.17 2,560 1.55 1,449 0.94

Total revenue 182,568 100.00 165,048 100.00 154,052 100.00

Note : The Company entered into a contract with Traveler Corporation of Japan as distributor of In-Flight Duty, a supporting activity.

Revenue Structure



In response to the intense competition in the commercial airline industry and increasingly high fuel

price during fiscal year 2006, the Company has focused on improving service quality and adopting

proactive network management. Sales and marketing strategies have been changed to increase income and

market share emphasizing premium customers, namely businessmen, entrepreneurs, corporate clients and

tour agencies. In addition, the Company augmented its fleet by taking delivery of another ultra-long range

Airbus A340-500 aircraft, bringing the ultra-long range fleet to 3 aircraft. These aircraft are used to mainly serve

direct flights to the United States and support the Company’s network strategy including Star Alliance.

The Alliance fulfills THAI’s network strategy by enabling its passengers to reach their destinations quickly

and seamlessly anywhere around the world. At the same time, the Company continues to promote the

unique Thai identity in adding value to services and creating maximum customer satisfaction.

These strategies enabled THAI to navigate through the economic crisis and continue to post a profit for

the 42nd consecutive year as well as maintaining its position as one of the leading airlines in Southeast Asia.

THAI is also playing a significant role in supporting the government’s initiative to establish Suvarnabhumi

Airport as a world class aviation hub.

Core Business

Aircraft Fleet

The Company’s Operating Results

Number of Aircraft

2006 2005

Boeing 747-400 18 18

Boeing 747-300 2 2

Boeing 777-300 6 6

Boeing 777-200 8 8

Boeing 737-400 10 10

Airbus A340-600 5 2

Airbus A340-500 3 2

Airbus A330-300 12 12

Airbus A300-600 21 21

MD-11 - 4

ATR 72 2 2

Total 87 87

Aircraft Type



THAI’s aircraft fleet totals 87 in 2006, which include the 3

new Airbus A340-600 aircraft added to the fleet in October,

November and December of 2005 used to serve European and

Australian routes. One Airbus A340-500 was brought into service on

the North American route in October 2005. The Company also retired

four MD-11 aircraft while renovating seats and upgrading in-flight

entertainment systems on Boeing 747-400 and Boeing 777-200 aircraft.

In January 2006, the Company leased one Boeing 737-400

and, in February 2006, one ATR 72 to Nok Air for use on domestic

routes. This brings the total number of aircraft on lease to Nok Air to

five - four Boeing 737-400s and one ATR 72.

In fiscal year 2007, the Company anticipates delivery of six

new aircraft: five Boeing 777-200ERs and one Airbus A340-500. One

of the Boeing 777-200ERs was delivered in October 2006 and another

three in November 2006. The remaining Boeing 777-200ER will be

delivered in September 2007. In April 2007, the Company will take

delivery of one Airbus A340-500 to serve the North American and

European routes.

Route Development

In fiscal year 2006, the Company adopted a proactive approach

to route development to enhance competitiveness amidst the

intensifying competition. Flight routes were expanded to destinations

with strong market potential and flight frequency was increased on

both regional and intercontinental routes to better cover business

and financial centers and tourist destinations. In addition, slot times

and flight frequency were adjusted to better satisfy passengers’

needs and the demands of the Star Alliance network.

THAI operates flights to 60 destinations in 34 countries worldwide

as well as to 11 destinations in Thailand. In 2007, it is expected that

THAI will begin to provide flights to 62 destinations in 35 countries

as part of the strategy to promote Thailand as the aviation hub of

Southeast Asia.



North American Routes

The Company now offers direct flights from Bangkok to Los Angeles using Airbus A340-500 aircraft,

which is in addition to the existing direct flights from Bangkok to New York. This enables non-stop connections

to the east and west coasts of North America. In fiscal year 2007, the Company expects to introduce daily

flights to the aforementioned destinations to facilitate travel flexibility. The two cities serve as perfect

connecting points to eight major cities in the U.S.A., namely Atlanta, Denver, Dallas, Washington D.C., Miami,

Chicago, Seattle, and San Francisco and three major cities in Canada, namely Toronto, Montreal and

Vancouver served by the Star Alliance network.

European Routes

As the demand for air travel between Europe and Asia continued to grow in fiscal year 2006, the

Company adjusted flight frequency and seating capacity on routes to Copenhagen and Stockholm using

Boeing 747-400 aircraft. The Company has introduced daily flights to Copenhagen, instead of six flights per week,

and service to Stockholm will also be increased to daily by the end of 2006.

At the end of 2006, the Company introduced daily flights to Munich, increasing from five flights per

week and commenced three direct flights a week to Madrid, Spain, avoiding the previous stopover in Rome.

The Company operates three flights per week to Moscow using Airbus A340-600 aircraft and expects

to increase this to four flights per week using Boeing 777-200ER aircraft at the end of 2006, reflecting strong

market demand.

Furthermore, THAI continues to cooperate with its European Star Alliance members having extensive

connections in Europe such as Lufthansa based in Frankfurt and Munich, BMI in London and Austrian Airlines

in Vienna. This ensures THAI’s passengers are able to seamlessly connect to most major cities in Europe.

This cooperation enables the Company to offer service to nine cities in Europe (Amsterdam, Geneva, Vienna,

Brussels, Barcelona, Lisbon, Budapest, Prague and Warsaw), seven cities in Germany (Nuremberg,

Dusseldorf, Cologne, Berlin, Stuttgart, Hamburg and Hanover), five cities in Austria (Graz, Innsbruck,

Klagenfurt, Linz and Salzburg), seven cities in England, Ireland and Scotland (Dublin, Glasgow, Edinburgh,

Belfast, Leeds, Manchester and Tees Side).

African Routes

In October 2006, the Company will commence direct non-stop flights to South Africa using the

Airbus A340-600 aircraft beginning with three flights per week. This will help THAI enter a new market in the

southern hemisphere where both business and tourism are growing. Additionally, the Company is cooperating

with South African Airlines to offer connecting flights to Cape Town and other major cities famous for their

tourist attractions.



Australian and New Zealand routes

To provide quick and convenient service for passengers and to respond to the increasing demand in

tourism, the Company has introduced non-stop flights to major cities in Australia such as Sydney, Melbourne,

Brisbane and Perth while increasing flight frequency to Auckland, New Zealand to daily flights. In fiscal year

2007, the Company will increase direct flights to Sydney and Melbourne to twelve flights per week. In 2008,

flights to Brisbane will be increased to five times per week when the 5th Boeing 777-200ER aircraft is added to

the fleet.

Code-share flights with Air New Zealand enables THAI’s passengers to connect to many cities in New

Zealand while Air New Zealand, in turn, introduced code-sharing with THAI for flights to Bangkok and connections

to European and Southeast Asian destinations.

Regional Routes

Regional flight scheduling has been adjusted to promote Thailand to become the regional aviation

hub. THAI covers 41 regional destinations and has adjusted slot times and increased flight frequency to China,

Japan, India and the Middle East where demand for travel is high. THAI has coordinated with Star Alliance

members to enhance competitiveness and attract more passengers to the region.

Northern Routes

To effectively respond to market demand and competition, the Company has increased the number

of flights to Fukuoka, Japan from five to daily flights while adding an additional weekly flight to Manila bringing

the total to twelve flights per week. To China, a market with high potential, two more weekly flights to Canton

were introduced, bringing the number of flights to twelve per week.

Western and Eastern Routes

The Company is expected to increase flight frequency to India upon receiving additional traffic rights.

Currently, THAI operates flights to five cities - New Delhi, Calcutta, Bombay, Chennai and Bangalore.

At the end of October 2006, the Company will commence three weekly flights to Hyderabad in India

using the Airbus A300-600 aircraft and will start daily flights to Calcutta in March 2007.

In order to attract more passengers to Thailand from the Middle East, the Company has changed the

type of aircraft used so as to suit the growing market, competition with regional airlines and the sales promotion

strategies.


Southern Routes

THAI now offers non-stop flights from Bangkok to Jakarta without a stopover in Singapore. It has also

changed the type of aircraft used in order to compete with low cost airlines in the region.

Indochina Routes

During fiscal year 2006, as planned, the Company increased flight frequency to Vietnam,

Laos and Myanmar. At the end of 2006, THAI will increase the number of weekly flights to Ho Chi Minh city

from fifteen to sixteen. It also will add seven flights per week to Laos and five weekly flights to Myanmar using

Boeing 737-400 aircraft. THAI is looking to cooperate with neighboring country’s airlines to promote Thailand as

the regional aviation hub.

Domestic Routes

The Company operates flights to major cities in Thailand and offers connections with international

flights to and from Phuket, Chiang Mai, Chiang Rai, Hat Yai and key cities in the northeast of Thailand. Sales

support plans were implemented and flight frequency have been added in response to demand during

seasonal festivities. In addition, THAI has joined hands with relevant government departments to promote

tourism, organize conferences and support trade. These activities are geared towards supporting economic

growth through wealth distribution to the provinces.

THAI operates 301 weekly flights or 43 daily flights to eleven domestic cities other than Bangkok.

These cities include:

Northern region: Chiang Mai, Chiang Rai, Mae Hong Son and Phitsanuloke

Northeastern region: Khon Kaen, Udon Thani and Ubon Ratchathani

Southern region: Phuket, Hat Yai, Surat Thani and Krabi

Additionally, the Company offers flights to Nakhon Si Thammarat and Trang under code sharing with

Nok Air as well as flights to Lampang, Nan, Sakon Nakhon, Nakhon Phanom, Roi Et and Krabi under code

sharing with PB Air. This has enabled THAI’s transit passengers to travel seamlessly to key domestic destinations.


Star Alliance

In fiscal year 2006, the Company and Star Alliance extended cooperation and adapted business strategies

to respond to intensifying competition and increasingly high fuel price. These strategies focused on benefit-

sharing among the groups of airline alliance and proactive development of services competitors. The Company

placed great importance on the quality of products and services to satisfy customers’ needs and delivering on

promises.

In April 2006, Swiss International Air Lines and South African Airways became the 17th and 18th members

of Star Alliance, making Star Alliance the biggest and strongest airline network. The addition of the two new

members has enabled THAI to expand its service coverage further into Europe and Africa.

During 2006, Star Alliance launched the “Star Alliance Upgrade Award” program offering members of

Star Alliance mileage plus program for which accumulated points can be used for class upgrades across

the Star Alliance network. The “Move under One Roof” initiative to facilitate convenience for passengers has

been completed at Narita Airport, in Japan as well as Suvarnabhumi Airport. This initiative enables Star Alliance

members to jointly provide check-in, lounge service and baggage service while adjustments to flight schedules

are being made enable convenience in flight connections. This cooperation also enables passengers a

smoother, more “seamless” travel experience and enhances the global image of Star Alliance. The “Star Alliance

Around-The-World Fare”, one of Star Alliance promotional fare products, remains popular among passengers as

it entitles 15 free stopovers and accumulation of mileage points.

Since 2005, Star Alliance has been supporting the “Visit Thailand Campaign”, a tri-lateral campaign among

Thai Airways International Pcl., the Tourism Authority of Thailand and Star Alliance. The aim of the campaign

has been to increase the number of tourists from three target markets namely Japan, Korea and Germany. The

campaign is expected to attract 20% or 240,000 more tourists and earn a revenue of 955 million baht for the

country.

The implementation of the Bangkok Hub-Global Connectivity Improvement Project running from April

2005 to 30 September 2006, to increase the number of passenger traveling to Bangkok, or to use Bangkok as

the connecting point to other destinations on the Company’s routenet, has been very successful with the result

of additional 37,141 connecting passengers, generating additional revenue of approximately 707 million baht

for the Company.

Commercial Operations

Competition in the commercial airline industry has increased in intensity from the increased number

of domestic and regional low cost airlines and the higher operating costs resulting from the continuous rise in

fuel price. To enhance competitiveness, the Company’s strategic commercial planning in fiscal year 2006


emphasized proactive marketing to maintain the existing customer base and to add new ones. The target groups

are high-potential customers for first class and premium class as well as corporate clients. One of the strategies

is to establish an efficient marketing network through alliances with other airlines and related businesses

including authorized sales representatives around the world. In addition, marketing plans have been

formulated focusing on “network services” which offer quick and seamless travel for passengers to destinations

worldwide. This strategy lends well to making Suvarnabhumi Airport a regional airport hub with global

connectivity.

The Company has focused on stimulating traffic demand by offering value-added products and

services, especially by improving domestic and international Royal Orchid Holidays travel programs. There is

now a wider variety of travel packages to satisfy a more diversified target group including niche and HIP groups.

The premium packages are high-end leisure vacations such as “The Great Escape Programs”. These are

designed to attract premium market segments and feature selected local and overseas attractions which tourists

dream about. The packages include various means of travel, accommodation and services.

In addition, the Company has developed on-line Royal Orchid Plus Mileage Programs to facilitate

electronic news and the redemption of mileage points earned from Star Alliance members, hotels and other

related business alliances.

Strategies to increase revenue and market share include the purchase of six new aircraft which will be

delivered to THAI in fiscal year 2007. These new aircraft augment the potential of THAI’s aircraft fleet enhancing

not only global route networks but also travel connectivity with alliance airlines. On the North American routes,

an increase in flight frequency to and from New York and Los Angeles make these two cities strategic competitive

points on the east and west coasts of North America. In addition, they form connecting points with other Star

Alliance airlines to more major cities in the U.S.A. and Canada.

The Company has increased its focus on network sales to increase passenger revenue which include the

launch of a pre-paid value card campaign for frequent fliers to increase cabin factor and promote domestic and

regional travel. The unique selling point of the card is its flexibility - a one-time card purchase entitles a buyer to

instant usage providing value and convenience to the customer. The first pre-paid card “THAI Value Card” is

tailored for domestic destinations while the second card “THAI Value Plus Card” offers flights to seven cities in

five Southeast Asian countries at a single price. The campaign has been tremendously successful and has yielded

advance revenues and continually attracts more customers.

The Company emphasized promotional campaigns that increased the number of passengers and thus

revenue during the low season between April-September 2006 and invited travelers to Thailand to celebrate

H.M. the King’s 60th Anniversary accession to the throne. In cooperating with Star Alliance partners and other

airlines, the Company has been able to enhance its network system by increasing code sharing. Moreover, the


Company joined hands with Star Alliance partners and the Tourist

Authority of Thailand to launch the “Star Alliance Visit Thailand”

campaign which aimed to attract travelers from major markets such

as Japan, Korea and Germany to visit Thailand. The “Star Alliance

Thailand Airpass” offers flight connections between THAI and other

Star Alliance destinations at special fares. Additionally, travelers are

entitled to promotional rates when purchasing products and services

during their stay in Thailand to stimulate spending.

The Company has implemented policies to increase yield

by attracting premium class passengers market, namely major corporate

and government clients as well as overseas representatives traveling

domestically or internationally for business purposes. The Company

has established a division to take care of these premium groups by

offering support and service convenience. The division coordinates with

Star Alliance partners, customer representatives or with THAI’s internal

divisions providing travel services to satisfactorily handle various

customer demands such as ticket reservations, accommodations and

other related services. Corporate clients are offered special fare

tickets, class upgrading and extra baggage allowance. As a result, the

number of corporate clients in 2006 has doubled, increasing revenue

and market share of premium passenger traffic.

For seat reservation, the Company has introduced a Revenue

Management System to expand network sales and enhance the

effectiveness of flight firming. The Company has cooperated with

alliance airlines that use a Computerized Reservation System (CRS) to

obtain mutual benefit by better managing bookings more effectively

to reduce seat vacancy. The Company has not only focused on selling

seats in all classes to generate the maximum level of revenue but devised

measures to enhance convenience and quicker service by introducing

e-Reservation, e-Ticketing and e-Payment for international flights.



Customer Services

Determined to remain among the world’s leading airlines offering excellent, customer-oriented service,

the Company has dedicated itself to enhancing and strengthening its services by adding new aircraft to its fleet

as well as by improving passenger seats to provide greater comfort for passengers. New aircraft livery and seat

configuration has provided more leg room for each seat. Personal space has been increased for passengers in

Royal First, Royal Silk and Premium Economy class. Much attention has been given to creating a relaxed and

welcoming atmosphere on board and to projecting a more modern and unique image. Additionally, specialists

and consultants have been brought in to enhance the standard of in-flight service, modernize facilities and

determine effective methods to inspect product quality and work procedures.

The in-flight entertainment system adds enjoyment and relaxation for passengers. The Company has

installed a personal video system in every seat on intercontinental flights and on the new Airbus A340-500

aircraft. Passengers can enjoy music, movies, sports program and documentary films that provide interesting

statistical and cultural information on destination countries or countries along the route as well as information

on destination airports. The Company plans to introduce Live Text News and Berlitz Word Traveler system, a

language learning system from which passengers are able to learn 22 languages on board. The Company is

currently studying the possibility of installing Broadband Internet on intercontinental routes.

In-flight menus have been improved by offering a wider menu selection in all classes. Menu

designers are hired to improve food variety while the “Chef on Board” program is provided to add culinary

enjoyment for in-flight meals. On some flights and routes, special dishes from leading restaurants are served

as well as those prepared by on-board chefs from renowned local and international hotels. To raise the

standard of overseas flight catering, the Company provided training on preparation of Thai food to chefs at

overseas stations to ensure authenticity and has also appointed quality control representatives in seven

major stations to monitor the quality of food purchased from overseas flight caterers. Quality control

representatives will be appointed at other stations in the near future.

At the beginning of 2006, THAI received the “Best Cellars in the Sky 2005” award from Business Traveler

magazine which conducts surveys on drinks served to first class and business class passengers on 30 international

airlines. The award not only confirms the commitment and meticulous care given to selecting wines and other

beverages but also recognizes THAI’s success in satisfying the needs of passengers from all corners of the world.

Efforts to enhance product and service standards are guided by the information obtained from the

THAI Customer Satisfaction Survey administered at every service point: pre-flight, in-flight and post-flight. The

Company also compares customer satisfaction of its products and services to that of competitor airlines and



continuously assesses the quality of products and services for further improved. Furthermore, the Company

emphasizes the importance of the Customer Relationship Management Program introduced in 2005 and empowers

all employees at major service points to quickly and effectively solve customer problems.

Flight Operations

The Company’s main business is to carry passengers, cargo and mail to their destinations safely and on

time. Therefore, the Company emphasizes safe and efficient flight operations through maintaining standard

quality training of aviation personnel. Training is provided according to the safety regulations set by the

Department of Civil Aviation (DCA), International Civil Aviation Organization (ICAO), Joint Aviation Authorities

(JAA) and Federal Aviation Administration (FAA), as well as IATA Operational Safety Audit (IOSA). The Company has

strict policies relating to the recruitment and selection processes. All pilots have to pass both physical and mental

tests, knowledge tests, skills tests and behavior tests especially aptitude and aviation psychology tests are a must

for commercial pilots. To enhance the quality of the selection process, the Company hired a group of Swedish

psychologists specializing in aviation psychology and commercial pilot aptitude tests to be the assessors.

The Company provides on ground and in the air training courses for pilots to ensure that they are able to

operate at the international standard. The courses include airline transition training, conversion and flight

instructor training.

Additionally, the Company has adopted the concept of knowledge management to develop pilot

training courses by combining explicit knowledge with tacit knowledge. The Company trains pilots in

modern classrooms equipped with either Computer Based Training (CBT) work stations or e-learning as well as

an outside-classroom learning system which enhances both instructor training and self learning. The

training facilities include six flight simulators for the following aircraft: Boeing 747-400, Boeing 777-200/300,

Boeing 737-400, Airbus A330-300, Airbus A330-600 and Airbus A340-600. In addition, the Flight Training Device

(FTD) and the Flight Procedure Trainer for Airbus A340-600, delivered in April 2006, will help reduce possible

losses and risks that may arise during both normal and emergency flight operations. Possible aviation incidents

are simulated to make pilots familiar with emergency procedures. All of these efforts ensure that THAI pilots are

highly-trained and skilled aviators ensuring the safety of our passengers.

To maintain the highest level of quality and efficiency in flight operations, the Company provides

Periodic Flight Training (PFT) every 6 month to ensure that THAI’s pilots are able to effectively respond to

emergencies. The Company has installed devices to analyse data gathered on take-offs and landings to determine

factors that could lead to possible incidents. The quarterly magazine, Thai Flight Safety International publishes

the lessons learned to update pilots. Furthermore, the fuel management project launched in 2005 to reduce


fuel consumption was very effective and has been able to reduce the aircraft fuel budget by approximately

400 million baht in fiscal year 2006. The Company also provides information on physical and mental health care

for all flight personnel.

In addition to ensuring safe and punctual flights, the Company strives to provide unsurpassed service

and to maximize customer satisfaction throughout each flight. The service of flight attendants for all classes

on both intercontinental and short haul routes have continuously been improved to meet world class standards.

Above all, the Company has continuously instilled a “Touch of Thai” service - the cultural identity - in every flight

attendant.

The Company emphasizes understanding customers’ tastes, culture and traditions as well as

their needs. One service improvement project was based on the concept of cross cultural communication.

Information was collected from numerous sources, including the opinions of specialists on culture of

various nations and used in the publication of a “Cultural Guidebook”. The advice given is used by flight attendants

to impress customers and increase satisfaction.

Safety Standards and Aviation Security

Internationally accepted safety standards and aviation security is one of the foundations of THAI as

the “First Choice Carrier” for our customers. The Company places airline safety and aviation security as the number

one priority in many areas including flight operations, customer service and a safe working environment. THAI

has formulated policies and targets in safety standards and has implemented them in operations, training, IT

systems and equipment operations. The Company conducts rigorous audits and assessments as well as follow-up

checks of all organizational performance and has devised a yearly safety development plan.

In 2006, the Company received a certificate from IATA Operational Safety Audit (IOSA), the internationally

recognized and accepted safety audit program designed by the International Air Transport Association

(IATA). This program assesses airline operational safety and aviation security every two years. The standards

of IOSA are derived from International Civil Aviation Organization (ICAO), aviation regulations of the Federal

Aviation Administration (FAA) and Europe’s Joint Aviation Authority (JAA) as well as industry best practices.

The certificate confirms that the Company maintains high safety standards and provides customers the best

service with the highest level of safety.

The IOSA audit program covers the following eight important operational areas : Corporate

Organization & Management Systems (ORG), Flight Operations (FLT), Operational Control - Flight Dispatch (DSP),

Aircraft Engineering & Maintenance (MNT), Cabin Operations (CAB), Ground Handling (GRH), Cargo Operations

(CGO), Operational Security (SEC).


Meanwhile, the Company plans to continuously improve its safety management system, especially the

corporate safety information system. In 2006, a study of this system was concluded and the resulting

recommendations were adopted throughout the organization to enhance the effectiveness of all aspects of

safety management system including safety information compilation, follow-ups, cause analysis and

accident prevention. Moreover, the system also helps the Company to benchmark airline safety information

with others along with aviation organizations that use similar software.

With regard to aviation security, the Company has developed aviation security standards in

accordance with those of the Transportation Security Administration (TSA) of the U.S.A. enabling flights to fly

into and from the U.S.A., i.e. Bangkok-New York and Bangkok-Los Angeles. The Company has also established

a security operations center to coordinate security for all THAI stations and has installed the latest in security

equipment in all operating facilities of Suvarnabhumi Airport. The Company worked in coordination with

related divisions and local security organizations to jointly rehearse incident-response plans in preparation

for the celebration of the King’s 60th Anniversary of accession to the throne and for the opening of Suvarnabhumi

Airport. In addition, THAI has coordinated with governmental security agencies and related divisions within the

Company to protect passengers’ property.

The Company has improved its Crisis Management Operation Center which now operates twenty four

hours. The center is not only equipped with the latest in equipment technology but is also staffed with highly

trained personnel to ensure that the Company is prepared to handle any crisis and maintain uninterrupted

service throughout any crisis.

To maintain quality standards, the Company has developed a comprehensive quality management system

based on the ISO 9001:2000 quality management system. This system is applied to all important operational

functions and departments to improve performance as well as to enhance customer satisfaction. The ISO 9001:2000

Certified Departments are General Administration, Ground Services, Ground Support Equipment Services,

Catering Services, Aircraft Maintenance Services both at Donmuang and Utapao and Cargo and Mail Services.

In 2006, three more departments including the Information Technology, Human Resource Development and

Planning and Customer Services Departments, including in-flight food and drink services, in-flight service

and facilities facilitating passenger comfort also received such certification.

As environmental protection is very important to the Company, THAI has implemented environmental

management strategies in line with internationally accepted standards. These standards have been implemented

at THAI’s head office and the aircraft maintenance centers both at Donmuang and Utapao and has received the

ISO 14001 Environmental Management System certification. Additionally, the Company plans to apply these

standards to other activities at Suvarnabhumi Airport, matching environmental plans of the new airport. THAI is

also concerned about environmental impact on communities and observes local environmental laws by


constructing “green” buildings at the new airport. The Company also follows rules and regulations on

aviation environment which have become stricter in response to the rapid increase in global pollution.

The Company has taken measures to reduce noise pollution caused by aircraft take-offs and landings

according to the standards set by the International Civil Aviation Organization (ICAO). Moreover, the Company

optimized fuel consumption by purchasing the new Airbus A340-500 and Airbus A340-600 aircraft which

produce less of noise pollution while being more fuel efficient.

Finance

The rising fuel price since 2004 along with a multitude of uncertainties including the fluctuation in currency

exchange, the strengthening of the Thai baht, the higher levels of interest rates, the cost associated with moving

to Suvarnabhumi and the heightened level of competition within the commercial airline industry and other

factors have impacted the Company’s financial performance. The Company has put in place a more robust and

effective financial and accounting management policy by actively monitoring and managing risk. These policies

are enacted to ensure optimum financial performance, strong financial health and sufficient liquidity to fulfill

the Company’s goals and strategies. Tight monitoring of the annual budget and ongoing timely assessment of

the Company’s operating performance through the improved monthly account closing process to within 7 days,

enables management to make decisions more quickly and react more promptly. This includes a forward looking

assessment of next month’s performance along with recommendations for actions.

The financing of investments takes into consideration the cost of funds, exposure to foreign exchange and

other related factors. In 2006, the Company secured a long-term euro denominated loan in the amount of 372.6

million, or about 18,247.8 million baht. The loan was secured using asset-based financing through the European

Export Credit Agencies (ECA). This 12-year loan was used for the purchase of one Airbus A340-500 and three

Airbus A340-600 aircraft. The Company also obtained a short-term one year loan from the Thai Ministry of

Finance in the form of Euro Commercial Paper (ECP) for the amount of 117.0 million euros or about 5,512.3

million baht. This loan was used to pay back the number 15 Samurai Bonds which was due on 27 March 2006.

An alternative source is being sought to provide a more favorable long-term financing solution. The Company

also repaid a total of 14,752 million baht in debt for the fiscal year.

To better manage its exposure to currency fluctuations, the Company undertook cross currency swap

(CCS) transactions under favorable conditions to convert a part of its baht debt exposure to euro debt to

better manage the Company’s net cash position from operations. The proportion of debt in US dollar, euro,

yen and baht were 17%, 21%, 26% and 36%, respectively at the end of fiscal year 2005 and was at 16%, 44%,

13% and 21% respectively for fiscal year-end 2006. In managing its interest rate exposure, the Company

entered into interest rate swaps to convert float rate debt into fixed rate debt in anticipation of higher interest


rates. The proportion of fixed rate to float rate debt increased to 81 : 19 at fiscal year-end 2006 from 79 : 21 the

previous year. New financial tools and instruments will be carefully considered to enhance the Company’s ability

to manage its cash and minimize its overall cost of funds with appropriate and sufficient risk control. The Company

will be going live with its new internet banking system which is part of the Global Account system enabling the

Company to manage its funds real time at all of its stations of operations.

For the fiscal year 2006 the Company’s credit rating by Thai Rating and Information Services Co.,Ltd. (TRIS)

for its promissory notes remained at AA-. This means the Company’s promissory notes and bonds are of investment

grade with very low risk and the Company has substantial ability to meet its loan and interest obligations.

The Company has also undertaken organization restructuring within the Finance and Accounting

Department to reduce redundancy, streamline operations, provide clear job functions and enhance overall

efficiency. The changes were made to reflect the process flow of the functions within the department and to

better enable the use of management information system to improve the quality of decisions made

by management and to improve Company performance, the Board of Directors has put a priority for

implementation of the Enterprise Resource Planning system for the Finance and Accounting Department and to

further develop and integrate all database into one system. The goal is to enable the development of a

comprehensive management database to enhance the effectiveness of decision making and improve overall

management of the Company, which will commence in fiscal year 2007.

Information Technology

The Company places great importance on using information technology as a major mechanism to

support the organizational operations and emphasizes service excellence. Its vision is to be an IT leader to

support the Company’s proactive business strategies and to enhance corporate potential and services by integrating

innovative IT capabilities.

The strategy involves the integration of IT systems of different business processes and enabling data

interlink. The Company has used the principles of good corporate governance and those of professional

management to govern information technology activities.

To put the policies and planning into practice and upgrade with the changing environment as

well as achieving the Company’s goals, the Corporate Information Technology Committee, responsible

for developing and adapting IT strategies, holds an annual meeting of all parties concerned to devise an

integrated IT master plan. The Committee ensures that all IT development projects have clear and achievable

goals, that they support one another and that they are developed based on the same platform. Moreover, the

Committee assesses IT utilization and the timely implementation of project through the gathering and analyzing

of available data.


The Company’s information technology enhancements include:

- Ongoing two-year System Integration for Aircraft Maintenance (SIAM) project, directly integrating data

from 3 maintenance centers.

- Moving towards e-procurement by implementing the Procurement & Inventory Centralization System

(PRINCES) to enhance the procurement process and increase transparency as well as cost and time-effectiveness.

The business reprocess, the standard inventory codes and key performance indicator of the Central Procurement

were set The PRINCES went live in April 2006 used at two stores. The Company plans to introduce this system

to other stores in the near future.

- Improving Customer Relationship Management (CRM) by using technology to enable

intercommunication effectiveness to better serve customers and to offer systematic and seamless service. Customer

information gathered from all service points are kept in the central database for analysis. The Company uses the

results to plan marketing promotions and developing services so that the different needs of specific groups and

individuals are satisfied.

- Developing a network management system which enables the Company to predict business

opportunities, expand or modify flight routes, reduce risk and maximize resource utilization to maximize profit.

- Developing Flight Operations Information System (FOIS) to increase effectiveness of in-flight operations,

communication and safety. The system consists of an electronic flight bag, video in-flight and e-documents.

Moreover, the Company has developed a Pre-Flight Study and Briefing System to increase flight crew and cabin

attendants’ accessibility to necessary information during pre-flight briefings at Bangkok and abroad.

- Introducing Wi-Fi internet at the executive lounges at Bangkok, regional and overseas airports. The

Company has also developed internet check-in for passengers holding e-tickets allowing check-in via

www.thaiairways.com within 2 to 24 hours before scheduled departure time at 51 stations. An automatic online

Departure Control System (DCS) for seamless link with ground services. The Company also provides passengers

with a self-service check-in kiosk at Bangkok, Chiang Mai, Chiang Rai, Phuket, Hat Yai, Khon Kaen, Phitsanulok,

Udon Thani and Krabi terminals. The Mobile Information Communication System and Personal Digital Assistance

(PDA) are used to increase work effectiveness and to help deliver unsurpassed service quality. The new investments

are geared towards enhancing customer service and delivering seamless quality service.

- Developing e-service to support the Magic Service Ring in delivering integrated customer service.

The Company’s website, www.thaiairways.com, offers Royal Orchid Plus members redemption options

on domestic tickets or hotel gift vouchers. In addition, the Company has developed the THAI Contact Center

which connects Multi-Channel Contact technology with THAI Phone, an automatic information provider.

This system enables customers to make reservations, obtain a Royal Orchid Plus Holiday ticket and accumulate


Royal Orchid Plus mileage points via the phone. Other information

services are rendered via SMS, e-mail and web chat. Royal Orchid

Holiday Programs can also be purchased made via the internet system

and information regarding holiday programs are more readily available

for travel agents and sales offices to enhance sales.

- Installing a new e-payment system connecting directly to

financial institutions and credit card providers with the highest level of

security. That is, customers are able to make immediate payment for

products and services via the website or Contact Center. The system is

expected to be operational within 2006.

- Enhancing staff performance by adding “e-Learning” to the

existing training and development courses including the “Cabin Crew

e-Learning” project. In addition, the Company has set up an IT system

which links directly to the training data system in order to process and

assess employee capability.

To strengthen management and to become an IT leader in the

global arena, the Company has adopted the ISO 9001:2000 quality

management system in devising service procedures. After thorough

auditing and rigorous assessment from the Bureau Veritas Quality

International (BVQI), Thai Airways International Pcl. received the

ISO 9001:2000 certification confirming that the Company’s IT capability

is in the forefront with strengths in strategic system and infrastructure

development along with effective consulting capabilities.

Human Resource

In striving to be the “First Choice Carrier with Touches of Thai”

the Company strives to achieve the highest level of customer satisfaction.

A key principle in this endeavor is appropriate personnel development

both in terms of policy and planning to enhance staff professionalism.

The Company’s personnel are highly-trained and competent in their

duties, dedicated to serving our customers while providing a glimpse

into the Thai identity.



The Company has implemented corporate strategies and formulated personnel development plans in

accordance with strategic planning and the changing environment of the industry. The organization has been

restructured, reflecting manpower planning suitable for all business activities. The Company also took into

consideration work procedures, work redundancies and effective management of human capital. Moreover,

career paths and succession plans are considered in order to prepare managerial-level personnel for future

business expansion.

Realizing that our people are our most valuable resource, the Company has designed proactive training

courses to match individual competency. Courses provide core competency and managerial competency training.

The Company also provides on-going functional competency courses on passenger service, air transportation,

safety, marketing and cultural development.

The Company has initiated academic cooperation projects with domestic and international academic

institutions. Various knowledge and skill specific courses have been designed and seminars are held regularly.

In addition, the Company implemented the “Orientation and Familiarization Coach Team (OFCT)” project for

those assigned to work at Suvarnabhumi Airport. The project aimed to familiarize participants with the

new airport and thereby improve work performance.

The Company launched the Language and Culture Institute to help personnel build multi-lingual

skills and enhance cultural awareness. Apart from English, the Institute teaches Chinese, Japanese, French,

German, Korean, Hindi, Italian, Spanish and Russian. The Company also uses e-learning systems to support

training, which makes it more cost effective.

As part of competency-based management, the Company has designed information systems to store

data and to assess employees’ competency. The systems are linked to training data and are used to help

develop employees’ competency in a practical way. This management approach promotes principles of good

corporate governance. It is transparent and provides a standardized approach to personnel management which

strengthens and sustains a good corporate culture.

With regard to performance management, the Company has initiated a performance-assessment

system and performance-based pay system as well as procedures to fairly and transparently appraise

employee performance. These procedures not only help executives to emphasize on-time and target-achieved

performance but ensure operational effectiveness and productivity in accordance with the Company’s vision,

goals and strategic planning.

Determined to be a customer-oriented organization, the Company conducts surveys on employee

attitudes toward customer service, both inside and outside the organization. The results are used to

systematically enhance the customer-orientation of the organization.

Encourages knowledge and understanding of good corporate governance by all employees according

to the requirements of the Ministry of Finance and the Stock Exchange of Thailand by offering special



training courses for executives so that they become leaders in adopting good corporate governance as part

of the organization culture. Managerial-level employees are also required to do compulsory courses on

good corporate governance. Ethics workshops are organized for employees for which they can adopt as guiding

principles for work and life.

The Company has adopted modern communication technology and other appropriate channels to

access and communicate to staff regarding personnel development policies, strategy as well as providing

information regarding recent developments. Staff consultants were dispatched to various operating units

to provide mental support and alleviate stress in the work place.

In accordance with strategic and operational plans employees are rotated to work in various offices.

In conjunction with providing work incentives, this enhances the quality of life of personnel and helps them

maintain good mental health.

Business Units

Ground Customer Services

Emphasizing customer-focused service by providing services beyond expectations, the Company

has modified its products and services in fiscal year 2006 to match THAI’s new corporate identity based on 3

themes. These are “High Trust”, “World Class” and “Thai Touch” reflecting modernity and liveliness. Premier

passenger lounges in domestic airports and those abroad were redecorated using vivid color schemes following

the lounges in Hong Kong and Chiang Mai, which have already been redecorated and are now in service.

The move from Bangkok International Airport (Donmuang) to Suvarnabhumi Airport was seen as an

appropriate time to change the image of Thailand’s national carrier. Ground customer services were enhanced to

make them competitive with new ground customer services provider and to provide unequivocal level of service

to leading airlines from all corners of the world. The Company provides first and business class passengers

with unsurpassed service and facilitates ease of travel at its premium class passenger lounges. To facilitate

passengers on their journey, premium class passengers are treated to world class service by being greeted at

curbside. First class passengers are checked-in at the First Class Check-in Lounge while Business class passengers

receive similar service in the Royal Orchid Premium Lounge. A special private fast track service lane is provided

to expedite immigrations. Passengers are treated to delicious A-la-carte restaurant concept dining at both the

Royal First Class and Royal Orchid Premium Lounges. A business/conference center is available for business

travelers to keep in touch with their head office and clients. Passengers can also relax and enjoy the fitness/yoga

room along with steam and sauna rooms in the Royal Orchid Spa Lounge. Families can also enjoy the private

entertainment/family room with a kids’ corner.


The ongoing improvements of all THAI products and services is among the goals for achieving excellence

and for making THAI a leading ground customer services provider.

Ground Support Equipment Services

Although the airline industry in 2006 was burdened with high fuel prices, THAI’s Ground Support

Equipment Services still provided a similar level of service as the previous year. In the first half of the year, the

number of flights serviced dropped slightly because of the reduced number of flights and the limited usage of

ground support services by low cost airlines. However ground services rendered to THAI increased due to the

delivery of additional aircraft in 2006.

The Company commands 62% of the ground services market at Bangkok International Airport

(Donmuang) serving 57 customer airlines. The Company emphasizes service excellence, internationally

recognized standards and maximum safety. All of which are key to THAI’s efforts in maintaining its rank

among the world’s leading providers of ground support equipment services.

In improving service quality - at the heart of competition - information technology has been introduced

to provide a management system that meets the varied needs of customers. A Baggage Reconciliation

System (BRS) was introduced in conjunction with the Baggage Handling System (BHS) of the Airports Authority

of Thailand to more efficiently sort baggage for delivery to the aircraft. The two systems working together minimize

baggage loss. Meanwhile, the Company is planning to purchase more ground support equipment to service

wide-body aircraft such as the Airbus A380 and to increase capacity in handling baggage as a result of the

increased flights at Suvarnabhumi International Airport.

The Company has developed a safety audit system to enhance safety and expedite operations

between the Company and its customer airlines. Safety experts from both the Company and customer airlines

inspect the equipment and make recommendations for improvement. The Company has also cooperated with

the IATA in implementing a Ground Damage Prevention Program (GDPP) around the apron area. Furthermore,

the Company has adopted international best practices for safety under the Quality Assurance System

(ISO 9001:2000), promoting occupational health and safety policies, as well as environmental management, risk

management, internal control and other measures. To improve on quality and value added service, the Company

adopted the IATA system for Performance Measurement of Service Delivery Standards (AHM 804). Service Level

Agreements with customer airlines offer Ramp Flight License Manager Services, Task Force Team Service and

Express Services.


The Company has emphasized proactive ways to capture a larger market share by introducing a

one-stop service policy. This enables the Company’s business units to coordinate with each other to offer

services (Ground Customer Services Department, Cargo and Mail Commercial Department, Technical

Department and Catering Department) on a one stop shop basis. This policy bolsters customer confidence in

the Company’s ability to provide a full spectrum of services on a regular basis or by request and enables the

Company to compete more effectively, increasing sales and market share. In addition, the Company has expanded

its cooperation with Star Alliances members, resulting in customer retention while adding new customers.

Additionally, the Company is continuously enhancing its employees’ capabilities through skill development

to develop skills and expertise. The Company is aware of the importance of operational safety, employees’ positive

attitude especially service mind and communication skills, which bear impact on employee effectiveness.

The Company was entrusted as one of the two ground service providers at Suvarnabhumi Airport

in 2006. Ground services involves two major activities - the first is aircraft support services to provide mobile

passenger ramp and passenger transfer, aircraft pushing and towing and aircraft cleaning. The second activity

is the transfer of passenger baggage, cargo and mail from passenger terminal to cargo terminal.

Cargo and Mail Commercial Services

The Company is striving to become the recognized leader in providing cargo and mail services and

the first choice provider of warehouse services. With this goal in mind, the Company is developing quality

products and services using the concepts of “Value Chain” and “Magic Service Ring”. The unique selling point

centers around the theme “THAI Cargo - Thai Care”, which is “Customer Oriented” and provide service with

“Touches of Thai”. These form the basis for creating maximum customer satisfaction.

Air Freight and Mail Services

The Company mainly uses cargo space on THAI passenger aircraft to carry freight. However, cargo is

shipped via alliance airlines on routes with strong demand for cargo shipment.

The Company places great importance on the transportation of products with high freight rates such as

TGForce, TGFresh and small shipments (less than 45 kg.). It plans to increase the number of service points

for time-definite products and express cargo from the existing 38 to 50 points globally.

The Company is continually adopting new ways and methods to improve operations so as to add

value for customers. THAI is cooperating with its business alliances to find additional freight space

and chartering planes as well as cargo space on high demand routes or during peak periods. Another


approach to resolving insufficient freight space is through the chartering of cargo aircraft. Additionally, the

Company has cooperated with a global forwarding agent to increase cargo load on every route and to promote

more transit cargo via Thailand through incentives.

Warehouse Services

The Company is readying itself to meet the expansion of inbound and outbound shipments along

with transfers as well as increasing competitiveness in accordance with Company’s plans. The Company’s goal is

to increase the number of customer airlines by offering unsurpassed ground handling service with the ultimate

goal in increasing overall revenue. Sales promotions and incentives have been offered to stimulate the market

during the low season. Additional revenue can also be achieved through the improved use of premises and

sophisticated equipment for goods requiring special care, especially at Suvarnabhumi Airport. Cargo is categorized

according to its value, group and warehouse charges. Furthermore, the Company is planning to offer

re-consolidation services for cargo tagged to the same destination.

The Company expects to co-invest with a strategic partner to set up an Express Cargo Center to speed up

operations and reduce costs and investment risk. The center will be able to offer Customs EDI Service and

Express Service, providing greater individual customer satisfaction.

Regarding the Perishable Services Center at Suvarnabhumi Airport, the Company set aside an area of

10,000 square meters where perishable commodities are kept in a temperature-controlled warehouse.

These commodities include fresh and processed agricultural products as well as medicine and medical supplies.

The latest technology acquired will help to keep the products fresh, will enable effective cargo management

and ensure timely and error-free delivery.

For additional services other than the cargo facilities, the Company has established a joint venture

with the ITOCHU Group to set up a New Logistics Center (NLC). The center moves raw materials required for

production, goods in process and finished products along with the distribution of their products.

Additionally, the THAI Cargo One-Stop Service Center was established to handle bulk cargo by offering

One-Stop Services outside the Customs Free Zones and “airport to door” services. This service enables recipients

in Thailand to receive cargo more conveniently as the cargo is delivered to the recipient’s doorsteps. Moreover,

the Customs Free Zones helps reduce customs formalities and improve cargo transport and transfer

maximizing benefits for transit shipments. The new services put Suvarnabhumi Airport in contention to

become a regional cargo hub.


Catering Services

As part of its plan to maintain its position as one of the

world ’s leading airlines, the Company has accelerated the

development of catering standards and firmed its ability to

handle expansion. In fiscal year 2006, THAI kitchens prepared

75,000 meals per day providing food and drinks for Thai Airways

International Pcl. along with 48 customer airlines, as well as

restaurants and snack bars at the International Airport and other major

provincial airports. Additionally, the Company offers banquet services

to the general public and has opened more than 38 Puff & Pie bakery

shops. The Company’s catering services not only yields high returns

but mirrors the employees’ capabilities at all levels. It also demonstrates

the high degree of trust that customers have in the Company.

To reinforce service and quality excellence to create the

highest level of customer satisfaction, the Company has continuously

encouraged development in all areas of operations. The goal of THAI

catering is to “Answer to Your Needs with Integrity”. The Company has

maintained food and health safety standards and cooperates with

Kasetsart University to support the growing of agricultural products

using “Good Agricultural Practice” (GAP). This practice not only promotes

high yield, cost-effectiveness, high quality agricultural produce, it poses

no health risks to farmers, consumers or the environment and thereby

supports agricultural sustainability. GAP ensures that food prepared in

THAI kitchens is safe, clean and is of the highest quality.

In strict adherence to quality food preparation procedures,

the Company has introduced the Quality, Hygiene and Safety

(QHS) system, which integrates the ISO 9001 quality management

system, Good Manufacturing Practice (GMP) and Hazard Analysis and

Critical Control Point (HACCP) into one. All of these systems and



practices are accepted by the International Travel Catering Association (ITCA) and the World Health

Organization. In fiscal year 2006, the Company participated in a Halal project (GMP/HACCP) with the Halal

Science Center at Chulalongkorn University to enhance the standards of Halal food preparation and to

strengthen customer confidence in the Company’s understanding and ability to prepare Halal food.

The Company stresses food variety for customers by adding exotic Thai dishes and distinctive

international dishes to its existing menus. The Company has hired executive chefs, executive sous chefs

and highly-experienced foreign chefs to join a team of THAI chefs to maintain the authenticity of flavor of the

respective country’s food based on the concept of “Taste from Race”. The teams of veteran chefs enabled

THAI kitchens to create 980 menus with 3,500 distinctive dishes which are interchangeably served in

bi-weekly intervals. Moreover, the Company utilized raw material obtained from the Royal Projects such as

trout, rosemary, oregano and Italian basil to prepare special dishes for in-flight service to celebrate His

Majesty the King’s 60th Anniversary of accession to the throne and to publicize Thai agricultural products.

In addition, THAI Catering launched the “Chef on Board” program which constitutes yet another level of

satisfaction for premium class customers based on the concept of “Restaurant in the Air”.

A memorandum of understanding (MOU) was signed with Gate Gourmet Switzerland GmbH to support

the move of THAI Catering to Suvarnabhumi Airport. The Company met with airline representatives and

customers - both existing and potential - to inform them about the move of THAI Catering to the new airport in

seeking to assure THAI’s service, standard and quality will not be compromised. The Company plans to change

THAI Catering at Bangkok Airport into a wholesale center for ready-to-cook meals and bakery products.

The Company will also be responsible for providing catering services to athletes and officials of the

24th Summer World University Games to be held on 8-18 August 2007. The Company is also building a

THAI Catering Center in Chiang Mai to serve domestic and international THAI flights as well as other airlines.

It will be able to produce 3,000 meals per day and is expected to commence operation in 2008. The Company has

opened a restaurant and a snack bar at Krabi Airport in anticipation of growth in tourism as the Government

pushes to promote the South. From the welcoming of Thai food by people around the world, THAI plans

to open Thai restaurants in major foreign cities such as New York, which coincides with the government’s plan

to make Thailand the “Kitchen to the World”.



Aircraft Maintenance Services

The Company is determined to provide the highest level of safety in maintenance service while

maintaining operational effectiveness to increase quality of service and observing the safety standards required

by the Department of Air Transport of Thailand, the Federal Aviation Administration (FAA), the European Aviation

Safety Agency (EASA), customer airlines including ISO 9001 : 2000 quality standards and ISO 14000 : 1996

environmental management standards. THAI is recognized for the quality and efficiency of its maintenance

services. In fiscal year 2006, it was entrusted with the maintenance of aircraft from more than 50 of the

world’s airlines.

The Company has provided the following maintenance services:

- 104,425 line and light maintenance services at Bangkok International Airport, 51,862 of which were

provided for the Company’s fleet and 52,563 for customer airlines

- 707 A-Checks

- 66 C-Checks and D-Checks, 52 of which were provided for the Company’s own fleet and 14 for

customer airlines

- 34 engine maintenance services for the Company’s fleet-CF6-80

- 15 engine maintenance services for customer airlines-CF6-50

- Inspection and maintenance of four MD-11 aircraft after being phased out in April 2006.

The Company has carried out its plans of retrofitting passenger cabins for its own 8 Boeing 777-200

aircraft, 6 Boeing 777-300 aircraft and 12 Boeing 747-400 aircraft totaling 26 aircraft. The retrofit program for its

Boeing 777-200 and Boeing 747-400 aircraft will have been completed in 2006 while the fleet of Boeing 777-300

aircraft will be completed by the beginning of 2008. In order to minimize the on ground time, for these 26

aircraft, the retrofit program was timed to coincide with each aircraft’s scheduled checks.

In servicing customer airlines, the Company has developed three guiding principles-maintenance

quality, turn around time and reasonable price. As a result, many leading airlines have entrusted THAI with

the structural maintenance of their aircraft for more than 10 years. THAI’s C-check and D-check of aircraft frames

have won the trust of leading Japanese airlines as they have signed maintenance agreements for past

five consecutive years. Leading European airlines also have confidence in the knowledge, expertise and

service quality of THAI technicians along with THAI’s cost competitiveness by contracting maintenance service to

THAI. Moreover, the moving of the base of operations from Bangkok International Airport (Donmuang) to

Suvarnabhumi Airport has enabled more slot times for C and D-checks at the maintenance center at Bangkok

International Airport (Donmuang). In fiscal year 2006, the Board of Directors approved, in principle, a project to

“Increase Maintenance Capacity” (IMC) with an overall budget of 578.2 million baht.


Strategies to reduce capital and costs relating to inventory management have been implemented in paral-

lel with strategies for providing the safest and highest quality of maintenance service. The Company signed a

memorandum of understanding with GE Engine Services Incorporated (GEES) to establish a Center of Excellence

for engine maintenance of both CF6-80 and CF6-50 series. GEES center supports the project by supplying

spare parts to Donmuang Maintenance Center’s “On Site Warehouse” and “Logistics Center”. Currently, more

than 151 spare parts worth approximately 42 million baht are on hand which helps reduce time consumed on

engine maintenance while reducing procurement costs. With regard to the maintenance of other engine types

such as the PW4000, the Company has negotiated with other maintenance centers to change the existing

on-time-and-material basis agreement to a maintenance-cost-guarantee agreement (MCG). The latter ensures

that the price will not exceed a predetermined ceiling. To maximize maintenance effectiveness, many

repetitive tasks have been eliminated. Six Sigma approach has been implemented for six years to continuously

enhance working procedures to help reduce investment and maintenance cost.

The Company seeks to continuously develop knowledge and skills of maintenance personnel in line

with internationally accepted standards by offering training courses, including basic aircraft mechanics and

basic aircraft type to over 300 newly recruited personnel who are to work on Boeing 747-400 and Airbus

A300-600 aircraft. These mechanics receive both classroom training and on the job training so that they

are competent for maintenance work at the Suvarnabhumi Aircraft Maintenance Center as required by the

Department of Air Transport of Thailand, the Federal Aviation Administration (FAA) and the European

Aviation Safety Agency (EASA).

The Company currently has three maintenance centers-Suvarnabhumi Maintenance Center, Donmuang

Maintenance Center in Bangkok and Utapao Maintenance Center in Rayong province.

Social Contributions

The Company is proud of its activities that lend support and assistance to the community. Activities

undertaken in 2006 include:

1. Supporting the planting of one million “Tan” trees carried out in conjunction with the Petchaburi

Association. This project is in honor of His Majesty the King’s 80th birthday.

2. Supporting a celebration on held in honor of Her Majesty the Queen organized by the Thai Chamber

of Commerce.

3. Supporting the exhibition and academic seminar celebrating Her Majesty the Queen.

4. Supporting the 2005 Princess Mother’s Award Foundation.


5. Supporting the “Loy Krathong” festival at the Bangsai Arts and Crafts Center in Ayutthaya.

6. Supporting the Heart Foundation of Thailand.

7. Supporting the 30th anniversary of the Thai-Chinese Women’s Friendship Association.

8. Displaying Royal Speech boards in honor of the 60th anniversary of His Majesty the King’s accession to

the throne at major destinations including Chiang Mai, Chiang Rai, Hat Yai, Phuket, Ubon Ratchathani,

Khon Kaen and along roads from Bangkok to Klai Kangwon Palace in Prachuab Khiri Khan province.

9. Sponsoring a field trip to the International Rice Research Institute in Philippines for Thai farmer’s

children who won a writing contest entitled “The Next Generation of Thai Farmers: the Survival of Thai

Rice” and their mentors.

10. Offering contributions to schools and scholarships to underprivileged talented students during the

Royal Kathin Ceremony in Suphan Buri.

11. Sponsoring lunch and donating funds to orphans at the Ban Kru Noi Foundation and Sangsan

Dek Foundation on the occasion of the Company’s 46th anniversary.

12. Donating second-hand computer terminals to “Hat Yai Rathaprachasan” school on the occasion of

Her Majesty the Queen’s birthday on 12 August 2006.

13. In cooperation with other corporations and the Customs Department, provided educational

scholarships and donated bicycles, sweaters, etc. to hill tribe children around the border area of Mae

Hong Son.

14. Organizing “Children’s Day” at Suvarnabhumi Airport in cooperation with the Airports of Thailand.


As the national flag carrier, THAI supports the government’s policy to promote Suvarnabhumi Airport as

southeast Asia’s aviation hub, one of the most efficient and best equipped airports in the world. Between 2002-

2006, the Company invested 15,099.32 million baht in buildings and equipment that are modern and feature

state-of-the-art facilities built according to internationally accepted standards. The Company is therefore well

prepared to meet the rigorous competition that will inevitably occur in the future.

Investments covered six key activities:

1. The Cargo and Mail Commercial Services is capable of servicing 1.26 million tons of cargo per year

and provides customers with temperature controlled cold storage and international warehousing.

The customs-free zones make international shipments much easier.

2. The Aircraft Maintenance Center which covers 24,300 square meters is known for being the largest

maintenance hangar in Southeast Asia. It can accommodate 3 Boeing 747s or 3 Airbus A380s

simultaneously and offer line and light maintenance services for all aircraft types.

3. Catering Services is capable of preparing 87,000 meals per day for THAI’s flights and other

customers’ flights.

4. Ground Support Equipment Services provide services to THAI and another 57 customer airlines.

Investment in new ground support equipment will increase the capability and services to be provided.

5. The Operations Center, which houses many offices including the Flight Operation Control Center,

the Ground Operations Control Center as well as the Crew Terminal, is equipped with modern

technology and computer networks, enabling effective and efficient 24-hour operation.

6. Ground Customer Services covering 16,000 square meters provides customers with a full range of

customer services and facilities to facilitate customer service.

Investment projects by THAI at Suvarnabhumi Airport are as follows:

The Preparation of Buildings, Premises and Facilities for:

Cargo and Mail Commercial (CGO)

Aircraft Maintenance Center (ACM)

Ground Support Equipment Services (GSE)

Operations Center (OPC)

The buildings, premises and facilities supporting the four activities above were completed so that

staff can commence work on 1 August 2006. The Crew Terminal and Operations Center began operations on

22 September 2006.

Operations at Suvarnabhumi Airport


Ground Customer Services (CUS)

The construction and decoration of the areas within the

passenger terminal and concourses were undertaken as follows:

1. The Customer Contact Area was ready for the opening

day of Suvarnabhumi Airport, 28 September 2006. Its area of

12,000 square meters include:

Royal Orchid Premium Check-in

Domestic Lounge

Royal Orchid Lounge (Main Lounge)

Economy Transit Lounge

Ticketing Office

Lost and Found Office

By the end of 2006, an additional space of 4,000 square

meters will be added for:

Spa Lounge

Arrival Lounge

International Lounge (Concourses C and E)

2. Office areas in the terminal buildings and concourses

were ready for occupation since 15 September 2006 onwards.

Catering Services

The construction work of the production and operation

buildings damaged by fire on 18 January 2006 is expected to be

completed by March 2007. Current inflight meal production is prepared

from the catering facility at Donmuang Airport and transported

in temperature controlled vehicles to the catering facility at

Suvarnabhumi Airport. On 22 September 2006 the catering services at

Suvarnabhumi Airport rehearsed the whole procedure starting from

production at Donmuang, arrangement at Suvarnabhumi and then

uplifting to aircrafts on 2 special international flights.



The preparation for moving base of operations

In preparation for the move from Bangkok International Airport (Donmuang) to Suvarnabhumi Airport,

the Company carefully formulated plans and systematically implemented them to minimize problems on

the first day of operations.

1. The movement of equipment from Bangkok International Airport (Donmuang) to

Suvarnabhumi Airport

The moving of 1,875,000 pieces of equipment (approximately 2,831 trips) was divided into

3 phases:

- Pre-Phase (1 -25 September 2006)-the moving of stand alone office equipment and support

equipment which were not necessary for the final days of operation at Bangkok International Airport, which

required 1,200 trips.

- Critical Phase (26 -28 September 2006)-the moving of equipment necessary for the last day of

operations at Bangkok International Airport and are a must for the first day of operations at Suvarnabhumi

Airport. These were mostly ground support equipment, requiring 1,000 trips.

- Post Phase (1 - 15 October 2006)-moving remaining office equipment after the opening of

Suvarnabhumi Airport and support equipment of other functions, requiring 600 trips.

2. The relocation of employees

Since the end of 2005 THAI put into effect its personnel migration plans-the Company’s success factor-

through an orientation program, “Orientation and Familiarization at Suvarnabhumi Airport” for executives

as well as arranging field trips to the airport for those assigned to work at the new airport to show the

construction progress while gaining familiarization with the airport. The Company arranged shuttle buses,

work facilities and prepared suitable accommodations for employees in coordination with the National

Housing Authority (NHA). With regard to the welfare of all employees, medical clinics, banks, canteens as well as

schools for employees’ children were also planned.

Since 1 August 2006, THAI has gradually transferred 21,451 employees and 4,592 outsource

staff to Suvarnabhumi Airport while operations related staff began working at the new airport from

27 September 2006.

3. Preparation for operation

THAI and the Airports of Thailand conducted numerous system tests on airport operating



systems and equipment during pre-trial operations with all concerned functions for special domestic flights on

29 July 2006, for special international flights on 1 and 22 September 2006 and for some special domestic flights

on 15 -27 September 2006. The Company was ready for full operations by 28 September 2006, the opening

day of the new airport.

On the evening of the move, 22 ferry flights were made from Bangkok International Airport beginning

08.30 p.m. on 27 September 2006 until 03.00 a.m. on 28 September 2006 in preparation for making departures

from Suvarnabhumi Airport on the opening day.

Regarding project plans for 2007, apart from restoring the catering building damaged by fire, the

Company has planned to develop and increase operational effectiveness by

installing intelligent security systems.

equipping the Ground Operations Control Center with information technology systems and

communication equipment. The center will serve as the decision-making center for ground operations in

coordination with other related centers both inside and outside the organization.

enhancing ground communication networks.

The Company also plans to carry out a joint venture project on the New Logistics Center for Electronic

Parts at Suvarnabhumi Airport.


Competition in the Global Commercial Aviation Industry

The fiscal year 2006, spurred on by global economic growth, has seen a continuous expansion in the

commercial airline business. The record fuel price and interest rate hike, while presenting additional risks, have

not been enough to slow down the surge in growth for the commercial airline industry. This growth has resulted

in more traffic for both business and leisure-travel. Significant growth in travel is expected for China, India and

the Middle East, where many new airlines both traditional and low cost carriers have been launched. These

newcomers quickly expanded both their routes and fleet. This increased competition, together with higher fuel

cost, has put a squeeze on traditional airline’s ability to compete, lowering yield. Each airline has had to come

up with their own measures to reduce fuel cost and increase efficiency, e.g. fuel hedging.

Passenger Transport

In the first half of 2006 global airline passengers increased 6.8 percent. The Middle East had the highest

growth rate at 17.8 percent. This is attributable to accumulated wealth from oil exports where oil money in this

region have been used to develop luxury resorts, along with airports and airline fleet designed to expand to their

tourism industry.

Thailand, in the first half of 2006, saw an 11.9 percent increase in international passengers. This is high

compared to the beginning of 2005, which was effected by the tsunami, causing delays in bookings. However,

for the coming year, the growth is expected to be 8.0 percent.

In the long run, the International Air Transport Association (IATA) has predicted that Thailand should

enjoy an average of 6.7 percent annual increase in passenger traffic through to 2009.

Air Cargo Transport

Fuel cost remains high, resulting in higher air freight charges. This has caused a slight decrease in demand

for air cargo. However, the sector has seen a growth of 5.4 percent for the first half of the year and is expected

to increase to 7.0 percent for the whole year.

Thailand’s international cargo export movement are higher than it’s imports. Major markets include

Hong Kong, Taipei, Tokyo, Singapore and Seoul. Trans-continental cargo mainly goes to Frankfurt and Paris.

In the next 5 years IATA has predicted a 6.6 percent annual growth for outbound cargo and 7.3 percent for

inbound cargo.


Domestic Airline Competition

There are 6 domestic operators, 3 of which are low cost airlines which have been launched since 2004.

The Company also launched Nok Air to compete with other low cost carriers to maintain its domestic market

share. One of the benefits of the introduction of low cost airlines was an increase in the number of total passengers

traveling by air. This was more than the expected growth of 3-4 percent annually. This new group of passengers

have been converted from land to air transport. The main attraction being a shorter travel time at a more

affordable price. The Company’s number of domestic passengers decreased in proportion to the reduced capacity

as some planes were leased to Nok Air. When passenger numbers from the two companies were combined, the

growth was in line with the overall domestic growth of passengers traveling by air. The Company currently

commands a 41 percent market share, while Nok Air controls 15 percent.

International Airline Competition

To promote free trade and tourism, the Thai government implemented the open skies policy resulting in

increased services by international airlines. The Company faced stiff competition from both established airlines

and new start-up operations. Competition in particular comes from the Middle East, China and India, other low

cost airlines and seasonal chartered flights. As of June 2006, there were 87 international airlines operating to

Thailand with an 8.0 percent annual growth rate of passengers traveling to the Kingdom. The Company

commands 38.5 percent share of the international traffic.


Resulting from intense competition in the global commercial airline industry, the fluctuations in

foreign exchange rates and fuel price, the Company has had to find means to strengthen the Company’s

competitiveness.

To achieve its goals, the Company continuously manages both internal and external risks. Risks are

identified and prioritized to determine systematic and effective measures that are in-line with internationally

accepted standards to prevent correct and control such risks. Additionally, the Company has formulated policies

to encourage all organizational units to use management tools to limit operational risk and engrain risk

consciousness into the organization’s culture. These policies are designed to enhance transparency, fairness

and accountability, which in turn, maximizes benefits for all and promotes the principles of good corporate

governance.

Risk Management

To effectively implement risk management throughout the organization, the Company appointed a

Risk Management Committee to formulate and oversee compliance of Risk Management policies as well as to

provide guidance on organizational risk management at the Corporate level. The Management is responsible

for overseeing risk management at the Operational level and ensuring strict adherence to established

guidelines. Management is also responsible for ensuring that risks are kept within acceptable limits-Acceptable

Residual Risk for the respective heads of units.

Furthermore, a follow-up on management of key organizational risks are reported to the Operation

Management Meeting, the Business Units’ Executive Board, the Company’s Executive Board and Board of

Directors to ensure effective management and supervision to achieve the established purposes and goals.

Risk Factors of Significance

1. Risk in Fluctuation in the Number of Tourists to Thailand

With a large part of THAI’s passengers being tourists, the Company’s financial performance

depends largely on the health of Thailand’s tourism industry. The industry is susceptible to the popularity

of Thailand as a tourist destination. Directly impacting tourism to the Kingdom is the health of the global

economy, the relative strength of the Thai baht, negative perceptions about Thailand, including the added

burden of paying additional applicable airport taxes. Terrorism, SARS, bird flu and other factors of sorts in and

around the region all bear impact on THAI’s performance. In response, the Company’s risk management process

vigilantly tracks these risk factors.

Risk Management and Risk Factors


2. Risk from High Fuel Price

As fuel constitutes the largest proportion of the Company’s operating expense, accounting for 34% of

total operating expense, THAI is directly affected by the fluctuation in fuel price. THAI’s fuel hedging was less than

50% of the annual fuel demand. However, with the sharp fluctuation in fuel price and the unfavorable hedging

terms, fuel hedging remained low at 21%, 20%, 10% and 6% for the four respective quarters of fiscal year 2006.

Moreover, the Company has developed a criteria and framework for fuel price risk management including using

high-technology software and collecting fuel surcharge at a rate that minimizes the impact of high fuel expense

on the Company.

3. Risk from Foreign Currency Fluctuation

The Company earns revenue in more than 40 foreign currencies but pays debts in only four

currencies : US dollars, Japanese yen, euros and Thai baht. The Company effectively manages risk from

foreign currency fluctuations by adopting a natural hedge strategy whereby most expenditure is paid in

the same currency as revenue. The Company has structured its loans in currencies to try to match its residual

cash position. The Company actively plans ahead to obtain sources of funding and utilizes appropriate

financial tools to manage exposure. To offset the current excess euro revenue, the proportion of euro loan

has been increased by entering cross currency swaps and funding new aircraft purchases with fixed rate euro

loans. Additionally, the Company has signed cross currency swap agreements increasing fixed rate euro

debentures to 45% by the end of fiscal year 2006.

4. Risk from Increased Competition due to Open Skies Policy

To promote tourism as well as Bangkok as an aviation hub, the government has introduced the

Open Skies Policy on international routes with no restrictions on flight frequency and capacity for 3rd and 4th

freedom traffic rights. With respect to 5th freedom rights, the government has enabled airlines around the

world to an extent, compete on all routes served by Thai carriers.

Currently, Thailand has signed unlimited flight frequencies for 3rd, 4th and 5th freedom traffic rights

with United Arab Emirates, Qatar, Sri Lanka, Bahrain and Switzerland. As these airlines can now operate flights

on the same routes as THAI, competition has increased. Should these airlines exercise their full rights, there

could be considerable impact on the Company’s operation.

However, the Company has prepared measures to reduce risk in its operations brought on by the

Open Skies Policy by improving marketing plans, extending cooperation through alliances and adopting various

promotional strategies that will enable THAI to effectively respond to increased competition.


5. Risk from Competition with Low Cost Carriers (LCC)

The popularity of low cost air travel has increased. To strengthen THAI’s competitiveness for destinations

served by low cost carriers, the Company took on a more proactive marketing strategy, upgrading of services

and enhancing passenger convenience. The Company has also extended its cooperations with its alliances

and adjusted flight frequencies and modifying seating capacity to achieve the above goals. These measures

have yielded satisfactory results but the Company continues to closely study the impact of low cost airlines on its

operations.

The Company has also emphasized providing services to through-traffic passengers instead of only

point-to-point traffic. This not only promotes Bangkok as a regional aviation hub but also provides full service

and network-based airlines with the advantage of connectivity and revenue generation. Flight schedules and

slot times were modified to enable optimal connectivity. Furthermore, the Company has launched the “THAI

Value Card” and “THAI Value Plus Card” campaigns. The cards offer frequent flyers value for money tickets on

both domestic and Southeast Asian flights. Internet-based sales and the cooperation with financial institutions

enabling the financing of travel packages along with special mileage points accumulation and excess baggage

allowance are part of this campaign.

Risk Management Plans for 2006/2007

THAI carries out annual reviews of its risks and determines risk tolerance within the airline industry as

well as each of the business units. The Company has urged all operating units to understand the importance of

early warning indicators and to take concrete steps to respond to such risk indicators. The Company encourages

personnel at all levels to participate in assessing and controlling risk. This practice has been widely adopted

and is now seen as part of THAI’s organizational culture.

Additionally, enterprise risk management information systems have been updated and linked to

other management systems, enabling risk information transfer and the production of monitoring reports on

internal control. The Company has urged all organizational units to understand clearly the methods and

procedures of the new risk management system to employ them more effectively.


Shareholder and Management Structure

Shareholders

The names of major shareholders, number of shares held and percentage of shareholding as of 6 January

2006, the Share Register Book closure date are as follows:

Ranking Name of Shareholders Number of Percentage

Shares

1 Ministry of Finance 913,407,726 53.76

2 Vayupak Fund 1 by MFC Asset Management Public Company Limited 130,289,400 7.67

3 Vayupak Fund 1 by Krung Thai Asset Management Public Company Limited 130,289,400 7.67

4 Chase Nominees Limited 1 55,386,600 3.26

5 State Street Bank and Trust Company 29,510,422 1.74

6 Vayupak Fund 1 by MFC Asset Management Public Company Limited 24,599,300 1.45

7 Vayupak Fund 1 by Krung Thai Asset Management Public Company Limited 24,599,300 1.45

8 Thai NVDR Company Limited 19,489,416 1.15

9 Chase Nominees Limited 42 15,981,800 0.94

10 Morgan Stanley & Co International Limited 14,696,798 0.86

11 Other Shareholders 340,639,588 20.05

Total paid up capital 1,698,889,750 100.00

Thai Shareholders 1,377,800,597 81.10

Foreign Shareholders 321,089,153 18.90

Note : Information on current shareholders can be accessed via the Company’s website www.thaiairways.com prior to the AnnualGeneral Shareholders’ Meeting.


The Ministry of Finance currently holds a 53.76% stake in THAI. As such, THAI remains a state enterprise

and must comply with the following guidelines:

1. THAI must obtain approval from the Cabinet for investments of significant value.

2. The Office of the Auditor General is responsible for auditing the Company’s financial statements.

Future Share Issuance Obligation

The resolution reached at the Annual General Shareholders’ Meeting 1/2545 dated 30 August 2002

allows the sale of 15 million common shares and/or warrant units to THAI employees under the Thai Airways

International Pcl. ESOP plan at a price or exercise price of 15 baht per share and/or unit.

Should all available shares and/or warrant units be subscribed and exercised into common stock,

THAI’s paid-up capital will increase to 17,000 million baht.

Dividend Policy

THAI’s dividend policy is to pay an annual dividend of not less than 25% of profit before consideration

of gain/loss from foreign exchange and is subject to future investment plans and other relevant factors.


Organization Chart


57Thai Airways International Public Company Limited 57Thai Airways International Public Company Limited


Board of Directors

As of 30 September 2006, the Board of Directors met 20 times and comprises the following members:

1. Mr. Wanchai Sarathulthat Chairman

2. Mr. Suparut Kawatkul Vice Chairman

3. ACM Chalit Pukbhasuk Independent Director

4. Mr. Tirachai Vutithum Independent Director

5. Pol. Gen. Nopadol Somboonsub Independent Director

6. Mr. Vudhibhandhu Vichairatana Independent Director

7. Mr. Pachara Yutidhammadamrong Independent Director

8. Mr. Borwornsak Uwanno Director

9. Mr. Chartsiri Sophonpanich Director

10. Mr. Pichai Chunhavajira Director

11. Gen. Ruengroj Mahasaranond Director

12. Mr. Vikrom Koompirochana Director

13. Mr. Somchainuk Engtrakul Director

14. Flg. Off. Apinan Sumanaseni Director

Power of Authority on behalf of the Company

The signature of Chairman Wanchai Sarathulthat and another Director together with the Company seal or

the signatures of 3 Directors with the Company seal are considered legal and binding.

Scope of Authority and Responsibilities of Board of Directors

The Board of Directors must perform their duties in accordance with laws, objectives and regulations of

the Company as well as shareholders’ resolutions. They are empowered to appoint any person to manage the

Company’s business under the supervision of the Board or entrust its authorization to any person, which the

Board deems fit. The Board may cancel, withdraw or change the scope of authorization delegated to such person.

The Board may authorize any person to sign on behalf of the Company as well as appoint any Committees.

In addition, the Board of Directors has set up various committees to help study and screen details of

specific matters. These committees include:

Audit Committee

The Board of Directors appointed an Audit Committee in accordance with good corporate governance

practices of the Ministry of Finance and the Stock Exchange of Thailand and also to increase shareholder and

investor trust. The Committee reports directly to the Company’s Board of Directors and members of the Committee

have no management responsibility within the Company. Members include:


1. Mr. Vudhibhandhu Vichairatana Chairman

2. Mr. Pachara Yutidhammadamrong Member

3. Pol. Gen. Nopadol Somboonsub Member

4. Vice President Secretary

Office of the Internal Audit

Mrs. Keseree Narongdej is the advisor to the Audit Committee.

Authority and Responsibilities of the Audit Committee

1. Reviewing the Company’s financial statements and reports for accuracy and integrity including

sufficient disclosure of connected transactions and conflicts of interest.

2. Verifying the Company’s internal control process and internal audit systems for appropriateness and

effectiveness.

3. Ensuring that the Company is in compliance with the Stock Exchange of Thailand’s guidelines,

commitments to third parties, relevant laws and regulations.

4. Appointing and determining remuneration for the auditor.

5. Appointing sub-committees and other working groups as necessary.

6. Executing other matters as assigned by the Board of Directors.

The Audit Committee schedules meetings on a regular basis. In Fiscal Year 2006, the Committee held

11 meetings and submitted reports to the Board of Directors.

Independent Committee

To ensure that the Company is managed in accordance with the Stock Exchange of Thailand’s principles of

good corporate governance. The Independent Committee was established to ensure compliance with guidelines

of the Stock Exchange of Thailand and those of Good Corporate Governance, which is part of THAI’s annual

evaluation process and is in-line with internationally accepted practices. Members include:

1. ACM Chalit Pukbhasuk Chairman

2. Mr. Tirachai Vutithum Member


4. Mr. Vudhibhandhu Vichairatana Member


Authority and Responsibilities of the Independent Committee

1. Freely expressing opinions and/or reporting results within their area of responsibility to the Board of

Directors. All should be in accordance with the principles of good corporate governance which are in

line with the Ministry of Finance and the Stock Exchange of Thailand’s guidelines, THAI’s annual


operational evaluation guidelines as well as international best practices.

2. Having the authority to summon relevant staff and documents to clarify matters under consideration.


In Fiscal Year 2006, the Committee met on average every 3 months and reported to the Board of Directors.

Appointment and Remuneration Committee

The Appointment and Remuneration Committee and a Secretary was appointed to ensure that the

Company is well managed according to the guidelines of the Ministry of Finance, the Stock Exchange of

Thailand and international best practices. Member comprise:


2. Mr. Suparut Kawatkul Member

3. ACM Chalit Pukbhasuk Member


5. Mr. Chartsiri Sophonpanich Member

6. Executive Vice President Secretary

Human Resources Development and Management Department

Authority and Responsibilities of the Appointment and Remuneration Committee

The Appointment and Remuneration Committee was established to

1. Define guidelines for recruiting and appointing of Board members and the Company’s senior

management, which is in accordance with the principles of good corporate governance as set forth by

the Ministry of Finance and the Stock Exchange of Thailand, as well as international best practices.

Modern human resource management philosophy is being applied to the search process for competent

and capable persons to sit on the Board of Directors and key senior management positions. The

guidelines must reflect the principles of equality, fairness, transparency and must be verifiable.

2. Stipulating remuneration for the Board of Directors, members of Committees, Sub-Committees and

Management as well as outside individuals who work for the Company. Remuneration must provide

sufficient incentive to retain qualified persons and must be comparable to industry peers. Moreover,

Committee members who receive added responsibilities and duties should be appropriately

compensated, while members who are part of managing daily operations receive remuneration linked

to Company performance and their own individual performance. Such guidelines are in accordance

with the principles of good corporate governance as set forth by the Ministry of Finance and the Stock

Exchange of Thailand as well as international best practices.




In Fiscal Year 2006, the Committee met on average every 3 months and reports directly to the Board of

Directors.

Good Corporate Governance Committee

To ensure good corporate governance in accordance with the Ministry of Finance, the Stock Exchange of

Thailand guidelines and that of international best practices, the Board established a Good Corporate Governance

Committee, a secretary and assistant secretaries comprising:

1. Mr. Borwornsak Uwanno Chairman

2. Mr. Suparut Kawatkul Member

3. Mr. Chartsiri Sophonpanich Member


5. Mr. Thosaporn Sirisumphand Member

6. Mr. Kobchai Srivilas Member

7. Mrs. Ngamnit Sombutpibool Member

8. Executive Vice President Member and Secretary

Corporate Secretariat

9. Director of the Compliance Department Assistant Secretary

10. Director of the Council of the Board Members Assistant Secretary

and Management Meeting Department

Authority and Responsibilities of the Good Corporate Governance Committee

1. Reviewing and providing advice to the Board of Directors on the principles of good corporate

governance, which are in line with the Ministry of Finance, the Stock Exchange of Thailand’s guidelines

and that of international best practices.

2. Having authority to coordinate with the Audit and the Risk Management Committees and other

Committees within the Company as deemed appropriate and necessary.

3. Having authority to summon Company personnel, hire staff and others to provide accounts or opinions,

as well as access documents or other related items for consideration.

4. If necessary, proposing to bring in consultants for related purposes.


In Fiscal Year 2006, the Good Corporate Governance Committee met 8 times and submitted reports to the

Board of Directors.


Risk Management CommitteeThe Risk Management Committee is comprised of:

1. Mr. Borwornsak Uwanno Chairman

2. Mr. Pichai Chunhavajira Member

3. Flg. Off. Norahuch Ployyai Member

4. Mrs. Ngamnit Sombutpibool Member

5. Vice President Secretary

Risk Management Department

Authority and Responsibilities of the Risk Management Committee

1. Providing advice and counseling on risk management in all areas of the Company.



In Fiscal Year 2006, the Committee met on average once a month and reports to the Board of Directors.

Executive BoardThe Executive Board was appointed to ensure smooth operations and maximize benefit for the Company.

The Committee is comprised of:

1. Mr. Somchainuk Engtrakul Chairman

2. Mr. Pichai Chunhavajira Member

3. Mr. Borwornsak Uwanno Member

4. Mr. Vikrom Koompirochana Member

5. Flg. Off. Apinan Sumanaseni Member

6. ACM Narongsak Sangapong Member and Secretary

Authority and Responsibilities of the Executive Board

1. Supervising the Company’s Senior Management to ensure compliance with corporate policy, corporate

plans and adherence to policies set by the Board of Directors.

2. Screening of issues to be submitted for the Board of Directors’ consideration.

3. Providing guidelines and measures to enhance effectiveness and efficiency of operations.

4. Approving purchases within the budget approved by the Board of Directors, which complies with

Board resolution and the Company’s charter as follows:

- Company’s procurement policies.

- Company’s human resource management policies.

- Company’s financial guidelines

- Company ’s other regulations within the powers given to the Board of Directors and

subject to a 500 million baht limit.


5. Having the authority to summon relevant staff and documents for consideration.

6. Appointing Sub-Committees and other Working Groups as deemed necessary.


In Fiscal Year 2006, the Committee met on average twice a month and reports directly to the Board of

Directors.

Other Committees and Sub-Committees appointed by the Board include the Committee overseeing

the move to Suvarnabhumi Airport, the Sub-Committee overseeing the purchasing of aviation fuel, the Legal

Sub-Committee and the Corporate Planning Committee etc.Note: All Committees, Sub-Committees and Working Groups appointed by the Board of Directors will continue to function through the end of the

2006 Annual General Shareholders’ Meeting.

THAI Management Executives

As of 30 September 2006, there were 16 Senior Management positions: President - 1, Senior Executive

Vice President -3, Executive Vice President - 9, and 3 Vice President positions, comprising:

1. Flg. Off. Apinan Sumanaseni President

2. Mr. Kobchai Srivilas Special Activities Advisor,

Airport Migration Management

Senior Executive Vice President Level

3. Wg. Cdr. Supachai Limpisvasti Special Activities Advisor, Technical


4. Mr. Vasing Kittikul Special Activities Advisor, Commercial


5. ACM Narongsak Sangapong Executive Vice President

Corporate Secretariat Department

6. Flt. Lt. Pisal Chayakula Executive Vice President

Corporate Planning and Information

Technology Services Department

7. Mr. Wallop Bhukkanasut Executive Vice President

Commercial Department

8. Mrs. Ngamnit Sombutpibool Executive Vice President

Finance and Accounting Department

9. Flg. Off. Chinawut Naressaenee Executive Vice President

Customer Services and

General Administration Department


10. Flt. Lt. Prasart Khoon-in Executive Vice President

Operations Department

11. Flg. Off. Norahuch Ployyai Executive Vice President

Standards Assurance and

Risk Management Department

12. Mr. Kaweepan Raungpaka Executive Vice President

Human Resources Development and

Management Department

13. Mr. Tummasak Chutiwong Managing Director

Technical Department

Executive Vice President Level

14. Mrs. Ngamnit Sombutpibool Acting Vice President

Management Accounting

and Budget Department

15. Mr. Thongchai Singhakul Vice President

Financial Accounting Department

16. Mr. Pichait Riengvattanasuk Vice President

Corporate Finance Department

Note: “Management Executives” are as per the definition of “Management” denoted by the Securities and Exchange Commission

Authority and Responsibilities of the President

The President’s authority and responsibilities as stipulated by the Company’s guidelines include:

1. Authority and duties as stated in the “Policies of Thai Airways International Pcl.” under the General

Administration section of B.E. 2540.

The President is responsible for managing Company operations and to achieve corporate objectives

set by the Board of Directors. The President oversees management and staff and is responsible for compliance

with the Company’s guidelines and achieving the Board’s directives.

2. Authority and duties under the Procurement Guideline - B.E. 2546.

In accordance with corporate guidelines, the President is responsible for upholding Company guidelines

and has the authority to approve or enter into contracts on behalf of the Company with regard to procurement

or disposal of materials and services. These include purchasing, hiring, leasing, etc. Such guidelines clearly stipulate

the President’s authority in approving procurement and entering into binding contracts on the Company’s behalf:

- Contracts for service of Consultants - up to 15 million baht

- Contracts or transactions to procure materials through special process - up to 25 million baht

- Contracts or transactions to procure materials through normal procedures - up to 50 million baht

- Contracts or business activities aimed at procuring fuel, equipment, products for advertising and

promotion, insurance for other assets, packaged food and drinks, services and merchandising at


provincial or overseas stations, office rental and accommodation not exceeding a year or

of temporary duration, planned or ad hoc requisition of fuel not exceeding a year - up to 100

million baht

- Sourcing fuel with better terms - up to 200 million baht

- Aircraft and/or passengers insurance - up to 500 million baht

- Emergency procurement of fuel - no limit

If the value of the transaction exceeds the President’s stipulated authority, the matter has to be

submitted to the Board of Directors for approval.

3. Authority and duties under the guidelines on Financial Authority B.E. 2549.

The President has the authority to enter financial contracts and approve financial undertakings as per

the guidelines approved by the Board.

The President may not approve or enter into transactions beyond those that have been stipulated.

According to the resolution of the Board meeting 14/2002 on 27 November 2002, the Board of Directors entrusts

the President to handle all routine matters but that does not mean the President can enter into transactions for

which he or person that may have conflicts of interest (i.e. (A) a Company Executive, (B) Company’s major

shareholder, (C) persons with management control, (D) a direct family member, a spouse or someone legally

registered to (A), (B) or (C) such as a father, mother, spouse, offspring or a close relative and (E) a legal entity in

which (A), (B) or (C) holds shares, controls or has direct or indirect vested interests or a person stipulated by the

Securities and Exchange Commission) has vested interests or may have any conflicts of interest with the Company

or its subsidiaries.

Appointment of the Board of Directors and Management ExecutivesBoard of Directors

According to the Company’s regulations, the Board of Directors must comprise of at least 5 and a maximum

of 15 members for which the number is to be decided at the Shareholders’ Meeting. At least half of the Directors

must be Thai residents. All Board members must possess appropriate qualifications and not be under any

prohibition as stipulated by the law.

Directors are appointed by a majority vote at the Annual General Shareholders’ Meeting in accordance

with the following guidelines and procedures:

1) Each shareholder shall have one vote for each share held.

2) Shareholders must use all the votes they have to select one or several persons as Directors but the

votes may not be divided.

3) The persons receiving the most votes in descending order will be appointed as Directors according to

the number of Directors to be elected. In the case that there is a tie for the last Director to be elected and this


exceeds the total number decided upon, a lottery will be drawn to determine the last member.

In the case of a vacancy on the Board of Directors is due to a cause other than end of term, the Board of

Directors shall elect any person who has the qualifications and is not subject to legal prohibition, to take the

place of the outgoing Director at next Board Meeting but must receive a vote of not less than three fourths of the

remaining Directors. If the remaining term of office of the Director being replaced is less than 2 months, the

replacement Director shall hold the office only for the remainder of the outgoing Director’s term.

At the Annual General Shareholders’ Meeting, shareholders may pass a resolution to remove any Director

before the end of their term by a majority vote of not less than three fourths of shareholders present and eligible

to vote. The number of shares shall not be less than one-half of shares held by shareholders present and entitled

to vote.

At every Annual General Shareholders’ Meeting, one-third of the Directors shall retire from office. The

names of Directors to retire during the first and second year after the Company’s listing will be drawn by lots. For

subsequent years, Directors who have served longest shall retire.

Note: Directors retiring by term can be re-appointed (Corporate regulations No. 17).

Other Committees

Other committees include the Audit Committee, the Risk Management Committee, the Executive

Management Committee, the Independent Committee and the Good Governance Committee. These Committees

are appointed by the Board of Directors.

The functions and limitations for Independent Directors are as follows:

1. Ability to freely perform duties, express opinions, and submit reports as assigned by the Board of

Directors with regard neither for monetary reward nor position or status, remaining free from the influence of

individuals or groups as well as from pressures preventing the open expression of opinions.

2. Holding less than 5% of the Company’s paid-up capital, subsidiaries, partner companies and any

related company. This includes shares owned by family and related parties.

3. Must not hold a management position in the Company, its subsidiaries, partner companies or related

companies and is not a major shareholder, an employee, hired staff or consultant receiving regular salary from

the Company, its subsidiaries, partner companies, related companies or major shareholders.

4. Having no vested interest, whether directly or indirectly, financially or managerial benefits from the

Company, its subsidiaries and partner companies or from major shareholders. Members must have no business

interest as stated above for a period of 1 year prior to an appointment as member of the Independent Committee,

unless the Board, after careful consideration, agrees that these benefits have no bearing on the proper and

independent execution of duties.


5. Neither being involved nor related to executives or major shareholders, according to the legal defini-

tion in the Regulations for Civil Service and Governance.

6. Not appointed to represent or safeguard the interests of the Board of Directors, major shareholders or

shareholders who are related to major shareholders.

Related parties refers to people with relationships or connections to the Company that prohibit them from

carrying out their duties independently such as suppliers, customers, creditors, debtors and those with hidden

business agendas.

Management Executives

In appointing the Company’s President, the Board of Directors must appoint a Nominating Committee

comprising the Permanent Secretary of the Ministry of Finance, the Secretary General of the National Economic

and Social Development Board (NESDB), the Permanent Secretary of the Ministry of Transport, 1 representative

from the State Enterprise Labor Relations Committee and 1 representative from the Board of Directors. This

Committee draws up qualifications and screens candidates according to the Act of Standard Qualifications of the

State Enterprise Directors and Staff B.E. 2518 (amended in B.E. 2543). The Nominating Committee will select

persons with required qualifications and propose them to the Board of Directors for selection by a majority vote.

As for other senior management positions, the Board of Directors need to appoint a Nominating Committee

to select appropriate persons.

Remuneration for the Board of Directors

The stipulated remuneration for Directors as proposed by the Remuneration Committee are as follows:

Meeting Allowance for the Board of Directors

- Each Director receives remuneration in the amount of 20,000 baht per month and a meeting allowance

of 30,000 baht per attendance. The Chairman and Vice Chairman receive a meeting allowance that is higher than

other Directors by 25% and 12.5%, respectively. Directors are responsible for paying their own income tax.

- For the Audit Committee, each Director will receive the same monthly remuneration as other Directors

whether or not in attendance.

- If a Director is appointed by the Board or the Chairman of the Board to a Committee, Sub-committee

or Working Group, he will receive an additional 10,000 baht per meeting attendance.

Bonus: 0.5% of dividend paid.


Remuneration for the Board of Directors and Management Executives

Monetary Remuneration

Remuneration for the Board of Directors for fiscal year 2006, ending 30 September 2006 was:

Unit: Million Baht

Number of Persons Total Remuneration

Board Directors 25 22.12

Audit Committee members 8 1.34

Other Committee members 47 1.50

Note : 1 Board member also holds a Management position

Remuneration for Management Executives for the fiscal year 2006, ending 30 September 2006 was:

Unit: Million Baht

Number of Persons Salary, Bonus and Other Benefits

Management Executives 15 48.71

Other Remunerations

Ticket Benefits:

1. Each Director and one accompanying person is entitled to 15 international round trip tickets per

year, 15 domestic round trip tickets per year for the highest possible class of service as long as such individual

remains a member of the Board. If the ticket allowance is fully utilized, the Director may purchase bookable

tickets at 25 percent of the normal fare in the desired class of travel with the exception of domestic travel.

- The one named companion will have the same ticket privileges as the Director. In case where traveling

together is not possible, the named companion will still have the same ticket privileges.

- Former Directors and one named companion will receive 12 international round trip tickets and 6

domestic round trip tickets per year at 25 percent of normal fare on the preferred class of travel.

The President has the authority to approve such tickets (he may entrust the Executive Vice President,

Commercial Department to approve such tickets on the President’s behalf).

2. Executive Officers, including spouse and children, receive bookable tickets at no charge. Parents receive

discounts on tickets in the same manner as Company employees.


3. Executive Officers receive the same benefits as other employees according to the Employee Securities

Option Plan (ESOP) as per the resolution at the Extraordinary Shareholders’ Meeting 1/2002 held on 30 August

2002.

4. Executive Officers receive the same benefits from the Company’s provident fund and pension fund

plans in the same manner as Company employees, as summarized below:

The Provident Fund -The Company registered a Provident Fund on 26 June 1992 in which both the

Company and employees make contributions. The Company contributes 9 percent of an employee’s salary if

his/her tenure is less than 20 years and 10 percent of salary if he/she has worked for over 20 years. The employee

contributes no less than 2 percent of salary and no more than the Company’s contribution.

The Pension Fund -The Company established the Employee Pension Fund by contributing 10 percent

of the employee’s salary, for which the fund invests and earns interest. Should the available funds drop

below the level of obligation, the Company will make a one time contribution to the fund in the particular

accounting period.

Staff eligible for the Pension Fund must have worked in the Company for at least 3 years to receive such

funds upon resignation, retirement or death. Since June 1992, when the Company established its Provident

Fund, employees have only been allowed to join the Provident Fund. As a result, the Pension Fund has had no

new members since then.

Provident funds given to Management Executives in fiscal year 2006

Unit: Million Baht

Number of Persons Amount

Management Executives 15 2.55


Good Corporate Governance Committee Report

The Company realizes the importance of conducting business in line with the principles of good

corporate governance. Therefore, a Good Corporate Governance Committee was appointed in 2002 to uphold

a culture of good corporate governance in compliance with the principles as set forth by the Ministry of

Finance and the Stock Exchange of Thailand as well as in accordance with international best practices. As a

result of the Committee’s monitoring, shareholders, investors, customers and stakeholders including staff,

can be confident that THAI conducts its business with transparency, accountability and fairness to all parties

while upholding its responsibility to society. Such confidence ensures the success and stability of the Company

and its long-term ability to contribute to national growth.

The Good Corporate Governance Committee met eight times in 2006. Activities undertaken include:

1. Reviewing and updating good corporate governance policies, code of conduct handbook for

directors and the ethics handbook of Thai Airways International for employees to comply with the

principles of good corporate governance outlined by the Securities and Exchange Commission,

the Stock Exchange of Thailand and with international best practices.

2. Overseeing and developing good corporate governance practices as stipulated by the Securities and

Exchange Commission, the Stock Exchange of Thailand and the Organization for Economic

Cooperation and Development (OECD).

3. Providing ongoing support to activities that promote good corporate governance within the

Company so that the concept of good corporate governance and ethics are understood by staff of all

levels forming part of the organization’s culture.

4. Encouraging the Company to participate in a good corporate governance rating program by a

government-accredited independent rating agency while continuously improving good corporate

governance in the Company to achieve a higher ratings.

5. Improving working systems to comply with principles of good corporate governance creating

transparency, accountability and equitable treatment of all parties.

6. Supporting and encouraging members of the Board to attend courses on directorship as well as

other related courses offered by the Thai Institute of Directors Association (IOD) and other institutes to

further their knowledge of various aspects of the Board’s responsibilities.


7. Reviewing and approving the practices of good corporate governance for the Company.

The Corporate Governance Report of Thai Listed Companies 2006 prepared by the Institute of

Directors Association (IOD) gave the Company an overall rating of “Very Good”. A point of pride for the Company

is an “Excellent” rating for information disclosure and transparency. This was the highest score given for this

category in the report. The survey covered five major categories of good corporate governance practice (totaling

122 items). This rating reflects the determination and dedication of the Board of Directors, senior management

and staff who have placed great importance on conducting business with transparency, accountability

and equitable treatment of all stakeholders. Confident that good corporate governance practices will

foster sustainable growth for the Company and the nation, THAI will continue to carry out its business in

accordance with these principles.

Borwornsak Uwanno

Chairman of Good Corporate Governance Committee



Good Corporate Governance Compliance Report

The Company understands the importance of good corporate governance and diligently observes

good corporate governance guidelines. The Board of Directors has established a Good Corporate Governance

Committee along with its various sub-committees, as well as a Corporate Secretariat Department, Investor Relations

Department and a Risk Management Department. Policies were created outlining principles for promoting a

culture of good corporate governance to enhance management effectiveness and efficiency as well as forming a

solid base for future growth.

In 2004, THAI was rated on good corporate governance based on guidelines of the Securities and

Exchange Commission. The rating process was carried out by the Thai Rating and Information Services Company

Limited (TRIS). The process involved analyzing and evaluating 2002 - 2004 performance data compiled from

interviews with senior management and staff of the Company as well as credible information available to the

general public regarding shareholder rights, good corporate governance practices, the role of the Board of

Directors and management and the level of information disclosure. The result received was a rating of “Good”

for Corporate Governance.

In 2005, the Company had the Thai Institute of Directors Association (IOD) prepare a company-specific

assessment report. The results of this report were included in the handbook of Good Corporate Governance for

the Company. In the report, the Company was compared to other listed companies to determine THAI’s strengths

and weaknesses. Moreover, the advice provided by IOD helped the Company to find appropriate ways to

disclose information. In 2006, to comply with regulations of the Organization for Economic Cooperation and

Development (OECD), the Company received a rating of “Very Good”.

These results reflect the commitment of all staff, including the Board of Directors and management,

to uphold the principles of good corporate governance, transparency in business operations, accountability

and equitable treatment of stakeholders. This firm foundation in good corporate governance will enable

THAI to sustain growth and provide benefit and prosperity to the Thai nation.

Measures undertaken by THAI to comply with legal guidelines relating to good corporate governance,

including those of the Securities and Exchange Commission and the Stock Exchange of Thailand are

described below.

1. Policies of Good Corporate Governance

Thai Airways International Public Company Limited is fully committed to the principles of good

corporate governance. This commitment is reflected in the Board of Directors’ resolution of 28 October 2005

approving the following policies:



- Adherence to rightfulness

- Appropriate response to customer and stakeholder needs

- Transparency of operations

- Job responsibility

- Operational responsibility

- Equitable treatment

- Vision

- Ethics

Much effort is made to firmly establish these principles in the minds of Board members, management

and staff to create a foundation for improving the efficiency and effectiveness of the Company’s operations as

well as equitable treatment of stakeholders. Such foundation also increases confidence, transparency and promotes

fair operations and these in turn ensure sustainable profitability and increase share value.

The Company is committed to adhering to the principles and guidelines of good corporate governance

according to the Ministry of Finance guidelines for state enterprises, the fifteen principles of the Stock

Exchange of Thailand and International Best Practices. THAI’s seven guiding principles regarding responsibility

towards stakeholders, the environment, society and the nation are as follows:

1. Uphold shareholder rights and ensure equitable treatment

2. Ensure integrity of structure, role and duties of independent directors

3. Ensure sufficient information disclosure and transparency

4. Ensure sufficient internal control and risk management

5. Uphold the Company’s code of conduct

6. Pursue long-term creation stakeholder value

7. Promote best practices

The Board of Directors appointed a Good Corporate Governance Committee comprising members

of the Board and management and charged them with the responsibility of reviewing and advising the Board

on good corporate governance practices. The Committee is also responsible for ensuring adherence to the

guidelines of the Ministry of Finance, the Stock Exchange of Thailand and international best practices. In addition,

the Committee is responsible for devising a comprehensive review process and ensuring that all Board members

attend relevant courses at either the Thai Institute of Directors Association (IOD) or other institutions.


Sub-committees appointed by the Good Corporate Governance Committee

- Code of Conduct and Good Corporate Governance Promotion Sub-Committee

The Code of Conduct and Good Corporate Governance Promotion Sub-Committee is responsible

for improving Company ethics, clarifying the concept of good corporate governance and promoting the

observation of these guidelines to employees.

This past year, the Code of Conduct and Good Corporate Governance Promotion Sub-Committee

revised the Thai Airways International Ethics handbook (in English and Thai) with operating procedures for

conducting business and providing channels for staff feedback. The handbook was distributed to local

and overseas staff and were posted on the THAI website.

The Sub-Committee organized a variety of activities to promote awareness of the importance of

good corporate governance to the members of the Board, management, staff and other related parties.

These include publication of a quarterly magazine focused on good corporate governance, holding a

slogan competition, “Promote Good Corporate Governance Week” with various departments within THAI,

visiting other business entities to observe first hand good corporate governance in action and preparing a

PR video. Announcements were made via the intranet and audio hotline to inform staff of these activities.

The Chairman of the Good Corporate Governance Committee was invited to give a special speech on

“Good Corporate Governance and THAI” at the Utapao Airport. The opinions of staff were solicited

using questionnaires and coaching teams were formed with a ratio of one coach to seven staff. These teams

were given the responsibility of keeping staff informed about developments.

- The Good Corporate Governance in Work Process Sub-Committee

The Good Corporate Governance in Work Process Sub-Committee is responsible for reviewing

work processes to ensure fair treatment of employees and ensure their adherence of Good Corporate Governance

principles.

Recruiting guidelines were revised and procedures for appointing and transferring management

level staff were redrafted to reflect Good Corporate Governance principles. Feedback from staff via the website

is reviewed by the sub-committee so that further changes can be incorporated. The sub-committee is

reviewing the performance evaluation system and will provide final recommendations to the Good

Corporate Governance Committee.

- Sub-Committee to Improve Good Corporate Governance Rating

The Sub-Committee to Improve Good Corporate Governance Rating is responsible for making

recommendations and coordinating with relevant parties in order to improve the Company’s Good Corporate

Governance rating for 2006 undertaken by the Thai Institute of Directors Association (IOD).


- Sub-Committee to study the Royal Decree on Good Governance B.E. 2546

The Sub-Committee to Study the Royal Decree on Good Governance B.E. 2546 is responsible for

studying the decree, submitting recommendations to the Good Corporate Governance Committee and

ensuring compatability of Company’s principles to the decree.

2. Shareholders: Rights and Equitable Treatment

Shareholders’ Rights

THAI recognizes the importance of shareholders’ rights and the equitable treatment of all shareholders

and has therefore implemented policies to protect the basic rights of its shareholders. These rights include the

right to sell/transfer shares, the right to receive a share of the profits, the right to access Company information,

the right to attend shareholders’ meetings, the right for a proxy vote, the right to express personal opinions and

the right to ask questions at shareholders’ meetings.

Equitable Treatment of all Shareholders

The Company has provided all shareholders with equitable and fair treatment according to the laws

and requirements regarding the protection of basic rights and the prevention of insider trading. THAI

forbids directors, including those retired from office for less than six months and Company executives to

buy or sell Company securities one month before and three days after the release of financial statements.

All directors and executives have to report their securities holding and regularly submit reports to the Board of

Directors. This measure aims to prevent the misuse of insider information which may affect all shareholders.

3. Stakeholders’ Rights

The Company’s Main Responsibilities

- Providing comprehensive air transport services encompassing domestic and international routes,

focusing on safety, convenience and unsurpassed service quality to satisfy its customers and gain

their trust

- Managing the business effectively and efficiently at par with internationally accepted standards while

delivering satisfactory operating results to maximize value to shareholders

- Providing a stable, safe and friendly working environment so that everyone can feel proud to be

part of the Company’s success as well as offering appropriate employee remuneration to optimize

their effectiveness

- Responsibility as a national flag carrier

The Company has clear guidelines regarding the rights of stakeholders within the Company (shareholders,

Board members, and company employees) as well as external entities (customers, trade partners, government


entities and other related parties). These guidelines also encompass responsibilities to humanity, society

and the environment. Such guidelines have been printed every year since 2002 in “Thai Airways International

Ethics” handbook so that Directors, management and staff are able to adhere to them. Rights of stakeholders

at THAI include:

In Relation to Shareholders - Performing duties with honesty, trustworthiness and fairness for the

benefit of shareholders as well as other related groups.

- Profitably managing the business and maximizing shareholder wealth.

- Execution of duties with efficiency and circumspection.

- Safeguarding the Company’s assets.

- Disclosing sufficient and accurate financial and non-financial data in a

timely manner that reflects the operational and financial status of the

Company.

In Relation to Customers - Adopting a positive attitude and placing great importance on

customers, offering services with enthusiasm and courtesy, keeping

customers’ information confidential and treating customers equitably

to provide impressionable service.

- Studying and understanding customers’ actual needs to ensure quality

service at every customer touch point, evaluating requirements before

offering services, updating information and seeking opportunity to

maximize customer satisfaction.

- Establishing strong relationships to build loyalty, offering inputs from

passengers to improve services, implementing systems that quickly

and satisfactorily handle customer complaints.

In Relation to Business Partners, - Treating partners equitably and fairly with consideration from mutual

Creditors or Debtors benefit and fairness to partners.

- Avoiding conflicts of interest while complying with obligations.

- Disclosing accurate and factual information while solving problems in

order to maintain good business relationships.

In Relation to Business - Following the framework of fair competition.

Competitors - Avoiding false accusations on others without substantiated information.

- Avoiding illegal access to competitors’ confidential information.

In Relation to Sellers of - Implementing transparent procurement policies while strictly

Products and Services following terms and conditions of contracts, making prompt payment,

and providing sellers of products and services with necessary informa-


tion.

In Relation to Staff Members - Realizing that the Company’s human resource is its most important as-

set, the Company seeks to recruit and employ knowledgeable, capable

and experienced staff. Ongoing personnel development programs are

provided to supplement staff knowledge and capabilities with higher

levels of skill. A key indicator that has been set to assess THAI’s

commitment to developing staff skills is the number of days spent

attending training courses. Salaries have been adjusted to be comparable

to leading companies in Thailand and peers in the aviation industry. All

permanent staff are entitled to the benefits provided within the

international commercial aviation industry. The Company also offers

fringe benefits to staff, such as contribution to employee’s provident

fund and support for the Thai Airways International Club and Thai

Employees’ Savings and Credit Coops Ltd. The Company along with its

staff established a health fund __ “Contribution Parents Medical Fund”

for the parents of staff members who are not supported by any other

health plans.

- THAI offers professional development courses to help staff enhance their

competencies to better complete tasks at hand and to improve service

standards to provide greater customer satisfaction.

In Relation to Society and - Activities yielding mutual benefit while avoiding activities that bear

Community negative impact on the nation, natural resources, environment or the

general public.

- Supporting social activities.

- Encouraging and firmly establishing a sense of social responsibility for

all employees.

- Giving neither support nor assistance to any activity that is intended to

avoid legal responsibility.

- Avoiding involvement in politics.

In Relation to the Environment - All operations are subject to observing internationally accepted standards

of managing the environment and ensuring that all activities of THAI are

in-line with various country’s environmental standards and related laws.

- Improving on environmental management for all activities with clearly

defined objectives, targets, planning and evaluation to minimize


pollution and environmental impact.

- Considering the environmental impact of the Company’s activities

such as design, procurement, production and service provision so as

to optimize the use of resources for the benefit of the organization

and the society as a whole.

- Raising awareness while continuously offering courses on environment

management to ensure effectiveness.

- Supporting conservation as well as providing relevant information to

employees, customers, government agencies and the general public

to build a positive corporate image and reflect the Company’s

understanding of environment management.

- Responding quickly and efficiently to situations bearing impact on the

environment and community as a result of the Company’s operations.

4. Shareholders’ Meeting

The Company held the 2005 Annual General Shareholders’ Meeting in accordance with the guidelines of

both the Stock Exchange of Thailand and the Securities Exchange Commission as well as the principles of TRIS

and IOD.

Date, Time and Place of the Meeting

The 2005 Annual General Shareholders’ Meeting was held on 23 December 2005 at the Event Hall 106 B,

BITEC Exhibition and Conference Center, Bangna-Trad Road, Bangkok. This was within four months post

closure of the Company’s fiscal year-end. The above mentioned venue can accommodate up to 1,000 people.

Submission of Documentation

A letter of invitation along with the Board’s opinion on each agenda were sent out 14 days prior to the day

of the Annual General Shareholders’ Meeting. An announcement of the Annual General Shareholders’ Meeting

was also placed in Thai daily newspapers for three consecutive days prior to the meeting date for shareholders to

read and consider each agenda. Each agenda was clearly marked as for acknowledgement, for approval, or for

consideration.

Proxy

Shareholders unable to attend were able to appoint proxies or give authorization to either of the five

independent directors in attendance and vote at the meeting on shareholder’s behalf. Authorization was given


by completing an enclosed proxy form attached to the invitation letter.

Attendance and Registration

Along with the letter of invitation, the Company provided explanation of procedures for attendance

and documents verifying shareholders’ rights to attend the Annual General Shareholders’ Meeting. At the meeting,

the Company arranged registrars to make the process more convenient for shareholders and their proxies.

Shareholders were allowed to register two hours prior to the designated meeting time.

Attendance by the Board of Directors at the Annual General Shareholders’ Meeting

The Board of Directors place great importance on the Annual General Shareholders’ Meeting. The Board

Chairman presided over each meeting while 11 other directors were in attendance. The attendees include the

Board Chairman, Audit Committee Chairman, Good Corporate Governance Committee Chairman, Chairman of

Independent Directors, Remuneration Committee Chairman, Corporate Structure Improvement Committee

Chairman and Chairman of the Management Committee:


2. Mr. Suparat Kawatkul Vice Chairman

3. Mr. Somchainuk Engtrakul Director

4. Mr. Prasithi Damrongchai Director

5. Mr. Borwornsak Uwanno Director

6. Mr. Vudhibhandhu Vichairatana Director

7. Mr. Vichit Suraphongchai Director

8. Mr. Olarn Chaipravat Director

9. Pol. Gen. Nopadol Somboonsub Director

10. Mr. Chai-anan Samudavanija Director

11. Mr. Tirachai Vutithum Director

Senior management and representatives from various departments attended the meeting to hear

recommendations and answer shareholders’ questions.

Shareholders’ opportunity to ask questions, make comments, vote on resolutions and the recording

of the minutes

The Company clearly explained the voting and vote counting procedures before commencing the

meeting. During the meeting, important matters were proposed to shareholders for consideration and

voted upon in the order as set forth in the agenda. The Chairman provided shareholders with equal opportunity

to ask questions and gave sufficient time for shareholders to vote and the counting of votes. Voting rights were

limited to one vote per common share held. Resolutions were passed on a majority vote basis. The ballots of

those voting against a resolution or those casting a no vote were kept in case for future review. The Company

recorded not only the minutes and resolutions but also important shareholder comments and recommendations.


5. Leadership and Vision

The Board of Directors is comprised of knowledgeable, capable, and highly successful executives with

diverse backgrounds, understanding the role and responsibilities of being a board member, have the capability

to ensure the Company’s smooth and efficient operations. Board members provide insightful comments, vision,

strategic business direction and the review and approval of the Company’s annual budget. The Board ensures

management ’s adherence to the approved strategies and budgets as well as efficient and effective

management of the organization while observing the rules and regulations of supervisory bodies,

government agencies and shareholder resolutions. The Board also oversees the establishment of an internal

control system and implements sound risk management policies, taking into consideration the interests of

the Company and stakeholders through the observance of Good Corporate Governance principles geared towards

enhancing the Company’s overall value and increasing shareholder confidence.

6. Conflicts of Interest

One aim of the principles of Good Corporate Governance is to prevent conflicts of interest. The Board

of Directors screen transactions that may have conflicts of interest and insist that all appointed Committees,

Management and staff observe SET regulations. In 2004, the Company issued an announcement detailing

guidelines related to disclosures of information of related parties of Thai Airways International Pcl. according to

SET regulations and procedures. It required that management, as defined by the Securities and Exchange

Commission (SEC), must disclose information about persons or related companies that may be deemed to have

conflicts of interest with THAI. A list of such persons or companies must be assimilated by the Corporate Secretary

and forwarded to the responsible units for verification. Should there be a conflict of interest, the SET must be

notified and such conflict must be disclosed in the Company’s annual report (56-2) and the Company’s annual

information disclosure form (56-1).

An announcement was made by the Company that pricing of products and services purchased by a

related party must be at market price. Discount pricing should only be used only if necessary. In following this

guideline, the Company has complied with SET guidelines as well as generally accepted accounting standards. In

addition, THAI’s Secretariat Department compiles a monthly summary for the Board and Management of related

party transactions to keep abreast of such transactions. The Board of Directors and senior management are

required to sign-off on the integrity of information of such related persons and entities.


7. Business Ethics

The Company asserts its commitment to all its stakeholders and takes to heart concerns over

environmental and social issues and upholding national interests while conducting transparent, honest and

ethical ongoing business operations under the principles of Good Corporate Governance.

The Company regards ethical behavior as a factor of success. Therefore, the Company has reviewed

and updated the “Thai Airways International Ethics”, handbook initially prepared in 2002, to suit the current

internal and external environment and to serve as the business practice guideline for directors, management

and staff.

The activities undertaken to raise awareness of Good Corporate Governance among the staff include

providing reviews and comments on the new THAI ethics guidelines, participating in a Good Corporate

Governance slogan competition and attending courses on Good Corporate Governance.

In addition, the Company has consistently improved its work processes for customer service and

support systems by employing the latest information technology to enhance the speed of operations while

providing sustainable benefits for all stakeholders including society and the nation.

8. Balance of Power for Non-Executive Directors

Appointment of Board members is approved at the Ordinary Shareholders’ Meeting and is in accordance

with established guidelines. The Board must consist of at least 5 and not more than 15 directors. As of 30

September 2006, there were 14 Board members as follows:

- 8 Non-Executive Directors

- 5 Independent Directors

- 1 Executive Director

Of the 14 Board members, 93% are non-Executive Directors and 36% are Independent Directors.

The proportion of non-executive and independent members provide sufficient balance of power.

The Board members are bound by fiduciary duty to carry out their responsibilities in compliance with all

legal guidelines, rules and regulations as set forth by THAI’s charter and shareholder resolutions. Board members

must carry out their responsibilities with the greatest diligence, prudence and honesty while protecting the

interests of the Company. It is required that one third of the directors - those whose tenures are the longest -

must retire at each Annual General Shareholders’ Meeting.


9. Evaluation of Board Members

The members of the Board are subject to periodic self-evaluations and cross-evaluations. There is also

an evaluation of the Board’s performance as a whole. Results from such evaluations are reviewed to

determine ways to improve Board effectiveness and efficiency.

10. Aggregation and Segregation of Positions

The Chairman of the Board of Directors shall not hold any management position within the Company

or simultaneously hold the position of Company President. The Chairman shall not have any relationship to

the Company’s management. There is in place guidelines providing clear cut separation of the roles of Board

members and that of management.

11. Remuneration of Directors and Management

There are clear guidelines on the remuneration for Board members, members of sub-committees and

persons who have been brought in to assist the Company. To attract and retain capable and knowledgeable

Board members, the remuneration package must be competitive and comparable to that offered by other

companies in the industry. Compensation is also provided for Board members who have been tasked with

additional responsibilities. For Board members who have management responsibilities, remuneration is linked

to the Company’s overall financial performance and that of the individual person’s performance and contribution.

The standard of remuneration complies with the guidelines set forth by the Ministry of Finance and the Stock

Exchange of Thailand and is on par with international standards. Remuneration details for Directors and

management in fiscal year 2006 has been provided in the Remuneration of Board of Directors and Executives

section.

12. Board of Directors’ Meetings

The Board of Directors meet regularly on the second Wednesday of each month while non-scheduled

meeting are called as needed. The agenda along with its details are submitted to members of the Board seven

days prior to each Board meeting. In fiscal year 2006, the Board met 16 times. Attendance of each Director in

fiscal year 2006 is summarized in the section on Shareholding and Meetings of the Board of Directors and Audit

Committee.

The Corporate Secretariat prepares the minutes of each Board meeting, which is submitted to each

Board member for review prior to ratification of the minutes at the next Board meeting. All agenda approved in

Board meetings are filed and are open for inspection by any interested party.


13. Sub-Committees

The roles and responsibilities of each of the sub-committees appointed by the Board of Directors

have been outlined in the section on Board of Directors and Committees.

14. Internal Control and Internal Audit

THAI recognizes the importance of having in place internal control systems and is committed to

providing sufficient and appropriate control measures to protect against potential financial and operational

losses along with potential losses from risk management and management deficiencies. Implemented internal

control systems comply with the 2001 State Audit commission’s guidelines. Results of annual reviews on internal

audit are submitted to the State Audit Commission, related authorities and the Audit Committee. An Internal

Control Policy handbook was prepared to serve as reference for management and staff.

The Company also recognizes the importance of undertaking a self-assessment (Control Self-

Assessment : CSA). A consultant was brought in during the past year to develop and enhance the self-assessment

process under Co-Sourcing. The self-assessment processes for the Finance and Accounting Department and

THAI’s Catering were the pilot projects.

To evaluate the effectiveness of THAI’s internal audit system, THAI set up an Internal Audit Department,

responsible for auditing performance and evaluating internal controls. This unit reports regularly to the

Audit Committee, which operates under SET’s guidelines on Good Corporate Governance and guidelines

stipulated within the State Enterprise Audit handbook that the Ministry of Finance uses as reference

December 2003. A summary of key internal audit guidelines include :

- The Audit Committee is responsible for assessing the adeqacy of internal control systems by regularly

reviewing audits undertaken by the Internal Audit Department and reports of the independent auditor.

The objective is to assess the appropriateness of the internal audit process and to ensure legal compliance,

regulations, policies and other related guidelines. Recommendations and/or major flaws are reported to

the Board of Directors for consideration and immediate action.

- The Internal Audit Department audits the Company’s operations by selecting operations in accordance

with its risk profile and ranking. Audit is performed on the internal controls within each function and evaluates

management policies in relation to managing these risks. The Department also provides recommendations

to management of the respective units on how to improve internal control process and Company guidelines

on managing risk in the respective areas. This is to improve efficiency and effectiveness in the Company’s


operations. The Internal Audit Department reports its findings to the Audit Committee regularly but a report is

submitted to the Committee at least on a quarterly basis. Feedback is also provided to the respective supervisor

in regards to observations or suggestions regarding internal control on key issues that could lead to damage

of significance for the Company. The President will also be notified to consider taking immediate action to

prevent potential damage.

15. Statement from the Board of Directors

The Board of Directors is responsible for providing shareholders with an annual report covering

THAI’s performance and key events that took place in the completed fiscal year. The Board is also responsible

for putting in place a comprehensive risk management system with appropriate and effective internal

control measures. An Audit Committee was established and is charged with the responsibility of ensuring

integrity and transparency of financial disclosure, ensuring compliance with generally accepted accounting

principles and establishing sufficient and appropriate internal control measures. Statements from both the Board

of Directors and the Audit Committee are included in the annual report.

16. Investor Relations

In THAI’s effort in becoming a leading publicly listed company, the Company emphasizes on good corporate

governance by providing shareholders with the highest level of benefit encompassing shareholder rights,

equitable treatment including timely, transparent and sufficient disclosure of information.

The Investor Relations Department is headed by a Vice President and is responsible for the disclosure of

relative information and reports directly to the Executive Vice President of the Accounting and Finance Department.

The regiment of information disclosure to stakeholders is both direct and indirect and is multi-channel.

1. The Securities and Exchange Commission

2. The Stock Exchange of Thailand

3. The Ministry of Commerce

4. Meetings with analysts, investors and the Company’s senior management

5. Non-deal road shows - domestic and international

6. Information disclosure via the media

7. Information disclosure via e-channels, e-mail, phone and fax

Direct : The communication plan is directed towards the Company’s shareholders, equity analysts, fund

managers, employees and other stakeholders through :


Activity Frequency

Road shows (domestic & international) 2 - 4 times/annum

SET or Ministry of Finance related activities 4 - 8 times/annum

Analyst briefings 4 times/annum

One-on-one meetings with management or via phone 150 times/annum

Reply to information request - phone/e-mail 3 - 5 times/day

Updating the company’s data on the website 3 - 6 times/week

Company visits 2 - 4 times/annum

Indirect : The Company provides basic and statistical information regarding its operating and financial

performance along with notices to the Stock Exchange of Thailand on its website www.thaiair.com.

17. Office of the Secretariat

To comply with good practices of a public company as set forth by both the SEC and the SET, the Board

of Directors appointed a company secretary to facilitate functions of the Board of Directors. This includes

the responsibility of ensuring Board decisions and actions comply with all legal guidelines and that of the

Company’s own charter and operating guidelines including shareholder resolutions. The Corporate Secretary is

responsible for the preparation and storage of all Board meeting and shareholder meeting documents and is

also responsible for coordinating with all concerned parties.

The current Company Secretary is ACM Narongsak Sungkapong, Executive Vice President reporting

directly to the President. The secretary monitors the activities of the Board of Directors to ensure compliance

with Company legislation, rules and regulations while promoting Good Corporate Governance. The departments

under the supervision of the Company Secretary include:

- Legal Department

- Council of the Board Members and Management Meeting Department

- Compliance Department

- The Secretariat Department


18. Policies Relating to Insider Information

THAI adheres strictly to all regulations regarding insider information established by the Stock

Exchange of Thailand and the Office of Securities and Exchange Commission. In 2004, the Company issued

an announcement regarding the use of insider information for personal gain. This announcement prohibits

Directors or recently retired Directors (within 6 months) as well as management from buying or selling

Company shares one month prior to financial disclosure and three days after disclosure. The secretariat has

informed members of the Board and management of this regulation. Moreover, the secretariat prepares monthly

updates on shares held by members of the Board, management, their spouses and dependent children.

The reports detail changes in shareholding and detail applicable penalties for not informing the SET within

the specified time period. Additionally, the Company has clearly stated in its Thai Airways International

Ethics Handbook that the use of insider information for personal gain is considered a breach of Company

discipline.

19. Personal Development for Directors and Senior Executives

The role of the Board of Directors registered under Good Corporate Governance is a topic of great

concern for the authorities, institutional investors, shareholders and for THAI itself. Stakeholders have high

expectations for members of the Board. They are expected to play an active role in guiding the business

towards sustainable growth, to be accountable for financial performance, protect shareholders’ rights and

ensure that investors, whether large or small, obtain the maximum return on investment. Ongoing personal

development for directors and executives is imperative in this era of ever changing conditions, more intense

competition and higher shareholder expectations. To this end, THAI’s directors and senior executives

attended courses provided by the Thai Institute of Directors Association (IOD). The courses include Director

Accreditation Program (DAP), Director Certification Program (DCP), Audit Committee Program (ACP), The Role of

Chairman Program (RCM) and Finance for Non-Finance Directors (FN). The Company Secretary and other

relevant staff have attended the Corporate Secretary Development Program organized by the SET and the

Association of Registered Companies.


89Thai Airways International Public Company Limited 89Thai Airways International Public Company Limited

Audit Fee and Related Expenses

As a state enterprise, Thai Airways International Pcl. must comply with the Royal Decree and section 4(4)

and 39(2) of the Constitution regarding auditing B.E. 2542 the Company’s financial statements. The audit must

be done by the Office of Auditor General. The transfer or changes in individual auditors or officers rests with the

Office of Auditor General. For the fiscal year 2006, the audit fee was 2.90 million baht and other audit expenses

were 0.79 million baht.

Other Factors Affecting Investment Decisions

THAI is currently subject to a number of lawsuits mostly in the form of labor disputes and compensatory

filings totaling 519 million baht and 288 million baht, respectively. The outstanding filings bear insignificant

impact on the Company’s financial stability.

In this era of globalization, the Company’s financial performance and share price may fluctuate as a

result of macro factors and the nature of the commercial airline industry. Macro factors resulting from the

operation of flights to 71 destinations in 4 continents include world economic trends, overseas crises, health-

related problems, natural disasters, as well as the fluctuations of exchange rates, interest rates and fuel price.

Therefore, the Company recommends that all shareholders, investors, security analysts, fund managers

and stakeholders thoroughly study key factors that may bear significant impact on the commercial airline

industry and in turn bear direct impact on the Company’s financial results before making investment decisions.


Number of No. of Attendance/Total Meeting (times) Period of

Shares Board of Directors Audit Committee Time

1. Mr. Wanchai Sarathulthat Chairman - 20/20 -

2. Mr. Thanong Bidaya Former Chairman - - -

3. Mr. Suparut Kawatkul Vice Chairman - 20/20 -

4. ACM Kongsak Vantana Former Vice Chairman - - -

5. Mr. Srisook Chandrangsu Former Director - 2/4 -

6. Mr. Chai-Anan Samudavanija Former Director - 3/4 -

7. Mr. Olarn Chaipravat Former Director - 8/8 3/3

8. Mr. Prasit Damrongchai Former Director - 7/7 -

9. Mr. Tatchai Sumitra Former Director - - -

10. Mr. Vichit Suraphongchai Former Director - 7/8 2/3

11. Mr. Viroj Nualkhair Former Director - - -

12. Pol. Gen. Sant Sarutanond Former Director - - -

13. Mr. Kanok Abhiradee Former Director - 8/10 -

14. ACM Chalit Pukbhasuk Independent Director - 9/13 -

15. Pol. Gen. Nopadol Somboonsub Independent Director - 20/20 8/8

16. Mr. Tirachai Vutithum Independent Director - 16/20 3/3

17. Mr. Pachara Yutidhammadamrong Independent Director - 13/16 8/8

18. Mr. Vudhibhandhu Vichairatana Independent Director 2,000 17/20 10/11

19. Mr. Borwornsak Uwanno Director - 15/20 2/3

20. Mr. Pichai Chunhavajira Director - 15/20 2/2

21. Gen. Ruengroj Mahasaranond Director - 5/9 -

22. Mr. Chartsiri Sophonpanich Director - 16/20 -

23. Mr. Vikrom Koompirochana Director - 5/9 -

24. Mr. Somchainuk Engtrakul Director - 18/20 -

25. Flg. Off. Apinan Sumanaseni Director 2,600 10/10 -

Board of Directors

Board of Directors’ Shareholding and Meeting Attendance for Fiscal Year 2006

17 Dec 04 - 30 Sep 06

23 Dec 03 - 10 Mar 05

17 Dec 04 - 30 Sep 06

23 Dec 03 - 1 Aug 05

20 Dec 02 - 23 Dec 05

20 Dec 02 - 23 Dec 05

17 Dec 04 - 4 Apr 06

23 Mar 05 - 16 Feb 06

20 Dec 02 - 17 Dec 04

17 Dec 04 - 4 Apr 06

23 Dec 03 - 17 Feb 05

20 Dec 01 - 17 Dec 04

23 Dec 03 - 2 May 06

23 Dec 05 - 30 Sep 06

9 Mar 05 - 30 Sep 06

23 Dec 05 - 30 Sep 06

23 Dec 05 - 30 Sep 06

27 Oct 04 - 30 Sep 06

17 Dec 04 - 30 Sep 06

14 Sep 05 - 30 Sep 06

10 May 06 - 30 Sep 06

23 Dec 05 - 30 Sep 06

10 May 06 - 30 Sep 06

23 Dec 05 - 30 Sep 06

10 May 06 - 30 Sep 06

Note : Former Chairman, former Vice Chairman and former Directors are members of THAI’s Board of Directors who have resigned from theirpositions before 30 September 2006


1. Mr. Wanchai Sarathulthat Chairman 611,250 70,000 777,571 1,458,821

2. Mr. Thanong Bidaya Former Chairman - - 453,008 453,008

3. Mr. Suparut Kawatkul Vice Chairman 568,125 140,000 723,708 1,431,833

4. ACM Kongsak Vantana Former Vice Chairman - - 721,774 721,774

5. Mr. Srisook Chandrangsu Former Director 60,000 - 850,771 910,771

6. Mr. Chai-Anan Samudavanija Director 75,000 5,000 822,043 902,043

7. Mr. Olarn Chaipravat Former Director 225,000 171,250 822,043 1,218,293

8. Mr. Prasit Damrongchai Former Director 175,000 35,000 430,910 640,910

9. Mr. Tatchai Sumitra Former Director - - 172,364 172,364

10. Mr. Vichit Suraphongchai Former Director 195,000 130,000 822,043 1,147,043

11. Mr. Viroj Nualkhair Former Director - - 313,159 313,159

12. Pol. Gen. Sant Sarutanond Former Director - - 172,364 172,364

13. Mr. Kanok Abhiradee Former Director 245,000 - 822,043 1,067,043

14. ACM Chalit Pukbhasuk Independent Director 390,000 60,000 - 450,000

15. Pol. Gen. Nopadol Somboonsub Independent Director 525,000 350,000 461,847 1,336,847

16. Mr. Tirachai Vutithum Independent Director 465,000 120,000 822,043 1,407,043

17. Mr. Pachara Yutidhammadamrong Independent Director 450,000 320,000 - 770,000

18. Mr. Vudhibhandhu Vichairatana Independent Director 525,000 410,000 764,589 1,699,589

19. Mr. Borwornsak Uwanno Director 495,000 258,750 822,043 1,575,793

20. Mr. Pichai Chunhavajira Director 465,000 155,000 38,819 658,819

21. Gen. Ruengroj Mahasaranond Director 190,000 40,000 - 230,000

22. Mr. Chartsiri Sophonpanich Director 495,000 80,000 822,043 1,397,043

23. Mr. Vikrom Koompirochana Director 220,000 20,000 - 240,000

24. Mr. Somchainuk Engtrakul Director 465,000 161,250 850,771 1,477,021

25. Flg. Off. Apinan Sumanaseni Director 250,000 20,000 - 270,000

Board of Directors

Remuneration for the Board of Directors for Fiscal Year 2006

MeetingAllowanceof Board

of Directors(Baht)

Bonusof fiscal year

2005

TotalRemuneration

(Baht)

MeetingAllowance

of SubsidiariesCommittee

(Baht)

Note : Former Chairman, former Vice Chairman and former Directors are members of THAI’s Board of Directors who have resigned from theirpositions before 30 September 2006


Ministry of •The MOF is a 1. The MOF is the guarantor 1. The MOF is the guarantor

Finance (MOF) major shareholder of loans as follows : of loans as follows :

of THAI •Loans from local financial The loans bear interest •Loans from local financial Please see (4)

with 53.76% institutions rate of 8.80% and are institutions

equity interest - Initial amount : repayable in two - Initial amount :

3,000.00 million baht installments per year 3,000.00 million baht

- Outstanding balance : over a 10 year term - Outstanding balance :

150.00 million baht 450.00 million baht

- Interest expense and - Interest expense and

accrued : 20.95 accrued : 47.23

million baht million baht

2. Loans via the MOF The loans bear interest 2. Loans via the MOF The loans bear interest

- Initial amount : rates between - Initial amount : rates between

30,510.91 million baht 1.13-7.07% and are 46,213.91 million baht 1.13-7.07% and are

- Outstanding balance : repayable at maturity - Outstanding balance : repayable at maturity

17,873.32 million baht over terms of 5-20 years 19,476.59 million baht over terms of 5-20 years

- Interest expense and for long-term loans and - Interest expense and for long-term loans

accrued : 637.50 within one year for short- accrued : 1,410.45

million baht term loans million baht

Thai-Amadeus •THAI is a major THAI leased to The company purchases THAI leased to Please see (4)

Southeast Asia shareholder with Thai-Amadeus Southeast Asia goods and services from Thai-Amadeus Southeast Asia

Company Limited 55% equity Company Limited office area, related parties on normal Company Limited office area,

(Subsidiary interest computer and office commercial terms computer and office

Company) •As at 30 September equipment. In addition, equipment. In addition,

2006, three of THAI provided the subsidiary THAI provided company with

THAI’s executives, with accounting services and accounting services and had

Mr. Vasing Kittikul, had seconded THAI personnel seconded THAI personnel for

Mr. Kobchai Srivilas, for its operations. THAI also sold its operations. THAI also sold

Mr. Wallop ticket to the subsidiary ticket to the company

Bhukkanasut - Aggregate amount : - Aggregate amount :

are Chairman 49.12 million baht 55.13 million baht

and director of - Outstanding balance of - Outstanding balance of

Thai-Amadeus service expense : service expenses :

Southeast Asia 10.61 million baht 15.44 million baht

Company Limited - Outstanding balance of - Outstanding balance of

respectively ticket : 0.02 million baht ticket : 0.14 million baht

•As at 30 September

2005, two of

THAI’s executives,

Mr. Prajak

Jamrusmechoti and

Mr. Tasnai Sudasna

are directors of

Thai-Amadeus

Southeast Asia

Company Limited

Related Parties Transactions

Details of Related Parties Transactions

Name of persons Relationship Type of Transaction Conditions /Pricing Type of Transaction Conditions /Pricing

who may have as at 30 September 2006 Policy as at as at 30 September 2005 Policy as at

conflicts of interest 30 September 2006 30 September 2005

(1) (2) (3) (4) (5) (6)


Donmuang •THAI holds 40% THAI obtained for its The company purchases THAI obtained for its Please see (4)

International equity interest in passenger accommodation goods and services from passengers accommodation

Airport Hotel Donmuang services provided by related parties on normal services provided by

Company Limited International Donmuang International commercial terms Donmuang International

(Associated Airport Hotel Airport Hotel Company Limited Airport Hotel Company Limited

Company) Company Limited - Aggregate amount : - Aggregate amount :

•As at 30 56.00 million baht 58.61 million baht

September 2006, - Outstanding balance :

four of THAI’s 0.80 million baht

executives,

Wg. Cdr. Supachai

Limpisvasti,

Flg. Off. Chinawut

Naressaenee,

Mrs. Ngamnit

Sombutpibool

and Mr. Tummasak

Chutiwong are

Chairman of board

director and directors

of Donmuang

International

Airport Hotel

Company Limited

respectively


2005, two of


ACM Narongsak

Sangapong and

Wg. Cdr. Supachai

Limpisvasti are

directors of

Donmuang

International

Airport Hotel

Company Limited

Bangkok Aviation •THAI holds 1. BAF provides fuel services The company purchases 1. BAF provides fuel services Please see (4)

Fuel Services 22.59% equity for THAI goods and services from for THAI

Public Company interest in BAFS - Aggregate amount : related parties on normal - Aggregate amount :

Limited (BAFS) •As at 30 September 295.30 million baht commercial terms 270.63 million baht

(Associated 2006, two of - Outstanding balance : - Outstanding balance :

Company) THAI’s executives, 25.64 million baht 21.11 million baht

ACM Narongsak 2. THAI sold ticket to 2. THAI sold ticket to

Sangapong and BAFS BAFS

FLt. Lt. Pisal - Aggregate amount : - Aggregate amount :

Chayakula are 0.22 million baht 0.02 million baht

directors of BAFS - Outstanding balance : - Outstanding balance :




(1) (2) (3) (4) (5) (6)


•As at 30 September 0.01 million baht 0.01 million baht

2005, one of

THAI’s directors,

Mr. Srisook

Chandrangsu, and

three of THAI’s

executives,

ACM Narongsak

Sangapong,

Mr. Kobchai Srivilas

and Mr. Tasnai

Sudasna are

directors of BAFS

Royal Orchid Hotel •THAI holds 24% 1. THAI obtained for its The company purchases 1. THAI obtained for its Please see (4)

(Thailand) Public equity interest in passengers accommodation goods and services from passengers accommodation

Company Limited Royal Orchid services provided by Royal related parties on normal services provided by Royal

(Associated Hotel (Thailand) Orchid Hotel (Thailand) commercial terms Orchid Hotel (Thailand)

Company) Public Company Public Company Limited Public Company Limited

Limited - Aggregate amount : - Aggregate amount :


2006, one of - Outstanding balance :

THAI’s directors, 0.83 million baht

Mr. Somchainuk 2. THAI sold ticket to 2. THAI sold ticket to

Engtrakul, and Royal Orchid Hotel Royal Orchid Hotel

three of THAI’s (Thailand) Public (Thailand) Public

executives, Company Limited Company Limited

Mr. Vasing Kittikul, - Aggregate amount : - Aggregate amount :

FLt. Lt. Pisal Chayakula 0.03 million baht 0.26 million baht

and Mr. Kaweepan - Outstanding balance : 0.01

Raungpaka are million baht

directors of Royal

Orchid Hotel

(Thailand) Public

Company Limited


2005, one of

THAI’s directors,

Mr. Srisook

Chandrangsu, and

three of THAI’s

executives,

Mr. Kanok Abhiradee,

Mr. Tasnai Sudasna

and Mr. Kaweepan

Raungpaka are

directors of Royal

Orchid Hotel

(Thailand) Public

Company Limited




(1) (2) (3) (4) (5) (6)


Phuket Air •THAI holds 30% THAI purchased food The company purchases 1. THAI purchased food Please see (4)

Catering Company equity interest in and the catering services goods and services from and the catering

Limited Phuket Air from Phuket Air Catering related parties on normal services from Phuket Air

(Associated Catering Company Limited commercial terms Catering Company Limited

Company) Company Limited - Aggregate amount : - Aggregate amount :


2006, three of - Outstanding balance : - Outstanding balance :

THAI’s executives, 0.45 million baht 2.05 million baht

Mr. Kaweepan 2. THAI sold food and catering 2. THAI sold food and catering

Raungpaka, services to Phuket Air services to Phuket Air

Mr. Kawin Catering Company Limited Catering Company Limited

Asawachatroj and - Aggregate amount : - Aggregate amount :

Mrs. Pismai 5.67 million baht 5.23 million baht

Chandrubeksa are - Outstanding balance : - Outstanding balance :

directors of Phuket 0.29 million baht 0.53 million baht

Air Catering

Company Limited


2005, three of


Mr. Kanok

Abhiradee,

Mr. Prajak

Jamrusmechoti

and Mr. Kaweepan

Raungpaka are

directors of

Phuket Air

Catering

Company Limited

Fuel Pipeline •THAI holds THAI purchased fuel The company purchases THAI purchased fuel Please see (4)

Transportation 8.35% equity transportation services from goods and services from transportation services from

Limited interest in Fuel Pipeline Transportation related parties on normal Fuel Pipeline Transportation

(Joint Venture Fuel Pipeline Limited commercial terms Limited

Company) Transportation - Aggregate amount : - Aggregate amount :

Limited 57.32 million baht 55.66 million baht

•As at 30 September - Outstanding balance : - Outstanding balance :

2006, one of 5.24 million baht 4.21 million baht


Mr. Prakobkiat

Ninnad is a

director of

Fuel Pipeline

Transportation

Limited




(1) (2) (3) (4) (5) (6)



2005, two of


Mr. Kobchai Srivilas

and Mr. Tasnai

Sudasna are

directors of Fuel

Pipeline

Transportation

Limited

Aeronautical Radio •THAI holds 1. THAI purchased The company purchases 1. THAI purchased Please see (4)

of Thailand 2.77% equity aeronautical navigation and goods and services from aeronautical navigation

Limited interest in leased equipment related parties on normal and leased equipment

(AEROTHAI) AEROTHAI from AEROTHAI commercial terms from AEROTHAI

(Joint Venture •The MOF, a major - Aggregate amount : - Aggregate amount :

Company) shareholder of 921.72 million baht 890.93 million baht

THAI, is a major - Outstanding balance :

shareholder of 0.03 million baht

AEROTHAI 2. THAI sold tickets to 2. THAI sold tickets to

•As at 30 September AEROTHAI AEROTHAI

2006, one of - Aggregate amount : - Aggregate amount :

THAI’s executives, 0.40 million baht 0.34 million baht

Captain Kasem - Outstanding balance : - Outstanding balance :

Panpat is a director 0.08 million baht 0.07 million baht

of AEROTHAI


2005, one of THAI’s

executives, Flg. Off.

Veerachai Sripa is

a director of

AEROTHAI

Suvarnabhumi •THAI holds 30% Commenced operations on - no transactions

Airport Hotel equity interest 10 September 2006,

Company Limited in Suvarnabhumi no transactions

(Associated Airport Hotel

Company) Company Limited


2006, three of


Flg. Off. Norahuch

Ployyai, Mr. Wallop

Bhukkanasut and

Mr. Chokchai

Panyayong are

directors of

Suvarnabhumi

Airport Hotel

Company Limited




(1) (2) (3) (4) (5) (6)



2005, three of


Mr. Kaweepan

Raungpaka,

ACM Narongsak

Sangapong and

Flg. Off. Norahuch

Ployyai are

directors of

Suvarnabhumi

Airport Hotel

Company Limited

Nok Airlines •THAI holds 39% THAI has been leasing out The company purchases THAI has been leasing out Please see (4)

Company Limited equity interest aircraft and providing aviation goods and services from aircraft and providing aviation

(Associated in Nok Airlines operation services to related parties on normal operation services to

Company) Company Limited Nok Airlines Company Limited commercial terms Nok Airlines Company Limited

•As at 30 September - Aggregate amount : - Aggregate amount :

2006, one of 1,694.07 million baht 1,405.26 million baht

THAI’s directors, - Outstanding balance : - Outstanding balance :

ACM Chalit 143.90 million baht 152.49 million baht

Pukbhasuk and

three of THAI’s

executives,

Mr. Wallop

Bhukkanasut,

Mr. Tummasak

Chutiwong and

Mrs. Ngamnit

Sombutpibool are

directors of

Nok Airlines

Company Limited


2005, one of

THAI’s directors,

Mr. Vichit

Suraphongchai

and two of


Flg. Off. Veerachai

Sripa and

Wg. Cdr. Supachai

Limpisvasti are

directors of

Nok Airlines

Company Limited




(1) (2) (3) (4) (5) (6)


PTT Public •The MOF, a major 1. THAI purchased fuel for its The company purchases THAI purchased fuel for its Please see (4)

Company Limited shareholder of aircraft from PTT Public goods and services from aircraft from PTT Public

(Related Company) THAI, is a major Company Limited related parties on normal Company Limited

shareholder of - Aggregate amount : commercial terms - Aggregate amount :

PTT Public 8,072.40 million baht 5,086.27 million baht

Company Limited - Outstanding balance : - Outstanding balance :


2006, two of 2. THAI sold tickets to

THAI’s directors, PTT Public Company

Mr. Suparut Limited

Kawatkul - Aggregate amount :

is a director 1.00 million baht

and Mr.Pichai

Chunhavajira is

an executive of

PTT Public

Company Limited


2005, three of

THAI’s directors,

Mr. Olarn Chaipravat,

Mr. Suparut

Kawatkul are

independent

directors and

Mr. Pichai

Chunhavajira is an

executive of

PTT Public

Company Limited

Airports Authority •The MOF, a major 1. THAI leased land and The company purchases 1. THAI leased land and Please see (4)

of Thailand shareholder of buildings at Bangkok goods and services from buildings at Bangkok

Public Company THAI, is a major International Airport and related parties on normal International Airport and

Limited (AOT) shareholder other airports in Thailand commercial terms other airports in Thailand

(Related Company) of AOT from AOT from AOT

•As at 30 September - Aggregate amount : - Aggregate amount :

2006, one of 2,158.34 million baht 2,041.73 million baht

THAI’s directors, - Outstanding balance : - Outstanding balance :

Mr. Vudhibhandhu 119.29 million baht 1.03 million baht

Vichairatana is 2. THAI sold tickets to AOT 2. THAI sold tickets to AOT

a director of AOT -Aggregate amount : - Aggregate amount :


2005, three of - Outstanding balance : - Outstanding balance :

THAI’s directors, 0.08 million baht 0.05 million baht

Mr. Srisook

Chandrangsu,

ACM Kongsak

Vantana and

Mr. Vudhibhandhu

Vichairatana are

Chairman,

Vice Chairman

and director of

AOT respectively




(1) (2) (3) (4) (5) (6)


Bangchak •The MOF, a major THAI purchased fuel from The company purchases THAI purchased fuel from Please see (4)

Petroleum shareholder of Bangchak Petroleum Public goods and services from Bangchak Petroleum Public

Public Company THAI, is a major Company Limited related parties on normal Company Limited

Limited shareholder of - Aggregate amount : commercial terms - Aggregate amount :

(Related Company) Bangchak 8,264.06 million baht 6,543.94 million baht

Petroleum Public - Outstanding balance : - Outstanding balance :

Company Limited 820.65 million baht 559.01 million baht


2006, one of

THAI’s directors,

Mr. Pichai

Chunhavajira is

a director of

Bangchak

Petroleum Public

Company Limited


2005, one of

THAI’s directors,

Mr. Chai-Anan

Samudavanija is

an independent

director of

Bangchak

Petroleum Public

Company Limited

Dhipaya •As at 30 September 1. THAI purchased Dhipaya The company purchases THAI purchased Dhipaya Please see (4)

Insurance 2006, two of property insurance and goods and services from property insurance and

Public Company THAI’s directors, employee risk benefit related parties on normal employee risk benefit

Limited Mr. Somchainuk insurance policies commercial terms insurance policies

(Dhipaya) Engtrakul and - Aggregate amount : - Aggregate amount :

(Related Company) Mr. Pichai 126.52 million baht 23.03 million baht

Chunhavajira - Outstanding balance : - Outstanding balance :

are Chairman and 0.01 million baht 0.48 million baht

Vice Chairman of 2. THAI sold tickets to Dhipaya

Dhipaya respectively - Aggregate amount

•As at 30 September 0.08 million baht

2005, three of

THAI’s directors,

Mr. Somchainuk

Engtrakul,

Mr. Pichai

Chunhavajira and

Mr. Prasit

Damrongchai are

Chairman,

Vice Chairman

and director of

Dhipaya

respectively




(1) (2) (3) (4) (5) (6)



Necessity and reasonableness of related parties transactions

Having scrutinized items on related parties transactions during fiscal year 2006, ending 30 September

2006, the Audit Committee is of the opinion that the aforementioned items were transacted in accordance

with the Company’s regular business practices and in a reasonable manner. The setting of prices, terms and

conditions were done in the same manner as those offered to non-related parties. There were no transfer benefits

between the Company, subsidiaries, joint ventures, associated company and shareholders.

As a major shareholder of THAI, the Company enjoys favorable cost of funds on loans guaranteed by and

loans from the Ministry of Finance.

Approval procedures for related parties transactions

Related parties transactions were undertaken as per the Company’s regular business procedures and

were approved strictly in accordance with the Government and State Enterprise procedures. No director or

executive with conflicts of interest in the respective matter has been involved in the approval process.

Policies on future related parties transactions

The Audit Committee will oversee future related parties transactions to ensure that transactions are

made properly with a fair rate of return and approved in accordance with appropriate processes and

procedures. Items and values of related parties transactions with connected persons will be disclosed under

the announcement and regulations by the Securities and Exchange Commission, and the Stock Exchange

of Thailand.



Management’s Discussion and AnalysisFor Fiscal Year Ending September 30, 2006 for Thai Airways International Public Company Limited and Its Subsidiary

1. Operating Results

The Company has increased its international flight frequencies

to cope with increased passenger demand and the launch of new

destinations such as Moscow in Russia and Islamabad in Pakistan.

In the first quarter of fiscal year 2006, the Company took the delivery of

4 aircraft - 3 Airbus A340-600 and 1 Airbus A340-500 and sold 4 MD-11

aircraft in the third and fourth quarters. Passenger production

(Available Seat - Kilometers : ASK) increased by 2.5% from increased

aircraft utilization. The Company’s passenger traffic (Revenue Passenger -

Kilometers : RPK) increased by 8.1%. The Company posted satisfactory

financial performance for fiscal year 2006 despite encountering

increased competition in the commercial airline industry including the

rapid route expansion of low cost airlines, the political tensions abroad,

jet fuel price having increased price by 25% and the fluctuation in

currency exchange. For the fourth quarter of fiscal year 2006, in

preparation for moving the Company ’s base of operations to

Suvarnabhumi Airport at end of September 2006, additional costs were

incurred. Despite these challenges, the Company was able to post a net

profit of 8,992 million baht, which was a 32.7% or 2,215 million baht

increase over the previous year. The earnings per share was THB 5.29

compared to THB 4.00 in fiscal year 2005.

Revenue from the sale of goods and the rendering of services

increased by 16,119 million baht or 9.9% from fiscal year 2005 to

178,607 million baht in fiscal year 2006. Because of a stronger Thai Baht,

revenue earned in foreign currency was lower after translation into


baht terms. Operating expense totaled 170,243 million baht, which is

an increase of 18,579 million baht or 12.3% over fiscal year 2005 as

a result of 30.1% increase in fuel expense and 17.9% increase in

depreciation. From better cost control measures, personnel expense

increased by 6.5% while other operating expenses were at similar levels

or saw a slight decrease from fiscal year 2005. As a result, profit from the

sale of goods and the rendering of services was 8,364 million baht. The

Company also realized a gain on sale of aircraft in the amount of 2,095

million baht, plus a foreign exchange gain of 6,178 million baht arising

from the translation of the Company’s outstanding foreign currency

loans into baht terms at the end of fiscal year 2006. As a result, the

Company’s profit before interest and tax amounted to 17,273 million

baht, which is 3,038 million baht or 21.3% higher than the previous

year. Profit before tax was 12,822 million baht, which was an increase

of 2,916 million baht or 29.4% over the previous year.

Summary of operating results for fiscal year 2006 :

Units: million baht 2006 % Change

Revenue from the sale of goods and

the rendering of services 178,607 +9.9%

Profit from the sale of goods and

the rendering of services 8,364 -22.7%

Gain on foreign currency exchange 6,178 +320.3%

Profit before tax 12,822 +29.4%

Net profit 8,992 +32.7%

Earnings per share (Baht) 5.29 +1.29


Production and Traffic

In fiscal year 2006, the Company launched services to new

destinations and increased its flight frequencies to North American,

European and Regional routes in order to satisfy the growing demand for

air transport. Passenger production (Available Seat - Kilometers) increased

from fiscal year 2005. Passenger traffic (Revenue Passenger - Kilometers)

increased at a higher rate than passenger production. Cabin factor was

higher than fiscal year 2005. The details are as follows:

2006 % Change

Production (MATK) 10,269 +4.9%

Traffic (MRTK) 7,001 +6.6%

Load Factor (%) 68.2 +1.1

Passenger Production (MASK) 71,594 +2.5%

Passenger Traffic (MRPK) 53,989 +8.1%

Cabin Factor (%) 75.4 +3.9

Freight Production (MADTK) 3,780 +8.2%

Freight Traffic (MRFTK) 2,048 +3.1%

Freight Load Factor (%) 54.2 -2.7

The number of passengers carried totaled 18.57 million

passengers, a 2.4% increase from last year. Operating flight hours

clocked was 324,366, a 6.5% increase from last year. An average of

aircraft utilization was 10.8 hours per aircraft per day, an increase from

10.4 hours per aircraft per day from last year.


Revenue

In fiscal year 2006, total revenue reached 182,312 million baht,

an increase of 17,391 million baht or 10.5% over the previous year.

The details are as follows:


Revenue from Transportation Activities

- Passenger and Excess Baggage 143,401 +11.0%

- Freight 25,650 +5.0%

- Mail 1,036 -4.0%

Total Revenue from Transportation Activities 170,087 +9.9%

Revenue from Other Activities 8,520 +9.9%

Total Revenue from the Sale of Goods

and the Rendering of Services 178,607 +9.9%

Other Income 3,705 +52.2%

Total Revenue 182,312 +10.5%

Revenue from the sale of goods and the rendering of services

for fiscal year 2006 totaled 178,607 million baht, which is an increase of

16,119 million baht or 9.9% over the previous year. Details are as follows:

Revenue from transportation activities amounted to 170,087

million baht, an increase of 15,355 million baht or 9.9% over fiscal year

2005 which consists of:

- Passenger and excess baggage revenue was 143,401 million baht

representing 80.3% of total revenue from the sale of goods and the

rendering of services or is an increase of 14,167 million baht (including

the collection of passenger fuel surcharge of 9,062 million baht) or is an

11.0% increase over the previous year.


- Freight revenue was 25,650 million baht, which constituted

14.4% of total revenue from the sale of goods and the rendering of

services increased by 1,231 million baht (including the collection of

cargo fuel surcharge of 1,533 million baht) or a 5.0% increase over the

previous year.

- Mail revenue was 1,036 million baht, a decrease of 43

million baht or 4.0% over the previous year.

The Company’s yield excluding insurance and fuel surcharge

decreased from fiscal year 2005. The major causes were mainly the

result of increased intensity of competition and a stronger Thai baht.

Details are as follows:

2006 % Change

System-wide (Baht/RTK) 21.08 -3.1%

Passenger (Baht/RPK) 2.32 -3.7%

Freight (Baht/RFTK) 10.00 -4.3%

Revenue from other activities was 8,520 million baht, an

increase of 764 million baht or 9.9% over last year.

- Revenue from business units - Aircraft Maintenance Services,

Cargo and Mail Commercial, Ground Support Equipment Services, Ground

Customer Services, and Catering Services totaled 7,388 million baht, an

increase of 720 million baht or 10.8% over the previous year.

- Revenue from Thai-Amadeus Southeast Asia Company Limited,

a 55% subsidiary, contributed 360 million baht, which was a decrease of

43 million baht or a 10.7% reduction from last year.

- Revenue from other activities totaled 772 million baht,

an increase of 86 million baht or 12.5% over the previous year, coming


mainly from the lease of aircraft and providing services to Nok Airlines Company Ltd.

Other Income was 3,705 million baht, an increase of 1,271 million baht or 52.2% over the previous

year. This comprised of 317 million baht in interest income, a decrease of 46 million baht or 12.7% from

the previous year and other income increased to 3,388 million baht, which is 1,317 million baht higher or

63.6% over the previous year. This was mainly due to the gain on sales of the 4 MD-11 aircraft totaling 2,095

million baht and recognition of revenue from passenger tax which have not been billed to the Company.

Expenses

Total operating expenses amounted to 170,243 million baht, which is an 18,579 million baht or a

12.3% increase over the previous year. Details are as follows:


Operating expenses :

Personnel 30,730 +6.5%

Fuel and oil 59,999 +30.1%

Cost of inventories and supplies 10,202 +4.8%

Lease of aircraft and spare parts 5,435 -3.8%

Flight operation 38,393 +4.5%

Depreciation 15,515 +17.9%

Marketing 3,116 -18.5%

Insurance 1,516 -20.3%

Remuneration to board of directors 26 -35.0%

Other operating expenses 5,311 -6.0%

Total operating expenses 170,243 +12.3%


The change in operating expenses can be summarized as follows:

- Fuel cost was 59,999 million baht, an increase of 13,898 million baht or 30.1% over the previous

year due to a 25.2% increase in average fuel price and increased fuel consumption arising from frequency

enhancement and route expansion.

- Flight operations such as flight per diem and accommodation of cockpit and cabin crews, navigation

fees, airport fees, handling fees, maintenance and overhaul aircraft and engines and reservation expenses

totaled 38,393 million baht, which was an increase of 1,649 million baht or 4.5% from last year due to an

expansion of production and increase in number of passengers.

- Personnel expense totaled 30,730 million baht, which was an increase of 1,877 million baht or

6.5% over previous year resulting from an annual salary increment, a salary base adjustment according to the

Resolution of a Cabinet as well as a payment of welfare award which was higher than the previous year.

- Depreciation was 15,515 million baht, an increase of 2,360 million baht or 17.9% from acquiring

4 new aircraft in the first quarter.

- Marketing expense was 3,116 million baht, a decrease of 709 million baht or 18.5% resulting from

a decrease in advertising, public relations and sales commission expenses.

- Insurance expense was 1,516 million baht, a decrease of 386 million baht or 20.3% from the

previous year from the reduction in insurance premium.

- Other operating expenses totaled 5,311 million baht, a decrease of 342 million baht or 6.0% from

last year due to more effective cost control.

Gain on foreign currency exchange for fiscal year 2006 amounted to 6,178 million baht, which is

higher than a gain of 1,470 million baht in fiscal year 2005. Due to a stronger Thai baht at the end of fiscal

year 2006 - foreign currency loans denominated in USA, JPY and EUR decreased in Baht value.

Other expenses amounted to 1,154 million baht, which is an increase of 578 million baht or a 100.3%

over the previous year arising from an adjustment of impairment loss on aircraft spare parts that are to be

disposed.


Share of net profit from associated companies was 256 million baht, an increase of 129 million baht or

101.6% from last year due to an increase in profit from Nok Airlines Company Ltd. and Bangkok Aviation Fuel

Services Public Company Ltd.

Interest expense totaled 4,451 million baht, an increase from last year of 122 million baht or 2.8%.

In managing interest rate risk arising from fluctuation in interest rates, the Company entered into euro

denominated interest rate swap agreements by changing a floated to fixed interest rate in an environment

of interest rates trending upwards. As a result, the Company’s interest expense declined by approximately

270 million baht despite the increase in short-term loans and interest expense on debentures over the

previous year.

2. Financial Position

Assets

At the end of fiscal year 2006 (September 30, 2006), the Company’s total assets were 249,034 million baht,

which was an increase of 17,396 million baht or 7.5% from the end of fiscal year 2005 (September 30, 2005).

Current and non-current assets accounted for 18.4% and 81.6% of total assets, respectively consisting of :

September 30, 2006 September 30, 2005

MTHB % of MTHB % of

total assets total assets

Current assets 45,702 18.4 44,148 19.1

Property, plant and equipment-net 196,031 78.7 180,983 78.1

Other non-current assets 7,301 2.9 6,507 2.8

Current assets increased by 1,554 million baht or 3.5% mainly due to an increase in trade account

receivables-net in the amount of 1,146 million baht or 7.4% resulting from increase sales while inventories

and supplies-net amounted to 902 million baht or 6.6% but cash and cash equivalent decreased by 755

million baht or 7.6%.


Property, plant and equipment-net increased by 15,048 million baht or 8.3%. The increase was mainly

due to the acquisition of 1 new Airbus A340-500 and 3 Airbus A340-600 aircraft, which were added to the

Company’s fleet in the first quarter as well as an investment in assets at Suvarnabhumi Airport.

Liabilities

The Company has total liabilities as at the end of fiscal year 2006 totaling 183,353 million baht, which is

an increase of 10,927 million baht or 6.3% from the end of fiscal year 2005 which consist of :

September 30, 2006 September 30, 2005

MTHB % of total MTHB % of total

liabilities liabilities

Current liabilities (excluding current portion of long-term loans) 60,440 33.0 47,018 27.3

Long-term debts 118,417 64.6 120,865 70.1

Staff pension fund 4,496 2.4 4,543 2.6

Current liability excluding current portion of long-term loans increased from fiscal year-end 2005 by

13,422 million baht or 28.5% mainly due to an increase in short-term loans of 5,606 million baht, unearned

transportation revenues of 6,336 million baht as well as trade account payables of 1,429 million baht.

Long-term debt as at September 30, 2006 including the current portion of long-term loans totaled 118,417

million baht decreased by 2,448 million baht or 2.0% from fiscal year-end 2005 due to a decrease in long-term

loans and promissory notes in the amounts of 7,509 million and 1,050 million baht, respectively. Financial lease

increased by 6,111 million baht.


Shareholders’ Equity

As of fiscal year end 2006, Shareholders’ Equity totaled 65,681 million baht, which is an increase of

6,469 million baht or 10.9% from the end of fiscal year 2005 resulting from an increase in net operating profit net

of dividend payment.

Capital structure as of September 30, 2006 consisted of total liabilities of 183,353 million baht or 73.6%

and shareholders’ equity of 65,681 million baht or 26.4% of total liabilities and shareholders’ equity.

The debt to equity ratio was 2.79x compared to 2.91x from fiscal year 2005.

Liquidity

Cash and cash equivalents as at the end of fiscal year 2006 (September 30, 2006) totaled 9,175 million

baht, which is a decrease of 755 million baht from the beginning balance as of October 1, 2005. Net cash from

and used in other activities are as follows :

- Net cash from operating activities amounted to 22,805 million baht.

- Net cash used in investing activities amounted to 13,070 million baht mainly investing in aircraft,

aircraft spare parts and Suvarnabhumi Airport.

- Net cash used in financing activities amounted to 10,551 million baht consisting of the repayment

of long-term loans and promissory notes of 14,752 million baht and dividend payment of 2,567 million baht.

The Company also received cash from loans totaling 6,772 million baht.



Business Operation and Strategies

THAI’s goal of being a full service airline with sustainable growth for the future is reflected in the

Company’s proactive strategies and enhanced work readiness by expanding its route network and emphasizing

service quality and safety, on-time performance, product enhancement to obtain the highest level of customer

satisfaction. The Company has significantly improved management effectiveness and developed a customer-

oriented organization. By undertaking these structural changes, enhancing internal efficiency and taking on a

more proactive approach to marketing, THAI has strengthened its competitiveness in the commercial airline

industry and will enable the Company to maintain sustainable growth for the future.

In fiscal year 2006 the Company:

Upgraded products and services to better compete with industry leaders and enhance

customer satisfaction. Service was enhanced by the “Touches of Thai” quality inherent in the Thai culture.

THAI introduced its modified logo and color scheme, which was used to upgrade various customer service

areas at a number of airports, especially at Suvarnabhumi Airport. The aim is to make each service point a

one stop shop for passengers. On-board the aircraft, new premium class seats and new in-flight entertainment

systems have been installed for inter-continental and regional flights. The retrofitting program will be

completed in the coming year.

Enhanced aircraft utilization, route network adjustments, increased profitable flights while

decreasing unprofitable routes and expanding to new destinations were means to improve THAI’s performance.

The Company focused on strengthening both intercontinental and regional routes by increasing seating

capacity and flight frequency on the routes with strong market demand. Moreover, the Company entered

into cooperation with a number of airlines to augment the status of Suvarnabhumi Airport as a regional hub.

Improved efficiency and cost management by standardizing processes including production,

procurement, service, operations, distribution and the utilization of resources which include aircraft, equipment,

capital and personnel being the most valuable. The Company places great importance on building

good relationships with customers, partners and employees. THAI’s own internal guidelines were redrafted to

streamline operational processes by making them more concise to enable flexibility in adapting to the changing

operating environment.

Improved organization structure to increase efficiency in marketing, finance and accounting and

operations to expedite performance and enhance flexibility. Enhancement of management capability

and transparency are the key factors driving forward the Company’s strategies. The Company aims to create a

learning organization known for its personnel expertise which, in turn, adds quality to customer service.

Furthermore, the Company stresses transparency in management, use of budget and the use of benchmarking

tools to guide processes leading to the achievement of the Company’s goals.



2006 2005 2004 2003 2002

Number of Aircraft 82 84 83 81 81

Flight Hours (Block Hours) 324,366 304,535 304,325 279,654 281,286

Available Ton-Kilometers (Million) 10,269 9,791 9,686 8,870 8,752

Revenue Ton-Kilometers (Million) 7,001 6,565 6,478 5,850 6,027

Load Factor (%) 68.2 67.1 66.9 66.0 68.9

Number of Passengers (000) 18,574 18,133 19,540 17,048 18,315

Available Seat-Kilometers (Million) 71,594 69,843 69,830 63,826 63,198

Revenue Passenger-Kilometers (Million) 53,989 49,931 50,633 44,396 46,571

Cabin Factor (%) 75.4 71.5 72.5 69.6 73.7

Available Dead Load Ton-Kilometers (Million) 3,780 3,492 3,401 3,125 3,064

Revenue Freight Ton-Kilometers (Million) 2,048 1,986 1,839 1,780 1,771

Freight Load Factor (%) 54.2 56.9 54.1 57.0 57.8

Number of Personnel (People) 26,488 25,876 25,884 25,531 25,516

Profitability (Result before Tax) (Million Baht) 12,822 9,906 14,284 17,431 14,416

Five-Year Review

Note : All data shown for fiscal year from 1 October - 30 September, or as at 30 September.


Definition of Aviation Terms

Available Ton-Kilometers (ATK)

Capacity offered for sale expressed as aircraft payload

multiplied by flown kilometers.

Revenue Ton-Kilometers (RTK)

Capacity sold expressed as tons of load carried


Load Factor

Revenue ton-kilometers expressed as percentage of

available ton-kilometers.

Available Seat-Kilometers (ASK)

Passenger capacity offered for sale expressed as

number of seats multiplied by flown kilometers.

Revenue Passenger-Kilometers (RPK)

Passenger capacity sold expressed as number of

passengers multiplied by flown kilometers.

Cabin Factor

Revenue passenger-kilometers expressed as

percentage of available seat-kilometers.

Available Dead Load Ton-Kilometers (ADTK)

Capacity offered of aircraft payload after deduction

of weight of the load of passengers multiplied by

flown kilometers.

Revenue Freight Ton-Kilometers (RFTK)

Freight capacity sold expressed as tons of freight carried


Freight Load Factor

Revenue freight-kilometers expressed as percentage

of available dead load ton-kilometers.

Aircraft Payload

Weight of the load of passengers, cargo and other load

carried on a fully loaded aircraft using the average

density of cargo.


Board of Directors’ Duties on Financial Disclosure

The Board of Directors of Thai Airways International Public Company Limited understands the

responsibility of ensuring integrity, sufficient, relevant and transparent disclosure of the Company’s fiscal

year 2006 financial statements. Such disclosure abides by the generally accepted accounting principles, ensuring

the integrity of the Company’s operations. Appropriate accounting policies have been put in place and

adhered to on a consistent basis while due consideration has been placed on the process of preparing the

Company’s and the consolidated fiscal year 2006 financial statements including other information that has

been included in this year’s annual report.

To enhance stakeholder trust, the Board appointed an Audit Committee comprising of independent

Directors with qualifications as stipulated by the guidelines of the Stock Exchange of Thailand. Ensuring that

the Company provides sufficient, transparent, correct and appropriate financial disclosure along with

information regarding related party transactions is a key function of the Committee. Ensuring appropriate,

sufficient and effective risk management guidelines, appropriate internal control procedures along with robust

internal audit processes are also the functions of the Committee. Legal compliance is at the forefront of the

Board’s concerns therefore the Committee is also charged with ensuring that the Company’s operations

adheres to all relevant external and internal legal, guidelines and policies.

The Board of Directors believes that the Company and the Company’s consolidated fiscal year 2006

financial statements ending 30 September 2006, which has been reviewed by the Audit Committee,

management and the Company’s financial auditor to be correct, complete, appropriate, in compliance

with generally accepted accounting practices and employs appropriate accounting policies on a consistent basis.

The financial disclosure is deemed to be transparent, provides an appropriate level of disclosure and is in

compliance with all the relevant legal, guidelines and policies.

Wanchai Sarathulthat Flg. Off. Apinan Sumanaseni

Chairman of the Board of Directors President


To Shareholders,

The Audit Committee of Thai Airways International Public Company Limited is comprised of three independent

directors. None are executive directors, employees or advisors of the company. The Audit Committee members are:

1. Mr. Vudhibhandhu Vichairatana Independent Director as Chairman

2. Mr. Pachara Yutidhammadamrong Independent Director as Member *

3. Pol.Gen. Nopadol Somboonsub Independent Director as Member

In 2006, the Audit Committee convened eleven times. The head of internal audit, the external auditors and the

Management were invited to attend as appropriate. The major tasks undertaken by the Audit Committee were as follows:

1. Reviewed both THAI’s and the consolidated quarterly and annual financial statements for fiscal year 2006,

ensuring integrity and sufficient disclosure of information and that the financial statements were prepared in accordance

with generally accepted accounting standards.

2. Reviewed THAI’s financial reporting process for its creditability. A review of the disclosure of related party

transactions was also made to ensure compliance with generally accepted business practices and the regulations of the

Stock Exchange of Thailand.

3. Reviewed and approved a long-term audit plan spanning 2007 - 2009 and an annual audit plan which were

prepared in relation to THAI’s risks. The risk based plans can be modified properly according to changing risk profile.

4. Reviewed to ensure that THAI has suitable and efficient internal control system by receiving regular updates

of internal audit results from Office of The Internal Audit as well as reviewing the establishment of internal control system

and control self-assessments as per the State Audit Commission’s internal audit guidelines of B.E. 2544.

5. Reviewed Office of The Internal Audit’s independence and its activities complied to international standard for

the Professional Practice of Internal Auditing. Moreover monitored follow up on actions taken by the management to the

recommendations from Audit Reports and from The Audit Committee to ensure adequate internal control and mitigate

THAI’s overall risk.

6. Reviewed of THAI’s risk management policies and reports from Risk Management Department.

7. Reviewed compliance with the Securities and Exchange Acts and laws related to the Company’s business based

on the internal audit reports and the report of the Company Secretary, who is responsible for compliance monitoring.

Upon review, the Audit Committee deems THAI’s operations to be in accordance with relevant rules and regulations.

8. Performed a self-assessment in relation to the Audit Committee Charter based on current best practice from

the Stock Exchange of Thailand and the Audit Committee Guidelines for State Enterprises as detailed by the Ministry of

Finance. The Committee was very satisfied with performance for fiscal year 2006.

9. Reviewed the re-appointment and remuneration of the Auditor General as the Company’s external auditors for

fiscal year 2007, advising the Board of Directors to propose for approval at the Annual General Meeting of Shareholders.

Mr. Vudhibhandhu Vichairatana

Chairman

November 21, 2006

Audit Committee’s Report

* Mr. Pachara Yutidhammadamrong has resigned from the Company’s Board of Directors and the Audit Committee effective 7 November 2006. The remainingBoard members appointed Mr. Sivaporn Dardarananda to the vacant position in the Audit Committee, effective as of 14 November 2006.


NO. 0022/2393 Office of the Auditor General

of Thailand

Rama VI Road, Phayathai,

Bangkok 10400, Thailand

Tel : 0 2273 9627

Fax : 0 2618 5783

E-mail : [email protected]

This letter is given to confirm that the English version of the Auditor’s Report together with

the consolidated financial statements for the years ended September 30, 2006 and 2005 of Thai Airways

International Public Company Limited and its subsidiary and the Company’s financial statements for the years

ended September 30, 2006 and 2005 of Thai Airways International Public Company Limited was translated by

Thai Airways International Public Company Limited. The Office of the Auditor General of Thailand reviewed the

aforementioned translated Auditor’s Report and financial statements and found that there were no substantial

differences of content from those of the Thai version.

Given on November 23, 2006

(Boobpha Anuntawat)

Deputy Auditor General

for Auditor General


Auditor’s Report

TO : THE SHAREHOLDERS OF THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED

The Office of the Auditor General of Thailand has audited the accompanying consolidated balance

sheets of Thai Airways International Public Company Limited and its subsidiary and the balance sheets of

Thai Airways International Public Company Limited as at September 30, 2006 and 2005, and the related

consolidated and the Company’s statements of income, changes in shareholders’ equity, and cash flows for the

years then ended. These financial statements are the responsibility of the Company’s management as to their

correctness and completeness of the presentation. The responsibility of the Office of the Auditor General of

Thailand is to express an opinion on these financial statements based on the audits.

The Office of the Auditor General of Thailand conducted the audits in accordance with generally accepted

auditing standards. Those standards require that the Office of the Auditor General of Thailand plan and perform

the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statements presentation. The Office of the Auditor General

of Thailand believes that the audits provide a reasonable basis for the opinion.

In the opinion of the Office of the Auditor General of Thailand, the consolidated and the Company’s

financial statements referred to above present fairly, in all material respects, the financial position of Thai Airways

International Public Company Limited and its subsidiary and of the Thai Airways International Public Company

Limited as at September 30, 2006 and 2005, and the results of operations, the changes in shareholders’ equity,

and the cash flows for the years then ended in accordance with generally accepted accounting principles.

(Signed) Boobpha Anuntawat

(Boobpha Anuntawat)

Deputy Auditor General

(Signed) Bubpha Kingsak

(Bubpha Kingsak)

Director of Audit Office

Office of the Auditor GeneralNovember 20, 2006


Units : Baht

CONSOLIDATED THE COMPANY

Notes 2006 2005 2006 2005

ASSETS

Current Assets

Cash and cash equivalents 3.1 9,175,267,322 9,930,000,904 8,937,827,934 9,589,521,953

Current investment-available-for-sale 102,256,496 - - -

Trade account receivables-net 3.2 16,613,734,289 15,468,179,546 16,576,817,194 15,423,035,075

Inventories and supplies-net 3.3 5,255,350,885 5,095,985,028 5,255,350,885 5,095,985,028

Other current assets 3.4 14,556,067,780 13,654,129,844 14,524,282,369 13,630,866,502

Total Current Assets 45,702,676,772 44,148,295,322 45,294,278,382 43,739,408,558

Non-Current Assets

Investments by the equity method 3.5.1 1,523,006,071 1,402,118,521 1,824,404,475 1,667,828,330

Other long-term investments 3.5.2 191,846,188 190,010,922 86,534,540 88,376,676

Property, Plant and Equipment-Net 3.7 196,030,545,530 180,983,297,860 195,937,578,431 180,940,866,547

Intangible Assets-net 3.8 421,211,394 - 418,776,627 -

Others 3.9 5,165,110,593 4,914,554,188 5,153,503,850 4,905,245,319

Total Non-Current Assets 203,331,719,776 187,489,981,491 203,420,797,923 187,602,316,872

Total Assets 249,034,396,548 231,638,276,813 248,715,076,305 231,341,725,430

The accompanying notes are an integral part of these financial statements.

Balance SheetsThai Airways International Public Company Limited and Its Subsidiary

As at September 30, 2006 and 2005


Units : Baht


Notes 2006 2005 2006 2005

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current LiabilitiesTrade account payables 9,423,137,305 7,993,856,108 9,411,603,172 7,981,405,194Short-term loans 3.14 5,606,417,700 - 5,606,417,700 -Current portion of long-term loans

Long-term loans 3.10 8,023,757,350 6,117,198,306 8,023,757,350 6,117,198,306Liabilities under financial leases 3.11 8,314,392,593 6,587,594,104 8,314,392,593 6,587,594,104Promissory notes 3.12 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000

Provision for contingent liabilities 3.13 - 141,049,404 - 141,049,404Other current liabilities

Accrued expenses 16,417,248,467 16,273,774,116 16,398,217,085 16,256,628,995Accrued dividends 57,863,117 52,475,790 57,863,117 52,475,759Accrued income taxes 20,613,157 28,411,385 - -Unearned transportation revenues 24,287,909,663 17,953,215,464 24,287,909,663 17,953,215,464Others 3.16 4,627,275,264 4,575,376,372 4,605,732,387 4,554,231,374

Total Current Liabilities 77,828,614,616 60,772,951,049 77,755,893,067 60,693,798,600

Non-Current LiabilitiesLong-term debts

Debentures 3.17 40,000,000,000 40,000,000,000 40,000,000,000 40,000,000,000Long-term loans 3.10 4,393,142,000 13,809,393,871 4,393,142,000 13,809,393,871Liabilities under financial leases 3.11 53,485,647,432 49,101,100,338 53,485,647,432 49,101,100,338Promissory notes 3.12 3,150,000,000 4,200,000,000 3,150,000,000 4,200,000,000

Staff pension fund 3.24 4,495,820,618 4,542,741,371 4,495,820,618 4,542,741,371

Total Non-Current Liabilities 105,524,610,050 111,653,235,580 105,524,610,050 111,653,235,580

Total Liabilities 183,353,224,666 172,426,186,629 183,280,503,117 172,347,034,180

Shareholders’ EquityShare capital 3.18

Authorized1,700.00 million ordinary shares par value of Baht 10 each 17,000,000,000 17,000,000,000 17,000,000,000 17,000,000,000

Issued and paid-up1,698.89 million ordinary shares par value of Baht 10 each 16,988,961,500 16,988,881,500 16,988,961,500 16,988,881,500

Premium on share capital 15,642,835,031 15,646,761,354 15,642,835,031 15,646,761,354Proceeds from ESOP offering - 12,000 - 12,000Unrealised losses on current investment-available-for-sale securities - (477,805) - (477,805)Retained earnings

Appropriated Legal reserve 3.19 1,700,000,000 1,700,000,000 1,700,000,000 1,700,000,000

Unappropriated 31,102,776,657 24,659,514,201 31,102,776,657 24,659,514,201

Total Company Shareholders’ Equity 65,434,573,188 58,994,691,250 65,434,573,188 58,994,691,250 Minority interests 246,598,694 217,398,934 - -

Total Shareholders’ Equity 65,681,171,882 59,212,090,184 65,434,573,188 58,994,691,250

Total Liabilities and Shareholders’ Equity 249,034,396,548 231,638,276,813 248,715,076,305 231,341,725,430


(Signed) Flg. Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President

Finance and Accounting


Units : Baht


2006 2005 2006 2005

Revenues from the Sale of Goods and the

Rendering of Services

Passenger and excess baggage 143,401,184,068 129,233,824,463 143,401,184,068 129,233,824,463

Freight 25,649,667,924 24,418,612,793 25,649,667,924 24,418,612,793

Mail 1,036,188,352 1,079,260,295 1,036,188,352 1,079,260,295

Other activities 8,519,843,512 7,756,523,548 8,159,740,321 7,353,803,316

Total Revenues from the Sale of Goods and the

Rendering of Services 178,606,883,856 162,488,221,099 178,246,780,665 162,085,500,867

Operating expenses

Personnel 30,729,663,179 28,853,278,446 30,697,016,022 28,828,349,652

Aircraft fuel 59,999,262,178 46,100,717,282 59,999,262,178 46,100,717,282

Inventories and supplies 10,201,744,088 9,739,263,524 10,201,744,088 9,739,263,524

Lease of aircraft and spare parts 5,434,434,982 5,651,787,307 5,434,434,982 5,651,787,307

Flight operations 38,393,262,426 36,743,707,218 38,393,262,426 36,743,707,218

Depreciation 15,514,467,423 13,155,407,827 15,484,615,707 13,091,686,866

Marketing 3,115,691,548 3,825,361,177 3,075,578,993 3,783,193,305

Insurance 1,516,417,024 1,901,656,351 1,516,417,024 1,901,656,351

Remuneration to board of directors 26,493,191 40,315,359 25,051,680 38,795,734

Other operating expenses 5,311,249,255 5,652,453,608 5,224,418,315 5,553,960,026

Total operating expenses 170,242,685,294 151,663,948,099 170,051,801,415 151,433,117,265

Profit from the Sale of Goods and the



Statements of IncomeThai Airways International Public Company Limited and Its Subsidiary

For the years ended September 30, 2006 and 2005


Units : Baht


Notes 2006 2005 2006 2005

Profits from the Sale of Goods and the


Other Income

Interest income 316,822,629 362,678,738 315,364,272 361,888,601

Others 3.20 3,388,247,464 2,070,679,905 3,382,856,386 2,067,564,496

Total Other Income 3,705,070,093 2,433,358,643 3,698,220,658 2,429,453,097

Other Expenses

Gains on foreign currency exchange (6,178,102,699) (1,469,706,067) (6,178,102,699) (1,469,706,067)

Yields from pension fund 75,923,013 44,010,429 75,923,013 44,010,429

Others 3.21 1,154,594,702 575,349,314 1,146,427,301 567,890,377

Total Other Expenses (4,947,584,984) (850,346,324) (4,955,752,385) (857,805,261)

Profits from Operations 17,016,853,639 14,107,977,967 16,848,952,293 13,939,641,960

Share of Profits from Investments by the Equity Method

Share of net profit from subsidiary company - - 64,910,790 59,311,669

Share of net profit from associated companies 256,226,137 127,495,109 256,226,137 127,495,109

Total Share of Profits from Investments by

the Equity Method 3.5.1 256,226,137 127,495,109 321,136,927 186,806,778

Profits before Interest and Income Tax Expenses 17,273,079,776 14,235,473,076 17,170,089,220 14,126,448,738

Interest expenses 4,450,936,258 4,328,903,629 4,450,936,258 4,328,903,629

Income tax expenses 3,777,437,609 3,081,390,254 3,727,555,881 3,020,893,645

Profits after Tax 9,044,705,909 6,825,179,193 8,991,597,081 6,776,651,464

Net profit of minority interest 53,108,828 48,527,729 - -

Net Profits 8,991,597,081 6,776,651,464 8,991,597,081 6,776,651,464

Basic earnings per share 3.22

Net profits 5.29 4.00 5.29 4.00

Diluted earnings per share 3.22

Net profits 5.29 4.00 5.29 4.00


(Signed) Flg. Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President



Units : Baht

CONSOLIDATED

Share Capital Premium Proceeds Unrealised gain Legal Retained Minority Total

issued and on share from (losses) on Reserve Earnings Interest

Notes fully paid capital ESOP offering available-for- Unappropriated

sale securities

Balance as at October 1, 2004 16,850,000,000 15,580,550,482 96,732,486 317,143,675 1,700,000,000 19,574,938,937 204,390,852 54,323,756,432

- Sales on current investment - - - (317,108,579) - - - (317,108,579)

- Unrealised losses on current

investment-available-

for-sale securities - - - (512,901) - - (419,647) (932,548)

Add Net Profits - - - - - 6,776,651,464 48,527,729 6,825,179,193

Less Dividends paid - - - - - (1,692,076,200) (35,100,000) (1,727,176,200)

Add Proceeds from ESOP offering - - 111,601,764 - - - - 111,601,764

Add Issued share capital 138,881,500 69,440,750 (208,322,250) - - - - -

Less Share offering expense - (3,229,878) - - - - - (3,229,878)

Balance as at September 30, 2005 16,988,881,500 15,646,761,354 12,000 (477,805) 1,700,000,000 24,659,514,201 217,398,934 59,212,090,184

Balance as at October 1, 2005 16,988,881,500 15,646,761,354 12,000 (477,805) 1,700,000,000 24,659,514,201 217,398,934 59,212,090,184

- Unrealised gains on current


for-sale securities - - - 477,805 - - 390,932 868,737

Add Net Profits - - - - - 8,991,597,081 53,108,828 9,044,705,909

Less Dividends paid 3.15 - - - - - (2,548,334,625) (24,300,000) (2,572,634,625)

Add Proceeds from ESOP offering - - 108,000 - - - - 108,000

Add Issued share capital 3.18 80,000 40,000 (120,000) - - - - -

Less Share offering expense - (3,966,323) - - - - - (3,966,323)

Balance as at September 30, 2006 16,988,961,500 15,642,835,031 - - 1,700,000,000 31,102,776,657 246,598,694 65,681,171,882


(Signed) Flg. Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool

(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President


Statements of Changesin Shareholders’ Equity

Thai Airways International Public Company Limited and Its SubsidiaryFor the years ended September 30, 2006 and 2005


Units : Baht

THE COMPANY

Share Capital Premium Proceeds Unrealised gain Legal Retained Total

issued and on share from (losses) on Reserve Earnings

Notes fully paid capital ESOP offering available-for- Unappropriated

sale securities

Balance as at October 1, 2004 16,850,000,000 15,580,550,482 96,732,486 317,143,675 1,700,000,000 19,574,938,937 54,119,365,580

- Sales on current investment - - - (317,108,579) - - (317,108,579)

- Unrealised losses on current


for-sale securities - - - (512,901) - - (512,901)

Add Net Profits - - - - - 6,776,651,464 6,776,651,464

Less Dividends paid - - - - - (1,692,076,200) (1,692,076,200)

Add Proceeds from ESOP offering - - 111,601,764 - - - 111,601,764

Add Issued share capital 138,881,500 69,440,750 (208,322,250) - - - -

Less Share offering expense - (3,229,878) - - - - (3,229,878)

Balance as at September 30, 2005 16,988,881,500 15,646,761,354 12,000 (477,805) 1,700,000,000 24,659,514,201 58,994,691,250

Balance as at October 1, 2005 16,988,881,500 15,646,761,354 12,000 (477,805) 1,700,000,000 24,659,514,201 58,994,691,250

- Unrealised gains on current


for-sale securities - - - 477,805 - - 477,805

Add Net Profits - - - - - 8,991,597,081 8,991,597,081

Less Dividends paid 3.15 - - - - - (2,548,334,625) (2,548,334,625)

Add Proceeds from ESOP offering - - 108,000 - - - 108,000

Add Issued share capital 3.18 80,000 40,000 (120,000) - - - -

Less Share offering expense - (3,966,323) - - - - (3,966,323)

Balance as at September 30, 2006 16,988,961,500 15,642,835,031 - - 1,700,000,000 31,102,776,657 65,434,573,188






Units : Baht


2006 2005 2006 2005

Cash flows from operating activities

Net profit 8,991,597,081 6,776,651,464 8,991,597,081 6,776,651,464

Adjustment to reconcile net profit to cash

provided by (paid from) operating activities :

Depreciation 15,514,467,423 13,155,407,827 15,484,615,707 13,091,686,866

Income from investments by the equity method (256,226,137) (127,495,109) (321,136,927) (186,806,778)

Losses (gains) on sales of assets (991,232,983) 92,814,717 (991,373,592) 92,394,036

Losses (gains) on current investments-available-

for-sale securities (4,587,358) (373,775,096) 477,805 (371,486,133)

Amortisation of deferred charges 176,512,541 119,187,843 176,512,541 119,187,843

Gains on foreign currency exchange (5,646,399,237) (1,402,910,156) (5,646,399,237) (1,402,910,156)

Net profit of minority interests 53,108,828 48,527,729 - -

Provision for obsolete inventories 144,151,808 (27,972,118) 144,151,808 (27,972,118)

Allowance for doubtful accounts and

impairment in value of assets 97,541,894 (29,750,469) 89,632,317 (37,148,730)

Operating profit before changes in operating assets

and liabilities 18,078,933,860 18,230,686,632 17,928,077,503 18,053,596,294

Decrease (increase) in operating assets :

Trade account receivables (1,338,153,082) (357,426,873) (1,338,470,881) (352,833,608)

Inventories and supplies (303,517,666) (799,189,084) (303,517,666) (799,189,084)

Prepaid expenses and deposits 394,254,749 717,933,681 396,709,604 720,824,730

Tax refund (448,783,917) (1,829,515,476) (448,783,917) (1,829,515,476)

Other current assets (998,114,588) (1,278,695,912) (992,047,374) (1,281,648,010)

Deferred income taxes 119,175,442 738,872,420 121,473,315 741,047,198

Deferred charges (462,344,246) (505,893,562) (462,344,246) (505,893,562)

Increase ( decrease) in operating liabilities :

Trade account payables 1,428,218,890 1,325,681,733 1,429,135,671 1,318,767,178

Accrued expenses and other current liabilities 19,223,004 1,564,413,396 24,737,122 1,572,345,916

Staff pension fund (46,920,753) 321,969,978 (46,920,753) 321,969,978

Unearned transportation revenue 6,363,320,218 1,411,709,777 6,363,320,218 1,411,709,777

Net cash from operating activities 22,805,291,911 19,540,546,710 22,671,368,596 19,371,181,331


Statements of Cash FlowsThai Airways International Public Company Limited and Its Subsidiary



Units : Baht


2006 2005 2006 2005

Cash flows from investing activities

Short-term investments increase (100,000,000) - - -

Cash paid for acquisition of fixed assets (20,231,596,361) (46,064,456,833) (20,151,032,348) (46,043,218,259)

Cash paid for intangible assets (455,609,398) - (453,130,576) -

Cash received from transferring down payment of

aircraft and aircraft spare parts 2,065,589,465 2,135,303,727 2,065,589,465 2,135,303,727

Cash received from sales of assets 5,521,806,216 298,727,912 5,521,726,259 298,727,912

Investments decrease 129,369,337 8,482,525 159,069,337 51,382,525

Cash received from current investments-

available-for-sale-securities - 377,320,653 - 377,320,653

Net cash used in investing activities (13,070,440,741) (43,244,622,016) (12,857,777,863) (43,180,483,442)

Cash flows from financing activities

Cash received from debentures - 30,000,000,000 - 30,000,000,000

Cash received from short-term loans 5,512,267,800 - 5,512,267,800 -

Cash received from long-term loans 1,259,525,538 1,211,018,582 1,259,525,538 1,211,018,582

Cash received from issuing ordinary shares 72,000 74,418,950 72,000 74,418,950

Cash received (paid) from premium on ordinary shares (3,930,323) 33,940,936 (3,930,323) 33,940,936

Cash received from subscription of ESOP - 12,000 - 12,000

Cash paid for repayment of long-term loans (13,701,821,877) (15,770,087,802) (13,701,821,877) (15,770,087,802)

Cash paid for repayment of promissory notes (1,050,000,000) (1,050,000,000) (1,050,000,000) (1,050,000,000)

Dividends paid (2,567,247,267) (1,725,307,795) (2,542,947,267) (1,690,207,826)

Net cash from (used in) financing activities (10,551,134,129) 12,773,994,871 (10,526,834,129) 12,809,094,840

Decrease in cash and cash equivalents (816,282,959) (10,930,080,435) (713,243,396) (11,000,207,271)

Increase (decrease) in the effect from changing in

exchange rate on cash and cash equivalents 61,549,377 (28,433,054) 61,549,377 (28,433,054)

Cash and cash equivalents at the beginning of the periods 9,930,000,904 20,888,514,393 9,589,521,953 20,618,162,278

Cash and cash equivalents at the end of the periods 9,175,267,322 9,930,000,904 8,937,827,934 9,589,521,953

Supplementary cash flows information :

Cash paid during the year for

Interest expenses 4,327,541,483 3,326,878,784 4,327,541,483 3,326,878,784

Corporate income tax 4,115,660,767 4,176,894,838 4,055,682,939 4,101,310,724

Non-cash item

Assets under financial lease 16,975,783,568 16,116,659,936 16,975,783,568 16,116,659,936






1. BASIC OF FINANCIAL STATEMENT PREPARATION

The Company’s financial statements consist of Thai Airways International Public Company Limited and the

Company’s staff pension fund.

The consolidated financial statements consist of the Company and its subsidiary, Thai-Amadeus Southeast

Asia Company Limited, in which the Company holds equity interests of 55%. Significant transactions between the

Company and its subsidiary have been eliminated from the consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Allowance for Doubtful Accounts

An allowance for doubtful accounts is established for trade account receivables, excluding those from

government agencies and state enterprises, which are more than 6 months overdue:

Period overdue Allowance for doubtful accounts (%)

6 months up to 1 year 50

1 year up to 2 years 75

2 years or more 100

Allowance for doubtful accounts for contingent estimated losses that may result from uncollectable

trade account receivables, including government agencies and state enterprises, is estimated from historical

collection experience and the position of account receivables at the balance sheet date.

2.2 Inventories and Supplies

Inventories and supplies at the year-end are stated at the lower of moving average cost or net realisable

value, except inventories in transit are stated at purchased date cost.

- Provision for obsolescence of aircraft spare parts is made at an annual rate of 10% of the year-end

balance.

- Slow moving aircraft spare parts and spare parts for sales are spare parts not moving over two years

or spare parts for aircraft not represented in the fleet. Provision for obsolescence is made at an annual rate of

33.33% of the incurred balance during the year.

- Provision for obsolete and damaged inventories is made at the full amount.

Notes to the Financial StatementsThai Airways International Public Company Limited and Its Subsidiary



2.3 Investments

2.3.1 Investments in subsidiary and associated companies are stated by the equity method.

2.3.2 Long-term investments in non-marketable equity securities are stated at cost net of a provision

for impairment. An impairment loss is recognised in the income statement.

2.3.3 Current investments in marketable equity securities are stated at market value at the year-end.

Gain or loss on change in value of trading securities is recognised in the income statement. For available-for-sale

securities, the Company recognises gain or loss on change in value as an unrealised gain or loss under shareholders’

equity.

2.4 Property, Plant and Equipment and Depreciation

2.4.1 Aircraft and aircraft under financial leases are stated at cost, including where applicable (engines

and other flight equipment), cost of decoration and acquisition, and interest on loans for the purchase of the

aircraft incurred prior to the aircraft being placed into service but excluding passenger seats and the first estimated

overhaul cost, less any concessions for the acquisition of aircraft. Depreciation is calculated on a straight-line

basis over an estimated useful life of 20 years with a salvage value of 10% of cost.

2.4.2 Aircraft overhaul (D-check) costs, the first estimated overhaul costs, are presented as separate

assets from the aircraft cost and depreciated over the period of the next scheduled overhaul 4-7 years depending

on type of aircraft. When these costs incur, the asserted assets will be expensed and replaced by the incurred

overhaul cost.

2.4.3 Passenger seats are presented as separate assets from the aircraft cost and depreciated on a

straight-line basis over an estimated useful life of 5 years. When the replacement costs incur, they are accounted

for as the separate assets and the replaced assets will be written off.

2.4.4 Aircraft spare parts are stated at cost on the acquisition date and depreciated on a straight-line

basis over an estimated useful life of 5-20 years.

2.4.5 Other fixed assets are stated at cost on the acquisition date or on the date of completion of

construction and depreciated on a straight-line basis over an estimated useful life of 5-30 years.

2.4.6 Leasehold buildings are amortised as expense over a lease term of 10-30 years.

2.4.7 Gain or loss on sale of aircraft is calculated from the difference between the sale price and the

net book value of the aircraft, including D-check and improvements to passenger seats net of sales expense. Gain

or loss on sale of other assets is calculated from the difference between the sale price and net book value of sold

assets and recognised as revenue or expense in the income statement.


2.5 Intangible Assets

Computer programmes

Software license and cost that are directly with identifiable and unique software product, which can be

separated, identified costs and have an economic useful life over the accounting period, will be recognised as an

intangible asset and amortised as expenses on a straight-line basis over an useful life of 5 years.

Expenses arising from developing or maintaining computers are recognised as expenses when incurred.

2.6 Impairment of Assets

Assets may be impaired whenever there is an indicator that the carrying amount of the asset exceeds

its recoverable amount. A recoverable amount is the higher of an asset’s net selling price and its value in use.

The Company will recognise an impairment loss in income statement whenever the carrying amount

exceeds its recoverable amount. Also, the Company will reverse the impairment loss when there is an indicator

that the value of asset is no longer impaired or amount of impairment has decreased.

2.7 Deferred Charges

2.7.1 Aircraft overhaul costs (D-check) for aircraft under operating lease are presented as deferred

charges and amortised as expenses over an estimated useful life of 4-7 years but not over the lease term.

2.7.2 Loan guarantee premiums are recorded as deferred charge and amortised as expenses over the

period of loans in each accounting period.

2.8 Liabilities Under Financial Leases

Liabilities under financial leases are liabilities from the purchase of aircraft under long-term financial

leases with financial institutions and are stated at obligation value less aggregate repayments.

2.9 Revenue Recognition

2.9.1 Passenger and excess baggage revenues:

- Revenue from ticket sales and service orders is recognised as revenue when transportation is

provided. For passengers using the services of other airlines, the difference between the selling price charged by

the Company and the amount billed to the Company by those airline performing the services is recognised as

revenue.

- Unused tickets and service orders are recognised as revenue after 2 years.


2.9.2 Freight revenue is recognised when the Company provides the services and issues its air waybills.

For freight carried by other air carriers, the difference between the selling price charged by the Company and the

amount billed to the Company by those air carriers performing the services is recognised as revenue.

- Freight with respect to which the Company has issued an air waybill but which is carried by

other air carriers is recognised as revenue if the other air carriers do not bill within 1 year.

2.9.3 The Company has operated a frequent flyer programme called “Royal Orchid Plus” since 1993.

Members exchange accumulated mileage for services. The Company calculates cost per mile by dividing the

average net collected fare in each zone by the number of miles redeemed for awards in that zone. The Company

estimates the number of miles utilised by members based upon the weighted zonal redemption. The estimated

cost is used to reduce passenger revenues and record liability under “unearned transportation revenue”. Revenues

are recognised when members redeem awards.

- Unredeemed awards are recognised as revenue after 3 years.

- Redemptions with Star Alliance partners involve interline billing arrangements and costs per

mile specified in partner agreements. Revenues are recognised when transportation is provided.

- The Company sells mileage to its members in order to encourage redemptions and recognises

the difference between the sale price and mileage cost as revenue.

2.9.4 Revenues from business units, Aircraft Maintenance Services, Ground Customer Services, Ground

Support Equipment Services and Cargo and Mail Commercial are recognised when services are provided. Revenues

from Catering Services, Sales on Board and Thai Shop are recognised at sale.

2.9.5 Other revenues are recognised on an accrual basis.

2.10 Basic Earnings Per Share

Basic earnings per share is calculated by dividing net profit for the year by the weighted average number

of ordinary shares outstanding during the period.

2.11 Foreign Currency Transactions

Foreign currency transactions incurred during the year are converted into Baht at exchange rates

calculated from the average exchange rate of the Bank of Thailand and commercial banks in the month in which

the transaction occurs. Except for foreign loans, the Company uses the exchange rate of the Bank of Thailand at

cash received date.


Assets and liabilities denominated in foreign currency at year-end are converted into Baht at average

commercial bank buying and selling rates announced by the Bank of Thailand at that date. Gains or losses on

currency exchange are recognised in the income statement.

2.12 Staff Provident Fund

On June 26, 1992, the Company established an “Employee of Thai Airways International Public Company

Limited Registered Provident Fund” in accordance with the Provident Fund Act B.E. 2530. The fund is managed

by a professional fund manager and does not appear on the Company’s balance sheet. The Company contributes

to the fund on a monthly basis at a rate of 9% of salaries for members having not more than 20 years of service

and 10% for members having more than 20 years of service. Contributions are treated as expenses of the Company.

2.13 Deferred Income Tax

Deferred income tax are calculated to comply with Accounting Standard No.56 effective on or after

January 1, 2007. The Company early adopted such standard in fiscal year 2002. For the Company’s tax expense is

calculated in accordance with the Revenue Code.

2.14 Accounting Estimations

The Company and its subsidiary have applied the accounting estimations and many assumptions in

preparation financial statements to conform to the generally accepted accounting principles. These will impact

on the amounts of assets, liabilities, revenues, expenses as well as the disclosure of contingent assets and liabilities

which may be differed from the actualities.

2.15 Financial Instrument

The Company uses derivative products which are Interest Rate Swap (IRS) and Cross Currency Swap

(CCS) to reduce the fluctuation risk from an interest rate and exchange rate by entering into a forward contractual

agreement to exchange the principal amount and interest rest at maturity according to the contract. The different

gain/loss will be recorded as interest income/expenses in income statement.

In addition, the Company also entered into fuel-oil hedging agreement in which premiums and the

difference of the fuel price arising from this agreement will be recorded as expenses in income statement.


3. SUPPLEMENTARY INFORMATION

3.1 Cash and Cash Equivalents

Units : Million Baht

Consolidated The Company

2006 2005 2006 2005

Cash - Domestic 18.13 13.27 18.13 13.27

Cash - Abroad 18.91 27.50 18.91 27.50

Bank Deposits - Domestic 2,486.93 3,907.86 2,249.49 3,567.38

Bank Deposits - Abroad 6,651.30 5,981.37 6,651.30 5,981.37

Total 9,175.27 9,930.00 8,937.83 9,589.52

3.2 Trade Account Receivables - Net

Trade account receivables are classified according to their stages of delinquency, as expressed in the

schedule below.



2006 2005 2006 2005

Period of overdue

Not over 6 months 16,522.50 15,398.90 16,488.21 15,358.19

Over : 6 months to 1 year 109.19 109.04 107.50 106.31

Over : 1 year to 2 years 146.57 59.04 139.42 46.75

Over : 2 years 1,141.78 1,110.20 1,121.66 1,102.37

17,920.04 16,677.18 17,856.79 16,613.62

Less Allowance for doubtful accounts (1,306.30) (1,209.00) (1,279.97) (1,190.58)

Trade account receivables - net 16,613.74 15,468.18 16,576.82 15,423.04


3.3 Inventories and Supplies - Net



2006 2005 2006 2005

Aircraft spare parts 4,192.54 4,278.83 4,192.54 4,278.83

Less Provision for obsolescence

(10% of the year-end balance) (419.25) (427.88) (419.25) (427.88)

Aircraft spare parts - Net 3,773.29 3,850.95 3,773.29 3,850.95

Vehicle spare parts and ground support equipment 210.76 162.13 210.76 162.13

Slow moving aircraft spare parts and spare parts for sale 1,896.35 1,750.43 1,896.35 1,750.43

Less Provision for obsolescence

(33.33% of incurred balance during the period) (1,828.08) (1,675.34) (1,828.08) (1,675.34)

Slow moving aircraft spare parts and

spare parts for sale - Net 68.27 75.09 68.27 75.09

Fuel and oil for aircraft 485.15 204.49 485.15 204.49

Goods for sales 206.37 262.89 206.37 262.89

Cabin supplies 293.62 219.93 293.62 219.93

Supplies and other consumables 26.53 29.71 26.53 29.71

Stationery and office supplies 113.38 102.13 113.38 102.13

Inventories and spare parts in transit 77.98 188.67 77.98 188.67

1,203.03 1,007.82 1,203.03 1,007.82

Obsolete and damaged inventories for disposal 14.05 14.01 14.05 14.01

Less Provision for obsolescence (100%) (14.05) (14.01) (14.05) (14.01)

Obsolete and damaged inventories for disposal - Net - - - -

Total inventories and supplies - Net 5,255.35 5,095.99 5,255.35 5,095.99

Total inventories and supplies at year-end 7,516.73 7,213.22 7,516.73 7,213.22

Less Total provision for obsolete inventories and supplies (2,261.38) (2,117.23) (2,261.38) (2,117.23)

Total inventories and supplies - Net 5,255.35 5,095.99 5,255.35 5,095.99


3.4 Other Current Assets



2006 2005 2006 2005

Prepaid expenses and deposits 4,366.85 4,920.62 4,361.21 4,917.44

Tax refund 2,738.62 2,289.84 2,738.62 2,289.84

Cash and fixed deposits of pension fund 4,270.00 4,126.62 4,270.00 4,126.62

Others 3,180.60 2,317.05 3,154.45 2,296.97

Total 14,556.07 13,654.13 14,524.28 13,630.87

3.5 Investments

Consolidated


Percentage of Investments Income on

Name of Company Shareholding Cost method Equity method investments

2006 2005 2006 2005 2006 2005 2006 2005

3.5.1 Investments using the equity method

Royal Orchid Hotel (Thailand)

Public Co., Ltd. 24 24 225.00 225.00 313.81 294.72 76.01 62.74

(Market value for the year 2006 amount

of THB 810.00 million and the year

2005 amount of THB 630.00 million)

Donmuang International Airport

Hotel Company Limited 40 40 48.00 48.00 219.97 175.69 63.48 56.71

Bangkok Aviation Fuel Services

Public Company Limited 22.6 22.6 95.98 95.98 469.13 424.88 98.96 41.04


of THB 1,084.67 million and the year


Phuket Air Catering Company Limited 30 30 30.00 30.00 44.81 44.45 4.86 4.97

Suvarnabhumi Airport Hotel

Company Limited 30 30 305.33 305.33 278.40 297.77 (19.36) (7.57)

Nok Airlines Company Limited 39 39 195.00 195.00 196.89 164.61 32.28 (30.39)

Total investments using the equity method 1,523.01 1,402.12 256.23 127.50


Consolidated




2006 2005 2006 2005 2006 2005 2006 2005

3.5.2 Other long-term investments

stated at cost

Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -

Aeronautical Radio of Thailand Limited 2.8 2.9 18.27 19.17 - -

SITA Investment Certificate - - 29.32 28.29 - -

TRADESIAM Company Limited 3.5 3.5 1.75 1.75 - -

(paid 25% of authorized share capital)

SITA Information Networking Computing - - 34.24 36.19 - -

Other Shares - - 2.95 2.98 1.75 1.49

Investment in private fund - - 105.32 101.63 - -

Less Allowance for impairment of

Fuel Pipeline Transportation Limited (133.00) (133.00) - -

Total other long-term investments 191.85 190.01 1.75 1.49


The Company




2006 2005 2006 2005 2006 2005 2006 2005

3.5.1 Investments using the equity method

Subsidiary Company

Thai-Amadeus Southeast Asia

Company Limited 55 55 8.25 8.25 301.40 265.71 64.91 59.31

Associated Companies

Royal Orchid Hotel (Thailand)

Public Co., Ltd. 24 24 225.00 225.00 313.81 294.72 76.01 62.74


of THB 810.00 million and the year


Donmuang International Airport

Hotel Company Limited 40 40 48.00 48.00 219.97 175.69 63.48 56.71

Bangkok Aviation Fuel Services

Public Company Limited 22.6 22.6 95.98 95.98 469.13 424.88 98.96 41.04


of THB 1,084.67 million and the year


Phuket Air Catering Company Limited 30 30 30.00 30.00 44.81 44.45 4.86 4.97

Suvarnabhumi Airport Hotel

Company Limited 30 30 305.33 305.33 278.40 297.77 (19.36) (7.57)

Nok Airlines Company Limited 39 39 195.00 195.00 196.89 164.61 32.28 (30.39)

Total 1,523.01 1,402.12 256.23 127.50

Total investments using the equity method 1,824.41 1,667.83 321.14 186.81


The Company




2006 2005 2006 2005 2006 2005 2006 2005

3.5.2 Other long-term investments

stated at cost

Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -

Aeronautical Radio of Thailand Limited 2.8 2.9 18.27 19.17 - -

SITA Investment Certificate - - 29.32 28.29 - -

TRADESIAM Company Limited 3.5 3.5 1.75 1.75 - -

(paid 25% of authorized share capital)

SITA Information Networking Computing - - 34.24 36.19 - -

Other Shares - - 2.95 2.98 1.75 1.49

Less Allowance for impairment of

Fuel Pipeline Transportation Limited (133.00) (133.00) - -

Total other long-term investments 86.53 88.38 1.75 1.49

3.6 Related Parties The Company

3.6.1 Major shareholders


2006 2005

Ministry of Finance

Guaranteed loans 150.00 450.00

Foreign loans via the Ministry of Finance 17,873.32 19,476.59


3.6.2 Subsidiary company


2006 2005

Name of Company Sales Trade Other Sales Trade Other

Account Account Account Account

Receivables Receivables Receivables Receivables

Thai-Amadeus Southeast Asia

Company Limited 49.12 0.02 10.61 55.13 0.14 15.44

The Company purchases goods and services from related parties on normal commercial terms.

3.7 Property, Plant and Equipment - Net

ConsolidatedUnits : Million Baht

Aircraft Aircraft under Aircraft Land buildings Other plant Total

financial leases spare parts and development and equipment

Cost

As at October 1, 2005 158,772.65 87,301.66 29,139.57 10,330.67 30,852.13 316,396.68

- Adjust/Transfer (7,894.78) (4.00) (1,118.99) 51.97 (8,778.71) (17,744.51)

- Increased asset 13,619.77 21,626.63 3,474.58 6,727.24 6,314.14 51,762.36

- Sold (9,979.34) (28.79) (3,256.77) (91.00) (427.30) (13,783.20)

As at September 30, 2006 154,518.30 108,895.50 28,238.39 17,018.88 27,960.26 336,631.33

Accumulated depreciation

As at October 1, 2005 80,237.36 14,058.49 17,250.30 7,817.29 16,049.94 135,413.38

- Depreciation 6,651.35 5,170.57 2,100.44 396.93 1,160.78 15,480.07

- Adjust/Transfer (558.80) - (467.02) 0.59 (14.56) (1,039.79)

- Sold (6,818.50) (24.00) (1,894.05) (89.80) (426.53) (9,252.88)

As at September 30, 2006 79,511.41 19,205.06 16,989.67 8,125.01 16,769.63 140,600.78

Net book value

As at September 30, 2005 78,535.29 73,243.17 11,889.27 2,513.38 14,802.19 180,983.30

As at September 30, 2006 75,006.89 89,690.44 11,248.72 8,893.87 11,190.63 196,030.55


The Company


Aircraft Aircraft under Aircraft Land buildings Other plant Total

financial leases spare parts and development and equipment

Cost

As at October 1, 2005 158,772.65 87,301.66 29,139.57 10,330.67 30,671.32 316,215.87

- Adjust/Transfer (7,894.78) (4.00) (1,118.99) 51.97 (8,764.49) (17,730.29)

- Increased asset 13,619.77 21,626.63 3,474.58 6,727.24 6,233.55 51,681.77

- Sold (9,979.34) (28.79) (3,256.77) (91.00) (427.30) (13,783.20)

As at September 30, 2006 154,518.30 108,895.50 28,238.39 17,018.88 27,713.08 336,384.15


As at October 1, 2005 80,237.36 14,058.49 17,250.30 7,817.29 15,911.56 135,275.00

- Depreciation 6,651.35 5,170.57 2,100.44 396.93 1,130.98 15,450.27

- Adjust/Transfer (558.80) - (467.02) 0.59 (0.59) (1,025.82)

- Sold (6,818.50) (24.00) (1,894.05) (89.80) (426.53) (9,252.88)

As at September 30, 2006 79,511.41 19,205.06 16,989.67 8,125.01 16,615.42 140,446.57

Net book value

As at September 30, 2005 78,535.29 73,243.17 11,889.27 2,513.38 14,759.76 180,940.87

As at September 30, 2006 75,006.89 89,690.44 11,248.72 8,893.87 11,097.66 195,937.58

In this fiscal year, there are 87 aircraft in the Company’s fleet consisting of 55 own aircraft which 5

aircraft are leased by other company, 20 aircraft under financial leases and 12 aircraft under operating leases.

Four MD-11 aircraft are sold in this fiscal year amount of THB 5,255.99 million with a total book value of THB

3,160.84 million. So, the Company has gain on sales of aircraft amount of THB 2,095.15 million.


Other plants and equipment-net amount of THB 11,190.63 million (consolidated) and THB 11,097.66

million (the Company) have already included the work in progress of Suvarnabhumi project amount of THB

2,596.16 million consisting of building, facilities, equipment and information technology which support to the

services in Suvarnabhumi

The Company uses buildings and equipment purchased at THB 36,573.23 million that are now fully

depreciated.

3.8 Intangible Assets-net



Cost

As at October 1, 2005 - -

- Assets increase 455.61 453.13

As at September 30, 2006 455.61 453.13


As at October 1, 2005 - -

- Depreciation 34.40 34.35

As at September 30, 2006 34.40 34.35

Net book value

As at September 30, 2005 - -

As at September 30, 2006 421.21 418.78


3.9 Non - Current Assets - Others



2006 2005 2006 2005

Deferred charges 1,144.79 775.06 1,144.79 775.06

Deferred income taxes 4,020.32 4,139.49 4,008.71 4,130.19

Total 5,165.11 4,914.55 5,153.50 4,905.25

Deferred charges consist of aircraft overhaul costs ( D-check ) for aircraft under operating lease which

are amortised as expenses over an estimated useful life of 4-7 years but not over the lease term and loan guarantee

premiums for purchasing of aircraft are amortised as expenses over the period of loans in each accounting

period.

3.10 Long-term Loans Consolidated and the Company

Currency Loan Currency Baht Equivalent (Million)

2006 2005 2006 2005

JPY 18,000,000,000 18,000,000,000 5,775.30 6,569.26

USD 172,477,817 313,989,666 6,491.59 12,907.33

THB 150,000,000 450,000,000 150.00 450.00

Total Long-term loans 12,416.89 19,926.59

Less Current portion of

long-term loans 8,023.75 6,117.20

Net Long-term loans 4,393.14 13,809.39

At the end of fiscal year 2006, the outstanding of long-term loans for acquisition of 10 aircraft consist

of foreign loans via the Ministry of Finance and domestic financial institutions. Such loans were guaranteed by

the Ministry of Finance amount of THB 12,416.89 million at the interest rates ranging from 1.13% to 8.80% per

annum.


3.11 Liabilities Under Financial Leases Consolidated and the Company

Currency Loan Currency Baht Equivalent (Million)

2006 2005 2006 2005

JPY 61,334,337,659 68,932,640,150 19,679.12 25,157.59

USD 268,091,820 329,857,098 10,090.25 13,559.60

EUR 668,446,068 341,911,041 32,030.67 16,971.50

Total Financial lease 61,800.04 55,688.69

Less Current portion of

financial leases 8,314.39 6,587.59

Net Liabilities under

financial leases 53,485.65 49,101.10

For certain of its aircraft, the Company has financial leases with buyout options. The Company had

financial leases with 5 foreign financial institutions. The accounting policy for recording aircraft under financial

leases is described in Note 2.8. In fiscal year 2006, the Company has outstanding obligations totalling THB 69,942.24

million under financial leases for 20 aircraft with maturities ranging from 2006 to 2018. After deducting interest

due amount of THB 8,142.20 million, the principal balance of obligations under the Company’s financial leases

is THB 61,800.04 million.

The Company has entered into a long-term loan contract in the form of Asset-Based Financing for

Airbus A340-500 No. 3 for an aggregate of EUR 89.66 million or approximately THB 4,411.73 million and Airbus

A340-600 No. 3, 4 and 5 for an aggregate of EUR 282.92 million or approximately THB 13,836.01 million which

the European Export Credit Agencies (ECA) is a guarantor.

3.12 Promissory Notes

The Company has loaned from the Government Saving Bank and THAI Employees’ Saving & Credit

Coops Ltd. by issuing promissory notes with a floating interest rate computed by using the interest rate on six-

month fixed deposits at the Government Saving Bank plus 2.90% to 3.00% per annum. Such issuances financed

the purchase of Boeing 747-400 No.14 and the payment of Airbus A330-300 No.12. In this fiscal year, the brought

forward balance was THB 5,250.00 million and the amount of THB 1,050.00 million was repaid during the

period, leaving a balance of THB 4,200.00 million ( THB 2,600.00 million from the Government Saving Bank and


THB 1,600.00 million from THAI Employees’ Saving & Credit Coops Ltd.,). As at September 30, 2006, these

promissory notes were transferred to current portion of long-term loans in the amount of THB 1,050.00 million,

leaving the long-term liabilities balance at THB 3,150.00 million.

3.13 Provision for Contingent Liability

The provision for contingent liability of the Company is THB 141.05 million deriving from the

Company’s dispute cases in the previous year. The Company has already paid amount of 12.50 million. The rest

of 128.55 million has been transferred to other current liability.

3.14 Short-term loans

On March 27, 2006, the Company has borrowed short-term loans from the Ministry of Finance

in the form of European Commercial Paper (ECP) amount of EUR 117.00 million or THB 5,606.42 million with

an interest rate of 2.94% per annum.

3.15 Dividends Payment the Company

According to the Annual General Shareholders’ Meeting for the year 2005 held on December 23, 2005

approved the Company to pay the dividends for the year 2005 operation at THB 1.50 per share for an aggregate

of THB 2,548.33 million.

3.16 Current Liabilities - Others



2006 2005 2006 2005

Airport fees 2,348.38 2,902.92 2,348.38 2,902.92

Deferred income 3.68 3.58 2.83 2.75

Taxes payable 372.90 361.39 370.90 360.14

Fringe benefits-field office staff 447.95 471.28 447.95 471.28

Other account payables 1,454.36 836.21 1,435.67 817.14

Total 4,627.27 4,575.38 4,605.73 4,554.23


3.17 Debenture Bonds

According to the Resolution of Extraordinary Shareholders’ Meeting No. 1/2546 held on September 2,

2003 approved the Company to issue debentures in the amount of THB 40 billion. The Company has already

issued its debentures for the first tranch of THB 10 billion, the second tranch of THB 15 billion, and the third

tranch of THB 15 billion, totalling to THB 40 billion which has already been transferred to the Company’s account.

The details are as follows:

Tenor Interest Rate Amount Maturity date

(Year) Pay every 6 months (MTHB)

(%)

The first 5 3.00 5,500 October 8, 2008

7 3.70 4,500 October 8, 2010

10,000

The second 5 4.65 7,500 October 20, 2009

7 5.20 4,500 October 20, 2011

10 5.80 3,000 October 20, 2014

15,000

The third 3 3.82 6,000 May 12, 2008

6 4.67 6,000 May 12, 2011

10 5.19 3,000 May 12, 2015

15,000

The balance as at September 30, 2006 40,000

The Company has registered these debentures with the Thai Bond Dealing Center (THAI BDC) in the

bond electronic exchange of the Stock Exchange of Thailand.


3.18 Share Capital

As at September 30, 2006, the Company has authorized ordinary shares amount of 1,700 million shares

at par value THB 10 each for an aggregate of THB 17 billion, issued and paid-up ordinary shares amount of THB

16,988.96 million. The details are as follows:

Issued and Paid-up Shares

Shares THB

As at September 30, 2005 1,698,888,150 16,988,881,500

On October 17, 2005, the employees 5th exercised type -

one warrants and 3rd exercised type-two warrants. 1,600 16,000

On January 18, 2006, the employees 6th exercised type -

one warrants and 4th exercised type-two warrants. 5,200 52,000

On April 18, 2006, the employees 7th exercised type -

one warrants and 5th exercised type-two warrants. 1,200 12,000

As at September 30, 2006 1,698,896,150 16,988,961,500

The Company determined the next exercise of type-one and type-two warrants to purchase

ordinary shares during September 26 - October 2, 2006. As at September 30, 2006, there is no exercise of

those warrants by the employees.

3.19 Legal Reserve

At the end of fiscal year 2005, the Company’s legal reserve balance was THB 1,700.00 million which

equaled to 10% of the Company’s registered shares. Therefore, the Company does not have to provide the legal

reserve in this fiscal year.


3.20 Other Incomes - Others



2006 2005 2006 2005

Compensation revenues from insurance

companies (asset) 566.60 94.64 566.60 94.64

Gains on sales of assets 1,611.50 15.98 1,611.50 15.98

Revenue from investments 1.75 1.49 1.75 1.49

Revenue from current investments - 371.49 - 371.49

Other incomes 1,208.40 1,587.08 1,203.01 1,583.96

Total 3,388.25 2,070.68 3,382.86 2,067.56

3.21 Other Expenses - Others



2006 2005 2006 2005

Bad and doubtful debts 109.29 46.71 101.38 39.31

Credit card fees 429.60 346.90 429.60 346.90

Compensation to customers for Damages 130.35 124.03 130.35 124.03

Impairment loss of assets 442.91 - 442.91 -

Other expenses 42.44 57.71 42.19 57.65

Total 1,154.59 575.35 1,146.43 567.89


3.22 Earnings Per Share Consolidated and the Company

Basic earnings per share is calculated by dividing net profit for the period by the weighted average

number of ordinary shares outstanding during the periods.

Diluted earnings per share is calculated by dividing net profit for the period by the weighted average

number of ordinary shares outstanding during the period adjusted by all dilutive potential ordinary shares

under the assumptions that all dilutive potential ordinary shares are converted into ordinary shares. The dilutive

potential ordinary shares of the Company are ordinary shares and warrants to purchase the ordinary shares

under ESOP.

Consolidated and the Company


Gains No. of Shares Earnings per share

2006 2005 2006 2005 2006 2005

Million Baht Million Baht Million Shares Million Shares Baht Baht

Basic earnings per share

Net Profits attributable to ordinary

shareholders 8,991.60 6,776.65 1,698.89 1,694.51 5.29 4.00

Effects of dilutive potential

ordinary shares

Warrants to purchase ordinary

shares not exercising the rights - - 0.01 0.01

Diluted earnings per share

Net Profits attributable to ordinary

shareholders under conversion

assumption to ordinary shares 8,991.60 6,776.65 1,698.90 1,694.52 5.29 4.00


3.23 Financial Information by Segment Consolidated

3.23.1 Business segments

Statements of Income

For the year ended September 30, 2006 and 2005


Inter - Segment

Revenues Revenues Total Revenues Segment Results

2006 2005 2006 2005 2006 2005 2006 2005

Air transportation 170,087.04 154,731.70 - - 170,087.04 154,731.70 6,239.21 8,197.17

Business Units 7,387.96 6,667.49 13,472.24 13,116.43 20,860.20 19,783.92 1,886.13 2,250.24

Other activities 1,131.88 1,089.03 369.46 334.00 1,501.34 1,423.03 238.86 376.86

Eliminations - - (13,841.70) (13,450.43) - - - -

Operating profits 8,364.20 10,824.27

Share of net profit from

subsidiary and associated

companies 256.23 127.49

Interest expenses-net (4,134.11) (3,966.22)

Gains on foreign currency

exchange 6,178.10 1,469.71

Other revenues 2,157.73 1,451.32

Minority interests (53.11) (48.53)

Income taxes (3,777.44) (3,081.39)

Net profits 8,991.60 6,776.65


Assets and Liabilities

As at September 30, 2006 and 2005


Current Assets Non-Current Assets Total Assets

2006 2005 2006 2005 2006 2005

Air transportation 42,633.50 40,679.67 196,444.79 185,118.28 239,078.29 225,797.95

Business Units 487.28 882.63 6,674.61 2,218.33 7,161.89 3,100.96

Other activities 419.02 424.47 212.32 153.37 631.34 577.84

Non-allocated assets 2,162.88 2,161.53 - - 2,162.88 2,161.53

Total 45,702.68 44,148.30 203,331.72 187,489.98 249,034.40 231,638.28


Current Liabilities Non-Current Liabilities Total Liabilities

2006 2005 2006 2005 2006 2005

Air transportation 77,224.84 60,198.68 105,469.87 111,572.45 182,694.71 171,771.13

Business Units 248.04 214.83 54.74 80.79 302.78 295.62

Other activities 83.35 94.73 - - 83.35 94.73

Non-allocated liabilities 272.38 264.71 - - 272.38 264.71

Total 77,828.61 60,772.95 105,524.61 111,653.24 183,353.22 172,426.19


Segment results derive from segment revenues net of segment expenses excluding interest

expenses, gains (losses) on foreign currency exchange, other expenses, and income taxes.

Segment current and non-current assets are those operating assets that are employed by a

segment in its operating activities.

Segment current and non-current liabilities are those operating liabilities that result from the

operating activities of a segment.

The Company records inter-segment revenue transfers at market price charged to its unaffiliated

customer net of discount. Those transfers are eliminated in consolidation.

3.23.2 Geographical segments


2006 2005

Domestic Revenues

Transportation 10,782.97 10,379.42

Business units 7,387.96 6,667.49

Other activities 1,131.88 1,089.03

Total domestic revenues 19,302.81 18,135.94

Foreign Transportation Revenues

Regional Asia 71,172.75 69,830.04

Europe 47,275.32 44,656.81

North Pacific 4,699.40 4,559.26

Australia & New Zealand 12,498.45 12,239.28

Total foreign transportation revenues 135,645.92 131,285.39

Charter revenues and others 6,335.74 4,767.66

Insurance surcharge from passengers 2,501.60 2,540.43

Fuel surcharge from passengers 14,820.81 5,758.80

Total 178,606.88 162,488.22


3.24 Staff Pension Fund Consolidated and the Company

The Company has established a staff pension fund, contributing 10% of employee salaries to the fund

each month. The fund’s assets and liabilities are presented in the Company’s balance sheet. Interest and expenses

arising from fund operations are recognised as income and expenses of the Company. The details are as follows:


2006 2005

Other current assets 4,315.79 4,142.05

Other current liabilities 35.22 14.49

Pension fund 4,495.82 4,542.74

4,531.04 4,557.23

As at September 30, 2006, the fund balance was THB 4,495.82 million, equal to the Company’s obligation

to its staff under the fund. The total Company contribution to the fund in fiscal year 2006 was THB 461.29

million, consisting of contributions at a rate equivalent to 10% of employee salaries in the amount of THB 246.03

million and additional amounts to match the Company’s obligation of THB 215.26 million.

3.25 Staff Provident Fund

The Company contributes to the provident fund at the rate of 9% for members having not more than

20 years of services and 10% for members having more than 20 years of services, representing amount of THB

920.03 million in fiscal year 2006.

The Company’s provident fund is managed by TISCO Asset Management Company Limited and Krungthai

Asset Management Public Company Limited which are approved by the Securities and Exchange Commission,

Thailand (SEC).


3.26 Contingent Liabilities

The Company has contingent liabilities, not presented in the financial statements, as follows:


The Company

2006 2005

Letters of guarantee issued by banks 6.07 11.06

The Company as defendant in

Labour dispute cases 515.70 519.74

Damage claims cases 290.63 288.58

Total 812.40 819.38

3.27 Disclosure of Financial Instruments The Company

3.27.1 Interest rate risk

Interest rate risk in financial statements arises from changes in market interest rates which

have an effect on the Company’s operating results.

The following tables show weighted average interest rates and the amount of financial liabilities.


2006

Weighted

Financial Liabilities Average Floating Interest Rates Fixed Interest Rates Total

Interest Rate Less than 1 year Over 1 year Less than 1 year Over 1 year

USD 3.77 797.77 3,897.02 6,119.73 5,767.33 16,581.85

JPY 0.65 2,434.11 15,881.02 4,251.64 2,887.65 25,454.42

EUR 2.73 1,270.84 14,506.62 6,920.48 14,939.15 37,637.09

THB 4.71 1,050.00 3,150.00 150.00 40,000.00 44,350.00



2005

Weighted

Financial Liabilities Average Floating Interest Rates Fixed Interest Rates Total

Interest Rate Less than 1 year Over 1 year Less than 1 year Over 1 year

USD 6.16 820.95 5,127.65 7,535.26 12,983.07 26,466.93

JPY 0.56 1,737.61 13,860.72 1,035.46 15,093.06 31,726.85

EUR 2.33 940.79 11,610.29 334.72 4,085.71 16,971.51

THB 4.38 1,050.00 4,200.00 300.00 40,150.00 45,700.00

The Company has entered into Interest Rate Swap (IRS) by converting EUR dominated loans

from floating interest rate to fixing interest rate for 1 Airbus A340-500 and 4 A340-600 for an aggregate of EUR

461.78 million. At the end of fiscal year 2006, the loan portion fixed to floated interest rate increased to 81 : 19

including the obligation under operating lease.

3.27.2 Exchange Rate Risk

Fluctuations in exchange rates affect on long-term liabilities and operating expenses

denominated in foreign currencies. The hedging policy of the Company is to hold foreign currencies received

from foreign currency revenues in proportion to foreign currency expenses. In addition, the Company holds

surplus cash in major foreign currencies which are stable and uses in the Company’s operations in order to

reduce foreign exchange risk. To reduce the Company’s risk and conform with its surplus cash, the Company has

exercised the Cross Currency Swap (CCS) by converting THB denominated debenture amount of THB 13.9 billion

to EUR dominated debenture with fixed interest rate. From this practice, the Company increased the EUR

dominated loans to match its surplus fund. As a result, the portion of EUR dominated loans was 43.6% of total

loans including obligation under operation lease.



Foreign Currency Liabilities

2006 2005

Currency Maturity within Maturity over Maturity within Maturity over

1 year 1 year 1 year 1 year

USD 6,917.50 9,664.35 8,356.21 18,110.72

JPY 6,685.75 18,768.67 2,773.07 28,953.78

EUR 8,191.32 29,445.77 1,275.51 15,696.00

3.27.3 Fuel Price Risk

Fuel price fluctuations depend on the supply and demand of fuel in the world market and

the global political situation and have a direct effect on the Company’s operations. To hedge the expense/lost

from fuel price fluctuation, the Company matchs foreign fuel supplies with the Company’s fuel demands by

entering into an agreement with various supplies in many countries and always monitors the change in

fuel price. Moreover, the Company’s hedging policy for this risk is to hedge maximum 50% of its utilized fuel

quantity. In this fiscal year, the Company hedges this risk in the proportion of 13.86% per annum.

3.27.4 Fair Value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between

knowledgeable, willing, independent parties with the freedom to bargain.

The following table presents year-end financial statement balances and an estimate of fair

value of financial assets and liabilities as at September 30, 2006 and 2005.



The Company

2006 2005

Balance Fair Value Balance Fair Value

Financial Assets

Cash and cash equivalents 8,937.83 8,937.83 9,589.52 9,589.52

Other investments 1,910.94 3,022.67 1,756.21 2,530.51

Trade account receivables 16,576.82 16,576.82 15,423.04 15,423.04

Financial Liabilities

Trade account payables 9,411.60 9,411.60 7,981.41 7,981.41

Loans 124,023.36 124,023.36 120,865.28 120,865.28

Accrued expenses 16,473.97 16,473.97 16,309.10 16,309.10

The methods and assumptions that the Company uses to estimate the fair value of assets and

liabilities are as follows:

Cash and cash equivalents, trade account payables, loans, and accrued expenses are stated at

balance sheet amounts.

Other investments are stated at net book value net of allowance of impairment. Investments

in marketable equity securities are stated at market value.

Trade account receivables are stated at net book value net of allowances for doubtful accounts.

3.28 Contractual Obligations

3.28.1 Obligation to Purchase Aircraft

The Company has a payment obligation to purchase aircraft amount of THB 73,512.89 million.

3.28.2 Leases and Obligations of aircraft

The Company has entered into operating leases amount of USD 353.45 million or approximately

THB 13,302.79 million (exchange rate USD 1 : THB 37.6373).


3.28.3 Contractual Obligation and Memorandum Agreement in Suvarnabhumi Airport Project

On January 18, 2006, there was a fire incident at Thai’s Catering building at Suvarnabhumi

Airport which was under a construction. This caused the damage on some parts of building, system, and assets of

the Company. Such Catering building is under a recovery process. From the fire incident, the Company received

a compensation from Dhipaya Insurance Public Company Limited amount of THB 1,150.00 million on September

21, 2006. These are an indemnity for the Company’s asset amount of THB 506.75 million and the damage under

the constructors’ responsibility amount of THB 643.25 million which will use to recovery the building.

The Company has an payment obligation to the constructors according to the contracts

approximately of THB 263.03 million for recovering which is expected to be finished in March 2007.

3.29 Accounting Presentation in Financial Statement

The Company has reclassified some accounting items in financial statements for the years ended

September 30, 2005 to conform with the classification of accounting items in the current period which has no

impact to net profit or shareholders’ equity as follows:

3.29.1 Expenses for financing of aircraft formerly presented in lease of aircraft and spare parts are

presented in interest expenses item.

3.29.2 An obligation of the Company’s pension fund formerly shown in other expenses are presented

in personnel expenses item.

3.30 Approval of Financial Statements

These financial statements were authorised for issue by the Board of Directors on November 20, 2006.


Board of Directors

Mr. Wanchai SarathulthatChairmanEducation- Master of Political Science,

Ramkhamhaeng UniversityExperience- Deputy Permanent Secretary- Director-General,

Meteorological Department- Director-General, Marine DepartmentPresent Positions- Permanent Secretary,

Ministry of Transport- Chairman of the Board of Directors,

Port Authority of Thailand- Director, State Railway of Thailand

Mr. Suparut KawatkulVice ChairmanEducation- M.Sc. (Econ.), Queen Mary College

University of London, U.K.Experience- Director-General,

Revenue Department- Director-General, Fiscal Policy Office,

Ministry of Finance- Director of the Board, PTT Public

Company Limited.Present Positions- Permanent Secretary,

Ministry of Finance- Chairman of the Board of Directors,

Krung Thai BankPublic Company Limited.

- Director of the Board,the GovernmentLottery Office

ACM Chalit PukbhasukIndependent DirectorEducation- Bachelor of Science,

Royal Thai Air Force AcademyExperience- Commander Air Combat Command- Deputy Chief of the Air Staff- Assistant Chief of the Air Staff for

PersonnelPresent Positions- Commander in Chief

Royal Thai Air Force- Deputy Chairman,

Council for National Security


Mr. Tirachai VutithumIndependent DirectorEducation- Doctor of Philosophy Honorary Degree in

Continuing Education,Ramkhamhaeng University

Experience- Deputy Bangkok Governor- Advisor to the Chairman,

Airports Authority of ThailandPublic Company Limited.

- Board Member, Aeronautical Radioof Thailand Limited.

Present Positions- Vice President, The Rattana Bundit

University- Honour Academic Committee, Member of

Ramkhamhaeng University Council

Pol. Gen. Nopadol SomboonsubIndependent DirectorEducation- Master of Science (Criminology),

California State University, USAExperience- Commissioner,

Narcotics Suppression Bureau- Assistant Commissioner - General

Royal Thai Police- Deputy Commissioner - General

Royal Thai PolicePresent Positions- Director, Fraud and Cyber Crime

True Corporation Public Company Limited

Mr. Vudhibhandhu VichairatanaIndependent DirectorEducation- M.A. (Economics),

University of Arkansas, USAExperience- Deputy Director, Bureau of the Budget,

The Office of the Prime Minister- Assistant Director, Bureau of the Budget,

The Office of the Prime MinisterPresent Positions- Director, Bureau of the Budget,

The Office of the Prime Minister- Member, Board of Directors,

Provincial Electricity Authority- Member, Board of Directors,

Thai Military BankPublic Company Limited.

Mr. Pachara YutidhammadamrongIndependent DirectorEducation- Bachelor of Law, Thammasat UniversityExperience- Deputy Attorney General,

Office of the Attorney General- Honorable Members of the State

Attorney Commission- Director-General, Department of the

State Attorney CommissionPresent Positions- Attorney General,

Office of the Attorney General- Director and Audit Committee

Krung Thai Bank Public Company Limited- Member, Board of Directors and

Chairman of the Audit Committee,Provincial Electricity Authority


Mr. Pichai ChunhavajiraDirectorEducation- Master of Business Administration

(Finance), Indiana University ofPennsylvania, USA

Experience- Acting President,

Bangchak Public Company Limited- Director of Thaioil

Public Company Limited.- Deputy Governor, Finance Petroleum

Authority of ThailandPresent Positions- Senior Executive Vice President,

Corporate Finance and Accounting,PTT Public Company Limited

- Chairman, State Owned EnterpriseValue Creation Committee(Super Holding)

- Director, MetropolitanElectricity Authority

Mr. Chartsiri SophonpanichDirectorEducation- Master Degree, Chemical

Engineering, MassachusettsInstitute of Technology (MIT), USA

Experience- Director, The Post Publishing

Public Company Limited.Present Positions- President, Bangkok Bank

Public Company Limited.- Chairman,

Thai Bankers Association- Director, Thai Asset

Management Corporation

Mr. Borwornsak UwannoDirectorEducation- Docteur de 3 e cycle (Droit Public

Général) (mention trés bien)Université de Paris X (Nanterr)

Experience- Secretary-General,

King Prajadhipok’s Institute- Dean, the Faculty of Law,

Chulalongkorn University- Secretary-General to the Cabinet,

The Secretariat of the CabinetPresent Positions- Chairman of Princess Maha Chakri

Sirindhorn Anthropology Centre- Chairman of the Audit Committee,

Ministry of Justice- Members of the

National Legislative Assembly

Gen. Ruengroj MahasaranondDirectorEducation- Bachelor of Science,

Royal Military AcademyExperience- Chairman of Advisor to Office

of Supreme Commander- Commanding General of

Armed ForcesDevelopment Command

- Comptroller General to Office of theComptroller General

Present Positions- Supreme Commander of the

Royal Thai Armed Forces- Chief Advisor to the

Council for Democratic Reform


Mr. Somchainuk EngtrakulDirectorEducation- Bachelor Degree in Economics,

Upsala College, New Jersey, USAExperience- Permanent Secretary,

Ministry of Finance- Director-General, The Customs

Department, Ministry of Finance- Director-General, The Revenue

Department, Ministry of FinancePresent Positions- Chairman of the Board,

Thai Military BankPublic Company Limited.

- Chairman of the Board,Dhipaya InsurancePublic Company Limited

Flg. Off. Apinan SumanaseniDirectorEducation- Bachelor of Science,

Royal Thai Force AcademyExperience- Executive Vice President,

Operations Department- Vice President,

Flight Operations Department- Deputy Vice President,

Flight Operations DepartmentThai Airways InternationalPublic Company Limited

Present Positions- President, Thai Airways International

Public Company Limited.- Members of the

National Legislative Assembly- Director, Star Alliance Services GmbH

Mr. Vikrom KoompirochanaDirectorEducation- Ph.D. (History), Michigan State

University, USAExperience- Ambassador Extraordinary and

Plenipotentiary of Thailand toNew Zealand

- Deputy Permanent Secretary of theMinistry of Foreign Affairs

- Ambassador Extraordinary andPlenipotentiary of Thailand toRepublic of Italy

Present Positions- Ambassador Extraordinary and

Plenipotentiary of Thailand to theUnited Kingdom of Great Britainand Northern Ireland andconcurrently Ambassador ofThailand accredited to Ireland


Management Team

Flg. Off. Apinan SumanaseniPresidentEducation- Bachelor of Science,

Royal Thai Air Force AcademyExperience- Executive Vice President,

Operations Department- Vice President,

Flight Operations Department- Deputy Vice President,

Flight Operations Department

Wg.Cdr. Supachai LimpisvastiSpecial Activities Advisor,TechnicialSenior Executive Vice President levelEducation- Doctor of Engineering (Structure

Engineering and Mechanics),Asian Institute of Technology

Experience- Managing Director,

Technical Department,Executive Vice President level

- Vice President,Heavy Maintenance Department

- Technical Representative,Aircraft Type Boeing 737-400,Boeing 777 and Airbus A330

Mr. Kobchai SrivilasSpecial Activities Advisor,Airport Migration ManagementSenior Executive Vice President levelEducation- Master of Business Administration,

Kasetsart UniversityExperience- Senior Executive Vice President,

Corporate Planning and InformationTechnology Services Department

- Executive Vice President,Corporate Secretariat Department

- Managing Director,Technical Department,Executive Vice President level


Mr. Vasing KittikulSpecial Activities Advisor,CommercialSenior Executive Vice President levelEducation- Diploma, Business Administration,

Perth Technical College, AustraliaExperience- Executive Vice President,

Commercial Department- Executive Vice President,

Customer Services Department- Vice President,

Sales & Distribution Department

FLt. Lt. Pisal ChayakulaExecutive Vice President,Corporate Planning and InformationTechnology Services DepartmentEducation- Bachelor of Science,

Royal Thai Air Force AcademyExperience- Executive Vice president,

Corporate Support Department- Vice President,

Aviation Personnel DevelopmentDepartment

- Deputy Vice President,Aviation Personnel DevelopmentDepartment

ACM Narongsak SangapongExecutive Vice PresidentCorporate Secretariat Department,Thai Airways InternationalPublic Company LimitedEducation- Bachelor of Science,

Royal Thai Air Force AcademyExperience- Executive Vice President,

Special Project Department

Mr. Wallop BhukkanasutExecutive Vice President,Commercial DepartmentEducation- Bachelor of Arts,

The University of Hawaii, USAExperience- Vice President,

Sales & Distribution Department- Vice President,

Marketing Planning Department- Vice President,

Alliance Department


Flt.Lt Prasart Khoon-InExecutive Vice President,Operations DepartmentEducation- Certificate, German Air Force Officer

School, GermanyExperience- Vice President, Aviation Personnel

Development Department- Assistant Vice President,

Aviation Personnel DevelopmentDepartment

- Director,Pilot Administration Department

Mrs. Ngamnit SombutpiboolExecutive Vice President,Finance and Accounting DepartmentEducation- Bachelor in Accountancy,

Chulalongkorn UniversityExperience- Executive Vice President,

Office of the Internal Audit- Vice President,

Comptroller Department- Deputy Vice President,

Revenue Planning andManagement Department

Flg.Off. Chinawut NaressaeneeExecutive Vice president,Customer Services andGeneral Administration DepartmentEducation- Master of Arts (Political Science)

Public Administration,Thammasat University

Experience- Executive Vice President,

Standards and General AdministrationDepartment

- Senior Vice President,Standards and Safety AssuranceDepartment

- Vice President,Special Project Department

Flg. Off. Norahuch PloyyaiExecutive Vice President,Standards Assurance andRisk Management DepartmentEducation- Bachelor of Science,

Royal Thai Air Force AcademyExperience- Vice President,

Special Project Department- Director,

Operations Appraisal andCoordination Department

- Deputy Director,Crew General AdministrationDepartment


Mr. Tummasak ChutiwongManaging Director,Technical Department,Executive Vice President levelEducation- Master of Engineering,

Lamar University, USAExperience- Executive Vice President,

Corporate Secretariat Department- Executive Vice President,

Human Resources Developmentand Management Department

- Vice President,Corporate Strategic Department

Mr. Kaweepan RaungpakaExecutive Vice President,Human Resources Development andManagement DepartmentEducation- Master of Business Administration,

Central Missouri State University,USA

Experience- Executive Vice President,

Finance and Accounting Department- Vice President,

Corporate Finance Department- Director,

Funding Department


THAI On-line Offices

ATHENS, GREECE32 EL. VENIZELOU STREET e-mail : [email protected] 75 GLYFADA TKT/RSVN : (30-210) 9692-001ATHENS, GREECE FAX : (30-210) 9602-686

AUCKLAND, NEW ZEALANDCITIBANK CENTRE BUILDING e-mail : [email protected] CUSTOMS STREET EAST TKT/RSVN : (64-9) 377-3886AUCKLAND, NEW ZEALAND FAX : (64-9) 379-8597

BRUNEI DARUSSALAMKOMPLEKS JALAN SULTAN e-mail : [email protected] JALAN SULTAN TKT/RSVN : (673) 224-2991-3BANDAR SERI BEGAWAN BS 8811 : (673) 224-2871NEGARA BRUNEI DARUSSALAM

BEIJING, PEOPLE’S REPUBLIC OF CHINAUNITS 303-4, LEVEL 3 OFFICE TOWER W3 e-mail : [email protected] PLAZA, NO.1 EAST CHANG AN AVE. [email protected] CHENG DISTRICT, BEIJING, 100738 TKT/RSVN : (86-10) 8515-0088PEOPLE’S REPUBLIC OF CHINA FAX : (86-10) 8515-1134

BRISBANE, AUSTRALIA145 EAGLE STREET, BRISBANE e-mail : [email protected] 4000, AUSTRALIA [email protected]

TKT : (61-7) 3215-4777RSVN : (1300) 651-960FAX : (61-7) 3215-4737

BODHGAYA, INDIAINPAC TRAVELS (INDIA) PVT LTD. e-mail : -C/O MR CB SINGH TKT : -GF, HOTEL THE ROYAL RESIDENCY RSVN : -DUMUHAN ROAD, BODHGAYA FAX : -DISTT GAYA, BIHAR, INDIA

CHENNAI, INDIA31 HADDOWS ROAD, NUNGAMBAKKAM e-mail : [email protected] 600034, INDIA TKT/RSVN : (91-44) 5217-3311

FAX : (91-44) 5217-3388

CHENGDU, PEOPLE’S REPUBLIC OF CHINAROOM 2309, 23rd FLOOR, ZONG-FU BUILDING e-mail : [email protected] ZONG-FU ROAD, JIN JIANG [email protected], SICHUAN 610015 TKT/RSVN : (86-28) 8675-7755PEOPLE’S REPUBLIC OF CHINA (86-28) 8678-1336

FAX : (86-28) 8678-1048

CHITTAGONG, BANGLADESHFINLAY HOUSE, AGRABAD, CHITTAGONG e-mail : [email protected] TKT/RSVN : (880-31) 713-435/-36

FAX : (880-31) 713-436

COLOMBO, SRI LANKACOLOMBO HILTON RESIDENT e-mail : [email protected] UNION PLACE TKT/RSVN : (94-11) 2307-100-8COLOMBO 2, SRI LANKA FAX : (94-11) 2307-109

COPENHAGEN, DENMARKRAADHUSPLADSEN 16 e-mail : [email protected], COPENHAGEN V TKT/RSVN : (45-33) 750-120DENMARK FAX : (45-33) 750-121

DELHI, INDIATHE AMERICAN PLAZA e-mail : [email protected] INTERCONTINENTAL EROS [email protected] PLACE, NEW DELHI 110019, INDIA TKT/RSVN : (91-11) 4149-7777

FAX : (91-11) 4149-7788

DENPASAR, INDONESIATHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] GRAND BALI BEACH HOTEL [email protected]. HANG TUAH, SANUR-BALI 80227 TKT/RSVN : (62-361) 288-141INDONESIA FAX : (62-361) 288-063

DHAKA, BANGLADESHDHAKA SHERATON HOTEL e-mail : [email protected] ROAD TKT/RSVN : (880-2) 831-4711-18DHAKA 1000, BANGLADESH FAX : (880-2) 832-2353

DUBAI, U.A.E.NO.1 BU HALEEBA PLAZA e-mail : [email protected] ROAD TKT/RSVN : (971-4) 268-1701DEIRA P.O. BOX 13142 FAX : (971-4) 266-5498DUBAI, U.A.E.

FRANKFURT, GERMANYZEIL 127 e-mail : [email protected] FRANKFURT, GERMANY [email protected]

TKT/RSVN : (49-69) 92874-129FAX : (49-69) 92874-222

FUKUOKA, JAPANHINODE FUKUOKA BUILDING e-mail : -1-12-1, TENJIN, CHUO-KU TKT/RSVN : (81-92) 734-6409FUKUOKA, 810-0001, JAPAN FAX : (81-92) 734-9480

GUANGZHOU, PEOPLE’S REPUBLIC OF CHINAG3, WEST WING, THE GARDEN HOTEL e-mail : [email protected] HUANSHI DONG LU, GUANGZHOU 510064 [email protected]’S REPUBLIC OF CHINA [email protected]

TKT/RSVN : (86-20) 8365-2333FAX : (86-20) 8365-2488

HANOI, VIETNAMMELIA HOTEL - 44B LY THUONG KIET STREET e-mail : [email protected], VIETNAM [email protected]

TKT/RSVN : (84-4) 826-7921 ext. 210FAX : (84-4) 826-7394

HO CHI MINH CITY, VIETNAM65 NGUYEN DU STREET, DISTRICT 1 e-mail : [email protected] CHI MINH CITY, VIETNAM [email protected]

TKT/RSVN : (84-8) 829-2809-10FAX : (84-8) 822-3465

HONG KONGTHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] C, 26th FLOOR, UNITED CENTRE [email protected] QUEENSWAY, HONG KONG [email protected]

[email protected] : (852) 2876-6899,

(852) 2876-6868FAX : (852) 2735-8551RSVN : (852) 2876-6888FAX : (852) 2865-6037

HYDERABAD, INDIATHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] PLAZA AND TOWERS [email protected] FLOOR, REAR POTRION TKT : -6-3-249/6 ROAD NO.1, BANJARA HILLS RSVN : -HYDERABAD 500034 INDIA FAX : -

JAKARTA, INDONESIA1st FLOOR, BDN BUILDING e-mail : [email protected]. THAMRIN NO.5 TKT : (62-21) 230-2551JAKARTA 10340, INDONESIA RSVN : (62-21) 230-2552

FAX : (62-21) 3193-0792

JOHANNESBURG, REPUBLIC OF SOUTH AFRICATWO COMMERCE SQUARE, GROUND FLOOR e-mail : -39 RIVONIA ROAD, CORNER HELLING TKT : -SANDHURST SANDTON RSVN : -REPUBLIC OF SOUTH AFRICA FAX : -

KARACHI, PAKISTANAPT NO. A, C110 e-mail : [email protected] LEGACY, BLOCK 2 [email protected], KARACHI, PAKISTAN TKT/RSVN : (92-21) 279-2294

FAX : (92-21) 279-1934


KATHMANDU, NEPALTHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] ARCADE [email protected] MARG, KATHMANDU, NEPAL TKT/RSVN : (977-1) 422-3565

FAX : (977-1) 422-5084

KOLKATA, INDIACRESCENT TOWERS e-mail : [email protected] A.J.C. BOSE ROAD TKT/RSVN : (91-33) 2283-8865/8868KOLKATTA 700020, INDIA FAX : (91-33) 3982-7197

KUALA LUMPUR, MALAYSIAWISMA GOLDHILL e-mail : [email protected] JALAN RAJA CHULAN TKT : (60-3) 2031-190050200 KUALA LUMPUR, MALAYSIA FAX : (60-3) 2032-5805

KUNMING, PEOPLE’S REPUBLIC OF CHINA2nd FLOOR, ATTACHED BUILDING OF e-mail : [email protected] JINJIANG HOTEL TKT / HF : (86-871) 351-151598 BEIJING ROAD KUNMING 650011 FAX : (86-871) 316-7351YUNNAN, PEOPLE’S REPUBLIC OF CHINA

KUWAITTHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] COMMERCIAL CENTER [email protected]. BOX 26775 SAFAT 13128, KUWAIT TKT/RSVN : (965) 242-1444

FAX : (965) 245-3702

LAHORE, REPUBLIC OF PAKISTAN9-A, DAVIS ROAD, GRAND HOTEL & TOWER e-mail : [email protected], REPUBLIC OF PAKISTAN [email protected]

TKT : (92-42) 630-9791-4FAX : (92-42) 636-8690

LONDON, UNITED KINGDOM AND IRELAND41 ALBERMARLE STREET e-mail : [email protected], WIS 4BF TKT : (44-20) 7491-7953UNITED KINGDOM AND IRELAND : (44-870) 606-0911

FAX : (44-20) 7409-1463

LOS ANGELES, U.S.A.222 NORTH SEPUL VEDA BLVD., SUITE 100 e-mail : [email protected] SEGUNDO, CA 90245, U.S.A. RSVN : (1-800) 426-5204

FAX : (1-310) 322-8728

MADRID, SPAINPRINCIPE DE VERGARA, 185 e-mail : [email protected] MADRID, SPAIN [email protected]

TKT/RSVN : (34-91) 782-0523FAX : (34-91) 564-5620

MANILA, PHILIPPINESCOUNTRY SPACE 2 BUILDING e-mail : [email protected] GIL J. PUYAT AVENUE [email protected] CITY, PHILIPPINES TKT/RSVN : (63-2) 812-4412

FAX : (63-2) 817-4044

MELBOURNE, AUSTRALIATHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] 3, 250 COLLINS STREET [email protected], VICTORIA 3000, AUSTRALIA TKT/RSVN : (61-3) 8662-2200

FAX : (61-3) 9650-7003

MOSCOW, RUSSIAN FEDERATION AND C.I.S.6/1 VOLKHONKA STREET, OFFICE 6.2 e-mail : [email protected] 119019, RUSSIAN FEDERATION [email protected]

[email protected]@thai-airways.ru

TKT/RSVN : (7-495) 647-1082 ext. 120-122FAX : (7-495) 647-1083

MUMBAI, INDIAMAKER CHAMBERS - IV, GROUND FLOOR e-mail : [email protected] POINT, MUMBAI 400021, INDIA TKT/RSVN : (91-22) 5637-3737

FAX : (91-22) 5637-3738

MUNICH, GERMANYBAYER KARREE, BAYERSTRASSE 85A e-mail : -80335 MUNICH, GERMANY TKT/RSVN : -

FAX : -

NAGOYA, JAPAN9th FLOOR, SOUTH HOUSE e-mail : [email protected], NISHIKI 3-CHOME [email protected], NAGOYA 460-0003, JAPAN TKT/RSVN : (81-52) 963-8585

FAX : (81-52) 963-8588

NEW YORK, U.S.A.LINCOLN BUILDING e-mail : [email protected] EAST 42nd STREET SUITE 3120 [email protected] YORK N.Y. 10165, U.S.A. TKT/RSVN : (212) 949-8424 ext.194

FAX : (212) 286-0082

OSAKA, JAPANSUMITOMO SEIMEI YODOYABASHI BUILDING e-mail : [email protected] KITAHAMA, 4-CHOME CHOU-KU TKT/RSVN : (81-06) 6202-5161OSAKA 541-0041, JAPAN FAX : (81-06) 6202-5453

PARIS, FRANCE23 AVENUE DES CHAMPS ELYSEES e-mail : [email protected] PARIS, FRANCE TKT/RSVN : (33-1) 4420-7080

FAX : (33-1) 4420-7037

PENANG, MALAYSIATHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] 3 BURMAH PLACE [email protected] MURMAH ROAD TKT : (007-604) 226-7000PENANG 10500, MALAYSIA RSVN : (007-604) 226-6000

FAX : (007-604) 226-6821, 226-1857

PERTH, AUSTRALIALEVEL 30, QV1 BUILDING e-mail : [email protected] ST GEORGES TERRACE TKT/RSVN : (61-8) 9488-9201PERTH, WA 6000, AUSTRALIA FAX : (61-8) 9488-9260

PHNOM PENH, CAMBODIASUITE A15-A16, REGENCY SQUARE e-mail : [email protected] MAO TSE TONG, PHNOM PENH 3 [email protected] OF CAMBODIA TKT/RSVN : (855-23) 214-359-61

FAX : (855-23) 220-790

ROME, ITALY50 VIA BARBERINI e-mail : [email protected] ROME, ITALY [email protected]

TKT : (39-06) 4781-3329RSVN : (39-06) 4781-3304FAX : (39-06) 474-6449

SEOUL, KOREA15th FLOOR, SHIN DONG AH FIRE & MARINE e-mail : [email protected] BUILDING [email protected] TAEPYUNGRO 2-GA TKT : (82-2) 3707-0133CHUNG-GU, SEOUL REPUBLIC OF KOREA RSVN : (82-2) 3707-0011

FAX : (82-2) 755-5251

SHANGHAI, PEOPLE’S REPUBLIC OF CHINAUNIT 105 SHANGHAI KERRY CENTRE e-mail : [email protected] NAN JING ROAD (WEST) TKT/RSVN : (86-21) 5298-5555SHANGHAI 200040 FAX : (86-21) 5298-6166PEOPLE’S REPUBLIC OF CHINA


SINGAPORETHAI AIRWAYS INTERNATIONAL PCL. e-mail : [email protected] GLOBE 100 CECIL STREET #03-00 [email protected] 069532 TKT/RSVN : (65) 6210-5000

FAX : (65) 6223-9005

STOCKHOLM, SWEDENDROTTNINGGATAN 33, BOX 1118 e-mail : [email protected], SWEDEN TKT/RSVN : (46-8) 5988-3600

FAX : (46-8) 5988-3690

SYDNEY, AUSTRALIA75-77 PITT STREET, SYDNEY e-mail : [email protected] SOUTH WALES 2000 [email protected] [email protected]

TKT/RSVN : (61-2) 9844-0999FAX : (61-2) 9251-1106

TAIPEI, TAIWAN96th FLOOR, CHIEN KUO NORTH ROAD, e-mail : [email protected]. 1 TAIPEI, TAIWAN, [email protected]’S REPUBLIC OF CHINA [email protected]

TKT/RSVN : (886) 2-2509-6899 ext. 711(886) 2-2509-6800

FAX : (886) 2-2509-2931(886) 2-2508-4910

TOKYO, JAPAN1-5-1, YURAKU-CHO, CHIYODA-KU e-mail : [email protected] 100-0006, JAPAN TKT/RSVN : (81-3) 3503-3311

FAX : (81-3) 3503-3323

VIENTIANE, LAOSM&N BUILDING, GROUND FLOOR e-mail : [email protected] NO. 70/101-103 [email protected] ROAD, VIENTIANE TKT/RSVN : (856-21) 222-527-29LAO, PEOPLE’S DEMOCRATIC REPUBLIC FAX : (856-21) 216-143

VARANASI, INDIATOP TRAVEL AND TOURS (P) LTD. e-mail :GF-3, R.H. TOWERS, THE MALL TKT/RSVN :VARANASI CANTT, VARANASI-221001 FAX :UTTAR PRADESH, INDIA

XIAMEN, PEOPLE’S REPUBLIC OF CHINA1st FLOOR, INTERNATIONAL PLAZA e-mail : [email protected]. 8, XIAMEN, 361001 [email protected]’S REPUBLIC OF CHINA TKT/RSVN : (86-592) 226-1688

FAX : (86-592) 226-1678

YANGON, UNION OF MYANMAR0101 SAKURA TOWER e-mail : [email protected] BOGYOKE AUNG SAN STREET [email protected] 11182 TKT/RSVN : (95-1) 255-499YANGON, UNION OF MYANMAR FAX : (95-1) 255-490

ZURICH, SWITZERLANDBAHNHOFSTRASSE 67 e-mail : [email protected] ZURICH, SWITZERLAND [email protected]

TKT/RSVN : (41-44) 215-6500FAX : (41-44) 212-3408

BANGKOK, THAILANDHEAD OFFICE89 VIBHAVADI RANGSIT ROAD TEL : 02 545-3690-92BANGKOK 10900 FAX : 02 545-3832

SILOM OFFICE485 SILOM ROAD TEL : 02 232-8000BANGKOK 10500 : 02 232-8197, 02 232-8294

: 02 232-8294FAX : 02 233-1465

02 237-4114

LARNLUANG OFFICE6 LANLUANG ROAD TKT : 02 288-7000BANGKOK 10110 RSVN : 02 628-2000

FAX : 02 280-174802 628-0111

AIRPORT OFFICE- BANGKOK INTERNATIONAL AIRPORT TEL : 02 535-2755 (TERMINAL 1)

VIBHAVADI RANGSIT ROAD FAX : 02 535-4768BANGKOK 10210 TEL : 02 535-6998 (TERMINAL 2)

FAX : 02 535-4266- DOMESTIC AIRPORT

VIBHAVADI RANGSIT ROAD TEL : 02 535-3290BANGKOK 10210 FAX : 02 535-3182

CHIANGMAI, THAILAND240 PRAPOKKLAO ROAD e-mail : [email protected] MUANG, CHIANGMAI 52000 TKT : (053) 920-921THAILAND RSVN : (053) 920-999

FAX : (053) 920-990

CHIANGRAI, THAILAND870 PHAHOLYOTHIN ROAD e-mail : [email protected] WIENG AMPHUR MUANG TEL(A/P) : (053) 711-179, 715-207CHIANGRAI 57000, THAILAND FAX : (053) 713-663

PHITSANULOK, THAILAND209/26-28 BOROMTRILOKNART ROAD e-mail : [email protected] 65000, THAILAND TEL : (055) 242-971

FAX : (055) 247-863

HAT YAI, THAILANDNIPAT UTHIT 1 ROAD e-mail : [email protected] YAI, SONGKHLA 90110, THAILAND TKT : (074) 233-433

FAX : (074) 233-114

PHUKET, THAILAND78 RANONG ROAD e-mail : [email protected] MUANG, PHUKET 83000 TKT : (076) 212-400THAILAND RSVN (076) 211-195

FAX : (076) 258-233, 216-776

KRABI, THAILAND39 TUNG FAH ROAD e-mail : [email protected] MUANG, KRABI 81000 TKT/RSVN : (075) 622-439, (075) 622-440THAILAND (075) 622-441, (075) 622-442

FAX : (075) 622-443

PATTAYA, THAILANDDUSIT RESORT PATTAYA HOTEL e-mail : [email protected]/2 PATTAYA BEACH ROAD TEL : (038) 420-994-97CHOLBURI 20130, THAILAND FAX : (038) 420-998

KHON KAEN, THAILANDHOTEL SOFITEL RAJA ORCHID KHON KAEN e-mail : [email protected]/9 PRACHASAMRAN ROAD TEL : (043) 227-701-04AMPHUR MUANG, KHON KAEN 40000 FAX : (043) 227-708

UBON RATCHATHANI, THAILAND364 CHAYANGGOOL ROAD, AMPHUR MUANG e-mail : [email protected] RATCHATHANI 34000, THAILAND TEL : (045) 313-340-2

FAX : (045) 256-069

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Documents

THAI : Annual Report 2006