Upload
mongkon-wirunputi
View
250
Download
3
Tags:
Embed Size (px)
DESCRIPTION
Annual Report 2007
Citation preview
50-09-026_COVER_V.ai 12/12/07 1:09:14 PM50-09-026_COVER_V.ai 12/12/07 1:09:14 PM
50-09-026_inside COVER _V.ai 12/12/07 1:07:51 PM50-09-026_inside COVER _V.ai 12/12/07 1:07:51 PM
2
4
6
10
12
15
17
47
50
52
54
57
71
73
92
92
95
102
112
114
116
117
120
128
158
160
164
Contents
Message from the Chairman
Message from the President
Achievements in Fiscal year 2007
Financial Highlights
Operations of the Company and its Subsidiaries-The Policies of Associated Companies
Revenue Structure
The Company’s Operating Results
Subsidiaries and Affiliated Companies
Adherence to Official Information Act, B.E. 2540
Status of the Commercial Airline Industry and Competition
Risk Factors
Shareholder and Management Structure
Good Corporate Governance Committee Report
Good Corporate Governance
Audit Fee and Related Expenses
Other Factors that May Affect Investment Decision
Related Parties
Management’s Discussion and Analysis
Corporate Direction and Strategy
Five-year Review
Board of Directors’ Duties on Financial Disclosure
Audit Committee’s Report
Financial Statements
Notes to the Financial Statements
General Information
Board of Directors
Management Team
2 Annual Report 20072 Annual Report 2007
Message from the Chairman
The year 2007 is a year of great pride and joy for
the Thai people as His Majesty the King is celebrating His
80th Birthday Anniversary on December 5, 2007. In honor
of His Majesty, Thai Airways International Plc. undertook
various activities in deference to His Majesty including
the “Plook Cheevit Hai Pandin” reforestation project and
supported the “Phorn Jak Fah, Phorn Por Piang” (Blessing
from the sky Blessing of sufficiency) seminars on the
subject of His Majesty ’s Sufficiency Economy held in
the United States of America, in Asia and Europe. Another
event that took place which will be recorded in the history
of Thai Airways International Plc. is the Royal Charity Flight
“Sai Yai Rak Haeng Khrobkhrua” (Family Bonds) in which
His Royal Highness The Crown Prince Maha Vajiralongkorn
was in command. The money raised went to helping those
who have been adversely impacted by floods and acquiring
medical equipment for hospitals in the three troubled
southern provinces of Thailand.
September 2007 marked the end of THAI’s 47th year
of successful operations and also marked the first full year of
operations at Suvarnabhumi Airport since its opening on
September 28, 2006. In support of the Government’s policy,
THAI recommenced its domestic services at Don Muang
Airport to facilitate domestic passengers in traveling
throughout Thailand. In the midst of increasing competition
in the commercial airline industry, the impact from rising
cost of aviation fuel, the fluctuation in currency exchange, THAI
3Thai Airways International Public Company Limited 3Thai Airways International Public Company Limited
has been successful in overcoming these challenges through its ability to adjust its strategy
with the changing operating environment. To achieve THAI’s vision of being the First Choice
Carrier with Touches of Thai, the area of emphasis has been to ensure the highest level
of security and safety for THAI’s passengers benchmarked to international safety standards.
Other areas of development include ongoing modernizing of the aircraft fleet and
improving service quality, adjusting the route network and increasing cooperation with
business alliances to enhance competitive advantage along with streamlining of the
organization structure to increase management efficiency and effectiveness. THAI also
places great emphasis on environmental conservation and responsibility towards society
through holding campaigns and activities for employees to participate and observe THAI’s
policies on environment conservation. Activities undertaken by THAI in the area of
environmental awareness has earned the Company an award for treatment and recycling of
waste from the Ministry of Natural Resources and Environment.
The Board of Directors would like to take this opportunity to express the Board’s
gratitude towards THAI’s shareholders, customers, business partners and all other related
parties for the ongoing support for the Company. For the trust bestowed upon the
Company, the Board of Directors would like to reiterate its commitment to manage the
Company based on the principles of good corporate governance to provide the highest
benefit for all stakeholders and continue to improve on its operations for sustainable
long-term growth.
ACM Chalit Pukbhasuk
Chairman of the Board of Directors
4 Annual Report 2007
Message from the President
Fiscal year 2007 was another year of solid performance
by Thai Airways International Public Company Limited as
it posted its 43rd consecutive year of profitability. The success
was in spite of the many challenges faced by the Company
specifically, the increased level of competition within the
commercial airline industry. Other risks bearing direct impact
on THAI’s performance include the record level aviation fuel
cost, the fluctuation in exchange rate, the impact of natural
disasters, the lingering concern over terrorism and the
political instability.
In the past year, THAI continued to strengthen its
competitive edge through emphasizing Smooth as Silk
service with Touches of Thai by enhancing passengers’
experience at every customer touch point to increase
overall customer satisfaction. Changes in THAI’s strategy
include the decommissioning of THAI’s older aircraft,
increasing the hour of utilization of each aircraft to increase
production and thus revenue, minimizing operating expense,
reducing funding burden on aircraft purchases, making
changes to the route network by limiting new route
expansion, reducing capacity and flight frequency on loss
making routes while increasing capacity and flight frequency
on profitable ones.
Proactive marketing strategies have been implemented
emphasizing markets with potential along with retaining of
existing customers and expanding the customer base. THAI is
utilizing new channels of distribution to penetrate markets,
4 Annual Report 2007
5Thai Airways International Public Company Limited
emphasizing network sales including greater cooperation with partner airlines and
related business partners while offering a broader variety of domestic and international
Royal Orchid Holiday (ROH) packages to meet customer needs and provides customers
with greater value to use ROH’s services.
Customer service and maximizing shareholders’ benefits are two key factors
determining THAI’s corporate development. Transparency in management, fairness
under the principles of good corporate governance, comprehensive risk management
processes minimizing potential adverse impact of internal and external risk factors on
the Company, organization restructuring through elimination of redundant tasks to
facilitate flexibility and effectiveness of operations and ongoing human resource
development are key to improving THAI’s development. A new corporate culture “THAI
Spirit” is being fostered focusing on “Teamwork” - increasing cooperation to create
competitive advantage; “Happiness” - focusing on employee’s well-being and happiness
at work; “Awakening” - enlivening with enthusiasm to welcome new experiences and
developments; “Inspiration” - feeling of being a part of the organization and the desire
to succeed “Customer Focus” - delivering unsurpassed quality service while also being
socially and environmentally responsible.
THAI’s success is the culmination of effort and hard work by the Company’s Board
of Directors, management and employees along with the support received from the
Government and THAI’s shareholders. On behalf of the Company’s management, I would
like to take this opportunity to show my appreciation and gratitude for your unwavering
support.
Flying Officer Apinan Sumanaseni
President
5Thai Airways International Public Company Limited
6 Annual Report 2007
Achievements in Fiscal Year 2007
Sponsored the Royal Charity flight commanded by His Royal Highness the Crown Prince Maha
Vajiralongkorn to Chiang Mai to raise funds in support of those that have suffered from natural
disasters and to donate medical equipment and supplies to hospitals in the 3 troubled southern
provinces.
Launched flights to Hyderabad, Bodhgaya and Varanasi beginning October 30, 2006 to meet tourist
demand and those seeking to go on pilgrimage for merit making.
Launched direct services from Bangkok - Johannesburg on October 31, 2006 - TG 703.
Re-established domestic flights from Don Muang Airport beginning March 25, 2007 with 30
daily flights.
Launched the THAI City Air Terminal to provide an alternative check-in point for domestic passengers
without flight connections flying out of Don Muang Airport. Passengers are ferried between the
City Terminal and Don Muang Airport and the City Terminal where passengers can connect to the
mass transit system.
THAI signed an agreement with Scandinavian Airlines System (SAS) to provide code share service for
THAI’s passengers traveling to various destinations in Scandinavia and for SAS to code share with THAI
for passengers traveling to destinations for which THAI flies in Asia.
To celebrate the 10th anniversary of the establishment of Star Alliance where THAI was among the
founding members, THAI along with Star Alliance and Asia News Network sponsored the largest ever
airline forum “Asia forum 2007 : The Future of Aviation” held at the Shangri La Hotel in Bangkok.
THAI was entrusted by the Royal Thai Government to cater meals for collegiate athletes and staff
participating in the 24th “Summer World Collegiate Athletic Competition” sponsored by the
International University Sports Federation and Thammasat University during May of 2007.
Launched the Puff & Pie Supreme Bakery Delight where THAI’s catering put on display the new
Puff & Pie wholesale concept along with putting on display the range of quality bakery from
THAI’s catering.
7Thai Airways International Public Company Limited
Awards Received in Fiscal Year 2007
Received the Best First-Class Lounge award at the World Airline Awards with ranking determined
by customer preference through Skytrax customer census.
Received second place among the most preferred airlines of the world from assessment conducted
by Skytrax (Airline of the Year 2007 Awards).
Received the Best Single In-flight Audio Program from Avion Awards and was among the top
5 airlines from a total of 250 candidates to be awarded for in-flight entertainment by the World Airlines
Entertainment Association (WAEA).
THAI was awarded the Best Intercontinental Airline for the fifth consecutive year at the Danish
Travel Awards 2006.
Received the ISO 9001 : 2000 certification from the Bureau Veritas Quality International (BVQI) for
in-flight customer services including in-flight entertainment, food & beverage and cabin crew
management.
Received recognition for initiatives for conserving energy and the environment from the Department
of Environmental Quality Promotion, Ministry of Natural Resources and the Environment for the
Company’s various projects at Suvarnabhumi Airport including :
- Development of “Biodiesel Project” of Thai’s Catering Services Unit.
- Environmental awareness award for “Ground Support Equipment Repair for Environmental
Friendliness Project” of the Ground Support Equipment Services Unit.
- Recognized for “Organic Fertilizer Project” at the Company’s Operations Center.
- Recognized for “Waste Water Treatment Project” conducted by Technical Services Unit.
- Recognized for the innovative “Wheel Suspension Project for Aviation Equipment” by Aviation
Service Unit.
8 Annual Report 2007
Activities in Deference to His Majesty the King
THAI, as the country’s national flag carrier undertook the following activities in deference to His Majesty
the King in celebrating His Majesty’s 80th Birthday on December 5, 2007.
1. Sponsored a talk in deference to His Majesty on the subject of Self Sufficiency Economy held
in Los Angeles and Seattle in the United States of America along with talks held in Munich,
Germany; Tokyo, Japan; Sydney, Australia; Dubai, United Arab Emirates. The talks were held by
Dr. Sumet Tantivejkul, Member and Secretary-General of the Chaipattana Foundation to provide
insight into His Majesty the King’s philosophy of Sufficiency Economy. The purpose is to instill
conscience of sufficiency into the hearts of Thais living abroad to observe in conducting their daily
lives. THAI received support and cooperation from the Thai Embassies and Consulates in the various
countries in inviting Thais living in the respective countries to attend the talks.
2. Supported His Majesty’s reforestation project “Karnbinthai Plook Chiwit Hai Pan Din” at Huay
Sai Royal Development Study Center in Cha-am District, Petchburi Province. This project was in
celebration of His Majesty the King’s 80th Birthday on December 5, 2007 which is in the interest of
forest conservation and environmental protection.
3. Undertook the Miles for Merit program where THAI’s Royal Orchid Plus frequent travelers
sponsored the travel of 80 monks on a pilgrimage to India in merit making by donating frequent flyer
miles and for which such merit was bestowed up on His Majesty the King on His 80th Birthday.
4. Deference alters were installed along with the posting of Royal pictures of His Majesty the King
and the 80th Birthday celebration shield.
5. A part of the revenue generated from the sales of yellow t-shirts with the 80th Birthday celebration
shield was donated to the Thai chapter of the Red Cross Society which is under the Royal patronage
of His Majesty the King.
6. THAI invited the general public from all walks of life to participate in the recording of reading
His Majesty’s edicts, philosophies and doctrines on CDs. A recording room was established at the
Company’s head office and another was established in the passenger terminal at Suvarnabhumi
Airport, Don Muang Airport, Chiang Mai International Airport and Phuket International Airport.
Mobile recording stations were moved from place to place - BTS stations, department stores and
special event venues to enable the general public to participate in this recording. The recorded
CDs containing His Majesty’s edicts, philosophies and doctrines were then given to people who
are visually impaired, to those that are illiterate, to elders and children to serve as guidance in
conducting their daily lives.
9Thai Airways International Public Company Limited
Social Oriented Activities
In addition to activities in deference to His Majesty the King’s 80th Birthday on December 5, 2007, THAI
is also proud of its activities benefiting social causes and activities that preserve Thai culture.
1. THAI sponsored a Royal Charity Flight (on THAI’s Boeing 737-400 aircraft) commanded by His
Royal Highness The Crown Prince Maha Vajiralongkorn between Bangkok-Chiang Mai-Bangkok on
January 5-6, 2007. The 80,993,740 million baht raised in proceeds from the Royal Charity Flight were
presented to His Royal Highness which was in turn used to help those that have adversely been
affected by floods and acquiring medical equipment for the various hospitals in the 3 troubled
southern provinces.
2. On its 47th anniversary, THAI provided donations to supplement general medical treatment for
over 300,000 monks and monks in training. Donations were also made for monks to undergo
surgery on their knees to obtain artificial knee joints.
3. The Company coordinated with the Border Patrol Police Bureau to distribute children’s school
clothes and school supplies received from donations at the Company’s head office to under
privileged children in the provinces along the borders of Thailand.
4. Supported air tickets for judges on behalf of the Anandha Mahidol Foundation and the Princess
Mother’s Award Foundation to award doctors and nurses internationally for excellence in their profession.
5. THAI participated in the Red Cross charity event held near the Dusit Palace where net proceeds
were given as donation to the Red Cross.
6. Facilitated transportation for international attendees of the 2007 annual Buddhist Visaka religious
celebration upon arriving at Suvarnabhumi Airport.
7. Supported and sponsored events to protect the environment, reduce pollution from various
business activities undertaken by the Company. The event held on “Global Environment Day”
recognized various units within the Company that have been active on environmental issues
(Award summary provided in the Awards Received Section Pg. 7). All the projects were geared to
reduce pollution and protect the environment while maximizing the utilization of available
resource.
10 Annual Report 2007
150,
000
100,
000
200,
000
9,00
0
8,992
6,00
019
0,00
0
230,
000
270,
000
310,
000
231,638
249,034
272,086
162,488
178,607
192,037
6,777
6,342
50,0
000
150,
0000
3,00
00
2007
2006
2005
2006
2005
2007
2005
2006
2007
Total Assets(Units : million baht)
Revenues from the Sale of Goods and the Rendering of Services(Units : million baht)
Net Profits(Units : million baht)
Financial Highlights
11Thai Airways International Public Company Limited
Consolidated
2007 2006 2005
Statements of Income (Million Baht)
Revenues from the Sale of Goods and the Rendering of Services 192,037 178,607 162,488
Profit from the Sale of Goods and the Rendering of Services 12,788 8,364 10,824
Profit before Interest and Tax 13,840 17,273 14,235
Net Profits 6,342 8,992 6,777
Balance Sheets (Million Baht)
Total Assets 272,086 249,034 231,638
Total Liabilities 202,858 183,353 172,426
Shareholders’ Equity 69,228 65,681 59,212
Shares
Issued and Paid-up Share Capital (Million Shares) 1,698.90 1,698.89 1,698.89
Par Value (Baht) 10.00 10.00 10.00
Earnings Per Share (Baht) 3.73 5.29 4.00
Dividends Per Share (Baht) 1.80 1.65 1.50
Financial Ratios
Net Profit on Revenues from the Sale of Goods (%) 3.3 5.0 4.2
and the Rendering of Services
Return on Total Assets (%) 2.4 3.7 3.2
Return of Equity (%) 9.4 14.4 11.9
Debt to Equity (Times) 2.9 2.8 2.9
Note :
1. The Board of Directors approved on November 26, 2007 and the rate will be brought to the 2007 AGM for resolution on December 27, 2007.
1
12 Annual Report 2007
Thai Airways International Plc. is a state enterprise under the jurisdiction of the Ministry of Transport
and is Thailand’s national flag carrier flying domestic and international routes. The Company restructured its
organization into the following key business units and subsidiaries beginning November 2001.
Aviation Business
The Company’s main 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 need 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 Company’s business units include :
Ground Customer Services
- Reception and check-in service
- Passenger baggage tracking service
- Baggage loading service
- VIP Lounges
- Transfer of passengers between THAI City Air Terminal and Don Muang Airport
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
Operations of the Company and its Subsidiaries -The Policies of Associated Companies
13Thai Airways International Public Company Limited
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
- Provide tracking information on package and cargo delivery via the internet
- Perishable services area to enhance the quality and freshness of cargo
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
14 Annual Report 2007
Technical Services
- Technical, line and light maintenance checks for aircraft in transit or on overnight stop at
Don Muang, Suvarnabhumi Airport (24-hour service at Suvarnabhumi Airport) 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-11s 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 were performed at the Don Muang 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 enabling 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
15Thai Airways International Public Company Limited
Revenue Structure
2007 2006 2005
MTHB % MTHB % MTHB %
Revenue from domestic transportation
Passengers and excess baggage 12,890 6.64 12,030 6.59 10,581 6.41
Freight 384 0.20 397 0.22 378 0.23
Mail - - 8 - 9 0.01
Revenue from other activities - domestic
Business Units 7,870 4.05 7,388 4.05 6,667 4.04
Supporting 820 0.42 772 0.42 686 0.41
Total operating revenue - domestic 21,964 11.31 20,595 11.28 18,321 11.10
Revenue from international transportation
Passengers and excess baggage 143,368 73.84 131,372 71.96 118,653 71.89
Freight 25,353 13.06 25,252 13.83 24,041 14.57
Mail 992 0.51 1,028 0.56 1,070 0.65
Total operating revenue - international 169,713 87.41 157,652 86.35 143,764 87.11
Revenue from subsidiary
Thai-Amadeus Southeast Asia Co., Ltd. 360 0.19 360 0.20 403 0.24
Total operating revenue 192,037 98.91 178,607 97.83 162,488 98.45
Other income
Share of profit from associated companies 123 0.06 256 0.14 127 0.08
Interest income 621 0.32 317 0.17 362 0.22
Others 1,382 0.71 3,388 1.86 2,071 1.25
Total other income 2,126 1.09 3,961 2.17 2,560 1.55
Total revenue 194,163 100.00 182,568 100.00 165,048 100.00
Note : The Company has a contract with Traveler Corporation of Japan as distributor of THAI’s In-Flight Duty Free goods, a supporting activity.
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
16 Annual Report 200716 Annual Report 2007
17Thai Airways International Public Company Limited
It is expected that going forward, competition in the commercial airline business is likely to intensify,
especially within Asia as the region will be experiencing the highest level of economic growth. Adding to the
intensity of competition is the ongoing open skies policy that will enable greater freedom for all airlines to
fly into Thailand. Other factors posing to be challenges include the dual airport operations of Suvarnabhumi
Airport and Don Muang Airport along with the rising aviation fuel price are factors bearing direct impact on
THAI’s operating performance.
To proactively mitigate the adverse impact of the above factors, THAI changed its operating strategy
by putting effort towards increasing network sales. This is in addition to the change in marketing and pricing
strategy adopted by targeting preferred passengers - the business community, entrepreneurs, large institutions
and leisure travel. Furthering the Company’s efforts in attracting preferred customers, THAI is continually
upgrading its aircraft fleet. In fiscal year 2007, THAI sold 3 of its older aircraft - 2 Airbus A300-600 and 1 Boeing
747-300. There is one more Boeing 747-300 that has been decommissioned and is pending sales. However,
THAI also took delivery of 5 new aircraft - 4 Boeing 777-200ER and 1 Airbus A340-500. To maximize revenue
and profitability, flight frequencies were added to destinations contributing the highest level of profitability
while reducing or discontinuing loss making flights.
New developments and efficiency improvements in all areas of operations have been undertaken
which has not only increased the Company’s competitiveness but has also enabled the Company to
weather many adversities and maintain profitability. These improvements have also enabled THAI to
successfully operate flights from both Suvarnabhumi Airport and Don Muang Airport to relieve congestion
being experienced at Suvarnabhumi Airport.
Core BusinessAircraft Fleet
Number of Aircraft
2007 2006
Boeing 747-400 18 18
Boeing 747-300 1 2
Boeing 777-300 6 6
Boeing 777-200 8 8
Boeing 777-200ER 5 -
Boeing 737-400 10 10
Airbus A340-600 5 5
Airbus A340-500 4 3
Airbus A330-300 12 12
Airbus A300-600 19 21
ATR 72 2 2
Total 90 87
Aircraft Type
The Company’s Operating Results
17Thai Airways International Public Company Limited
18 Annual Report 2007
THAI’s aircraft fleet currently totals 90 with the additions of 5 new Boeing 777-200ERs, 2 of which
were received in November, another 2 were received in December of 2006 and the last was received in
September 2007, used for additional services to Europe and Australia. Another Airbus A340-500 was received
in May 2007 enabling THAI to increase its flights to North America. As part of an ongoing effort to enhance
product quality, THAI decommissioned 4 aircraft in fiscal year 2007 - 2 Airbus A300-600 and 2 Boeing 747-300.
Of the Company’s aircraft fleet, 5 have been leased to THAI’s sister low cost carrier “Nok Air” which includes
4 Boeing 737-400 and 1 ATR 72. As at the end of September 2007, the aircraft fleet used by THAI totaled 84 with
1 decommissioned aircraft pending sales.
In fiscal year 2007, THAI began its retrofitting program for its Boeing 777-300 by installing new and
more comfortable seats with on demand in-flight entertainment system. The retrofitting program is likely to
be completed by November 2008.
THAI expects to receive 1 new Boeing 777-200ER in October 2007 and another Airbus A340-600 in
October 2008 to further expand its operations to Europe and Australia. Another 2 new Airbus A330-300 will also
be joining the fleet in November and December of 2008 to support regional demand.
19Thai Airways International Public Company Limited
Routing and Destination Development
Proactive steps were taken in fiscal year 2007 in regards to its routing and destination development
to enhance THAI’s competitiveness. Additional intercontinental and regional flights were added to
destinations determined to have the most potential, which were mostly business centers and tourist destinations
around the world. Flight times and frequencies were also adjusted to better meet passengers’ preference
while coordinating with partner airlines to enhance connectivity.
THAI’s reach currently spans 62 destinations in 35 countries around the world and provides services
to 11 intriguing destinations within the Kingdom of Thailand.
North American Routes
THAI’s frequency of non-stop flights to North America from Bangkok was increased for both Los Angeles
and New York to daily flights providing passengers with flexibility and accommodating the strong demand
for air travel on these routes. The two U.S.A. destinations serve as points of connectivity for passengers
traveling to other destinations within North America via the Star Alliance network. There are 8 major
destinations within the U.S.A. from which passengers mostly connect from New York, these include Chicago,
San Francisco, Dallas, Washington D.C., Atlanta, Miami, Denver and Seattle. Pacific flights to Los Angeles are
code share flights with United Airlines with passengers connecting to points beyond including Chicago,
San Francisco, New York, Denver, Seattle and Washington D.C. Code shares are also made with Air Canada from
THAI’s European destinations Frankfurt and London to Toronto, Montreal and Vancouver in Canada.
20 Annual Report 2007
European Routes
Additional flights were initiated to Munich and Stockholm from 5 weekly flights to daily. Because
of the strong passenger demand, an additional flight was added to the Bangkok-Milan route for the 2007
summer traffic program, making it 4 weekly flights.
THAI has also put much effort into the development and cooperation with members of Star Alliance
that have their operating base in Europe which includes Lufthansa in Frankfurt and Munich; Bristish Midland
Airways (BMI) in London; and Austrian Airlines in Vienna to enhance connectivity and increase points of
destination of choice for passengers where THAI does not fly. The cooperation expands THAI’s reach to 9 key
destinations in Europe - Amsterdam, Geneva, Vienna, Brussels, Barcelona, Lisbon, Budapest, Prague and Warsaw.
THAI is now also able to reach 7 major destinations in Germany namely Nuremberg, Dusseldorf, Cologne,
Berlin, Stuttgart, Hamburg and Hanover. To Austria, THAI can now reach 5 major destinations including Graz,
Innsbruck, Klagenfurt, Linz and Salzburg. In England, THAI’s reach spans 7 destinations in Ireland and
Scotland - Dublin, Glasgow, Edinburgh, Belfast, Leeds, Manchester and Tees Side.
African Routes
THAI currently provides 3 weekly flights on its Airbus A340-600 to the beautiful city of Johannesburg
in South Africa and cooperates with South African Airways to provide service for passengers wanting to travel
to Cape Town and other major tourist destinations in South Africa.
Australian and New Zealand Routes
To meet the growing travel demand of passengers into Australia, THAI increased its direct flights to
Sydney from Bangkok to 14 weekly flights and will increase that to 19 weekly flights ending October 2007 with
ongoing service to Brisbane to 7 weekly flights. For direct flights to Melbourne, flight frequency was increased
to 12 per week.
As a member of Star Alliance, THAI code shares with Air New Zealand to carry passengers to key
tourist destinations in New Zealand. On the same basis, Air New Zealand code shares with THAI for passengers
who need to connect to Europe and other regional destinations within Asia.
Regional Routes
THAI’s route network has been designed to make Thailand a regional hub for air travel for which
THAI currently serves 42 destinations in Asia. Changes in flight schedules and flight frequencies were made
to destinations in China, Japan, Korea, India and the Middle East experiencing the high levels of growth in
travel. This is in addition to the increased cooperation with members of Star Alliance to build travel traffic
into the region.
21Thai Airways International Public Company Limited
Northern RoutesFlight frequency to the city of Seoul in The Republic of Korea has been increased to 32 weekly flights
from 28. The same has been done for flights to Busan where the frequency has been increased to 6 weekly
flights from 4. For China, flight frequency to Beijing will be increased to 14 weekly flights from the existing 10
by end of October 2007.
Western and Eastern RoutesTHAI is looking to increase its flight frequency to Pakistan as per the given rights by the end of October
2007 to the 3 cities that THAI currently serves - Karachi, Lahore and Islamabad. Aircraft type adjustment has
been made for flights into the Middle East - Muscat, Dubai, Kuwait and Bangalore in India, to match the
growing traffic volume and to compete with Middle East airlines. New sales approaches and techniques
have been employed to attract travelers to visit and relax in Thailand.
Southern RoutesTHAI is holding its frequency of service to the south steady while aircraft type has been changed to
match market demand and demand generated from THAI’s alliance network to better compete with low cost
carriers that have increased their presence in the region.
Indochina RoutesFor fiscal year 2007 services to Ho Chi Minh City was increased to 16 from 15 weekly flights using Airbus
A300-600 and that frequency will be increased to 17 by October 2007.
Domestic RoutesTo reduce the level of traffic congestion being experienced at Suvarnabhumi Airport, THAI began its
domestic services from Don Muang Airport since March 25, 2007. However, the main tourist destinations -
Chiang Mai, Chiang Rai, Phuket and Krabi are also being served from Suvarnabhumi Airport for connectivity
with international flights.
THAI currently serves 11 domestic destinations in various parts of Thailand. To the north, THAI
serves Chiang Mai, Chiang Rai, Maehongson and Phitsanulok. To the northeast, THAI serves Udon Thani,
Ubon Ratchathani and Khon Kaen. To the south, THAI serves Phuket, Krabi, Hat Yai, and Surat Thani. THAI also
has direct flights between Chiang Mai - Phuket and Chiang Mai - Maehongson. The number of domestic flights
per week totals 296 with 175 of the flights departing from Don Muang Airport, from Suvarnabhumi Airport 100
flights and 21 flights between Chiang Mai - Maehongson and Chiang Mai - Phuket. Ending October 2007, total
domestic operations will increase to 317 flights per week with 168 flights from Don Muang Airport, 121 flights
from Suvarnabhumi Airport and 28 flights between Chiang Mai - Maehongson and Chiang Mai - Phuket.
For domestic services, THAI has a code sharing arrangement with PB Air to provincial destinations such
as Lampang, Nan, Sakon Nakhon, Nakhon Phanom and Roi Et to provide international passengers with greater
flexibility in connection to these smaller provinces in Thailand.
22 Annual Report 2007
Star Alliance
A strategy for which THAI has utilized to mitigate the impact of increasing competition in the commercial
airline industry has been the ongoing development and cooperation with members of Star Alliance
for which THAI was among the founding members launched on May 14, 1997. Today, Star Alliance is
the largest air travel alliance with 17 member airlines, and 3 European regional carriers. The Alliance
network spans 855 airports in 155 countries with overall flights of over 16,000 per day. By December 2007,
there will be 2 additional members including Air China and Shanghai Airlines. The exponential growth in
economic interdependence amongst countries around the world in the course of the past ten years
confirms THAI’s vision in jointly establishing this premier alliance.
The growing cooperation amongst member airlines has led to the realization of both tangible and
intangible benefits. THAI’s global image reflected through the membership of Star Alliance is an invaluable
intangible benefit. Revenue growth for member airlines along with the number of member airlines within
Star Alliance and the sheer number of Network Traffic or the increased number of passengers generated
by the network effect are some of the key tangible benefits. In fiscal year 2007, revenue contributed by
network traffic to THAI’s top-line revenue increased by 3.1% year on year to 10,000 million baht.
The joint exercise amongst Star Alliance members in the Global Connectivity Improvement Project and
the Bangkok Hub Project, a 2 year cooperation amongst alliance members which started from April 2005
and ended in March 2007, to promote Bangkok as the connecting hub yielded an increase of 60,665 travelers
or a contribution of approximately 931 million baht.
Cooperation has also been extended in various areas to support each member’s operations,
standardize certain operations and venues for knowledge and experience sharing to better control
operating cost. At the same time, the synergy encompasses utilization of the latest technology and knowhow
to develop products and services to better meet the demands of customers in a changing environment.
The marking of the 10th Anniversary of Star Alliance has brought on new marketing techniques
and tools to meet the changing customer demands within the commercial airline industry. Much of these
changes are the result of technological developments for which THAI and Star Alliance have embraced in
addition to delivering unsurpassed service quality.
23Thai Airways International Public Company Limited
Commercial Department
To enhance the Company’s ability to compete in an ever increasingly competitive operating
environment for the commercial airline industry stemming from open skies policy and external uncontrollable
factors such as the ever increasing price of aviation fuel, in fiscal year 2007, a proactive marketing approach was
adopted to increase the Company’s overall revenue and increase market share. Part of the strategy was to
ensure customer retention while looking for opportunities targeting new markets especially the more affluent
population. The objective was also to increase the proportion of the Company’s premium class passengers
by building a larger corporate client base and attracting premium passengers with packages targeting such
niche. Products were also developed geared towards attracting passengers for the economy class.
Being a full network airline, THAI used its positioning to develop and increase passenger volume
through pushing to increase network sales in conjunction with members of Star Alliance and THAI’s other
Partner Airlines. This strategy was in addition to THAI’s ongoing effort to modernize its aircraft fleet and
adjusting aircraft type and flight frequency to increase its competitive position in the respective markets.
Attention was also given to niche marketing to further enhance the Company’s revenue and the
number of passengers especially during the seasonally low period while protecting the Company’s market
share. The Summer Super Early Bird Promotion was launched for Frankfurt and Munich while the Touch Down
Fare was launched for Lahore. The Star Alliance Thailand Airpass, THAI Value Card and THAI Value Plus Card were
pre-paid tickets of attractive prices which could be used as gifts for friends and family. Seasonality products
were also launched especially for the low season during the months of April through June.
To broaden the customer base, THAI entered into cooperation with Total Access Communications Plc.
(DTAC) and Krungthai Card Plc. to co-promote travel through a larger combined customer base.
For value added service, Royal Orchid Holidays (ROH) vacation packages were diversified to encompass
a larger selection of destinations and preferences for both domestic and international travel. Packages
offered for fiscal year 2007 totaled 800 encompassing 35 countries and 110 cities.
The Reservations Booking Designator Guideline System (RBD) was utilized to assist in setting airfares
for each booking class to maximize overall revenue and to ensure efficient and effective seat booking.
The Revenue Management System (RMS) was also utilized to maximize efficiency in optimizing revenue
generation. Furthering efforts to grow revenue, THAI re-assessed its routes and made necessary changes to
ensure that the routing suites customers’ travel preference and increasing travel demand on THAI.
The Centralized Intelligent Fares System (CIF) and the CIF Online Fare Filing System were used to assist
in effectively and efficiently establishing fares for network sales and providing faster reservation service for
passengers. The systems also helped to minimize the possibility of overbooking and overflow of passengers
during peak seasons.
Enhancing customer ease in making bookings, the Flex Pricer program has been introduced to
24 Annual Report 2007
enable passengers to book their seats online and make payment via the online Automatic e-Payment system.
The online payment system enables passengers to immediately know their completed payment. The
online reservation system will enable online bookings from abroad beginning late 2007. The system allows
passengers to book seats 24 hours before flight time versus the previous requirement of 72 hours with the
manual process. THAI is making a conscientious effort to reign in cost and to be more environmentally friendly.
E-tickets have been issued for all domestic flights and now tickets sold for partner airline flights have begun to be
in e-Ticket form.
THAI is better utilizing customer information for competitive purposes to not only improve products
offered but also to improve services delivered to passengers globally. The Company has and continues to
actively seek to foster closer cooperation with members of Star Alliance and is currently studying the benefits
of utilizing passenger information on the Star Common Platform. To this end, THAI launched the Star Alliance
Thailand Airpass/Visit Asian Airpass to promote travel into Thailand and Asia while also adopting a more
flexible term and pricing policy for travel as part of Star Alliance around the world.
Customer Service
Customer service is at the heart of the commercial airline business for which THAI has and continues
to develop and improve its service quality to deliver the highest level of satisfaction to its customers. The
aligned strategies and goals focusing on customers are based on the concept of providing unsurpassed service
quality at every touch point based on the concept of the Magic Service Ring. Being committed to meet the
guidelines of the Magic Service Ring will lead to consistency in service excellence and thus enhance THAI’s
competitiveness, which will translate into stronger revenue growth.
THAI has and continues to emphasize improvement in service quality through managing every
customer touch point based on internationally accepted standards with Thai touch. The benefit derived from the
effort put forth in managing customer touch points and meeting customers’ needs is customer satisfaction
and return patronage to ensure robust earnings for the Company in the longer term.
THAI integrates the inherent beauty and friendliness of Thai culture into providing service to its
passengers from the first point of contact to the end of the customer’s journey. The goal is to provide
comprehensive quality, efficient, smooth and quick service not only just on the ground but also in the air.
25Thai Airways International Public Company Limited
The in-flight products have also been enhanced to improve passengers’ experience including the
cabin ambience, seats and in-flight entertainment to increase THAI’s product competitiveness. Of the
Company’s aircraft fleet, 12 of its Boeing 747-400 have undergone refurbishment from 2006 and have been
completed in fiscal year 2007. Another 8 of its Boeing 777-200 aircraft have also undergone refurbishment
during the same period. The remaining refurbishments to be completed by fiscal year 2008 are its 6 Boeing
777-300 aircraft which will be configured exactly the same as its 5 newly received Boeing 777-200ER. Both
refurbished and newly received aircraft are decorated with the Company’s new striking and modern looking
Corporate Identity with emphasis of touches of Thai. New luxuriously spacious and comfortable seats have
been installed along with personal entertainment monitors with interactive on-demand entertainment on all
seats of THAI’s new aircraft.
In THAI’s quest to achieve the objective of being the First Choice Carrier, another aspect of service
that cannot be overlooked is its in-flight food and beverage service. A testament to the level of dedication
to THAI’s onboard food and beverage service is the Meal of the Week award earned in 2007 for its first class
meal on the Bangkok-Hong Kong flight. This prestigious award was bestowed on THAI by its customers who
voted through the www.airlinemeals.net. The Japanese Newsweek magazine also commended THAI’s
in-flight meal on its Tokyo-Bangkok flights. Another award bestowed on the Company in conjunction with 6 of
its peers is the Best White Wine award provided by Best Traveler magazine. The Best in Test award was also
given to THAI in March 2007 by a major Swedish newspaper “Expressen” for its long-haul service in comparison
with all other airlines flying out of Stockholm.
26 Annual Report 2007
To further enhance the travel experience of our passengers, THAI introduced the Route Localization
strategy where authentic food and beverage of the country of destination has been incorporated into the
menu. For 2007, Pakistani dishes for Karachi, Lahor and Islamabad were the feature dishes.
In consideration of passenger comfort in traveling, much consideration was made in regards to the
selection of in-flight equipment and supplies for which is most suitable to enable cabin crew to execute
their tasks most efficiently. THAI actively makes changes to its in-flight cabin equipment and dining wear to
ensure the highest level of ergonomics for passengers. The latest in technological development in light weight
drink/meal cart was acquired to not only facilitate quality service by the cabin crew for THAI’s passengers but
also reflects THAI’s environmental awareness where less weight carried in-flight translates into reduced fuel
consumption. Head sets for in-flight entertainment for economy class have been designed for one-way use and a
mini comfort set is provided for passengers in Premium Economy class.
All new developments and improvements in product and services undertaken by the Company
reflect our customers’ feedback via the THAI Customer Satisfaction Survey for all flight destinations that THAI
serves. The survey covers pre-flight, in-flight and post-flight concerns and the results are benchmarked against
results of customer feedback on service of peer airlines. THAI has also put in place a process that monitors
and assesses the quality of product and service provided to its customers. The information is used to make
27Thai Airways International Public Company Limited
further improvements to THAI’s products and services. THAI utilizes the Customer Relationship Management
Program in its effort to provide unsurpassed service quality and has empowered its staff at each customer
touch point to provide the highest standard of service with authority to make on the spot decisions to assist
in resolving problems passengers may have.
Flight Operations
The ultimate concern for the Company is the ability to provide the highest level of safety in providing
transport services for passengers, cargo and mail benchmarked to that of internationally accepted standards.
Safety guidelines for which the Company strictly adheres to are that of Thailand’s Department of Civil
Aviation (DCA), the International Civil Aviation Organization of United Nations (ICAO), the Joint Aviation
Authorities of Europe (JAA), the United States’ Federal Aviation Administration (FAA) and the guidelines of
IATA’s Operational Safety Audit (IOSA) Program.
Factors in which the Company emphasizes to enhance overall safety in operations include the policy
on selecting the most qualified cockpit crew. Physical, mental, knowledge, skills and behavior are among
factors the Company assesses on each of its pilots. A third party expert from Sweden has also been
commissioned to undertake aptitude and aviation psychology assessments on the cockpit crew.
THAI has not only qualified training personnel but also has the latest in training equipment to support
the development of pilot skills. Training emphasizes a multitude of on the spot problem solving related to
weather effects, technical difficulties, engine problems, fires and emergency landing under various
emergencies. Every six months, each pilot has to undergo a skills refresher and development course in the
Company’s flight simulators. THAI has simulators spanning the range of its aircraft types and have the latest
in software capability enabling very realistic situational simulation.
To ensure the highest level of safety training and the most efficient and rapid response to emergencies,
joint training of the cockpit and cabin crews were undertaken. The training was to enhance in-flight cooperation
and ultimately to ensure the highest level of safety standard for which THAI’s passengers expect.
Safety enhancement plans have been developed for different functions throughout the Company.
Research and studies on safety have been undertaken including Flight Operational Trend Analysis (FOTA),
VR, FOR, ATIR, Deficiency/Hazard Reports and Bird Strike Reports to find ways to prevent the occurrence
and resolve such problems if and when they occur. Trend analysis reports are also generated to provide
information for management decision making on the various aspects of safety. THAI coordinates and
regularly participates in domestic and international functions held by ICAO, Association of Asia Pacific Airlines
(AAPA), International Aviation Transportation Association, DCA, AEROTHAI (Aeronautical Radio of Thailand) and
meetings with the Airports of Thailand Public Company Limited (AOT) on issues pertaining to enhancing safety
standards.
28 Annual Report 2007
THAI’s e-Learning system has been developed to enable pilots to review and enhance their knowledge
on technology that is constantly changing in the aeronautical industry. The Flight Instructor Training Program
(FIT) has been developed to facilitate flight instructor skills, the Airline Transition Training (ATT) program is for
training of new pilots and Conversion Training for pilots converting to a different aircraft type. Other
training include flight management skills and team work development.
To ensure operational efficiency, THAI used its knowledge management system to store case studies
to efficiently and effectively find ways to resolve problems using Risk Reduction Program. The handbook and
operating guidelines of its aircraft fleet are kept current with ongoing updates.
At the same time, THAI has implemented a very effective fuel consumption management system which
has been an ongoing project for the Company since fiscal year 2005.
In addition to adhering to the highest level of safety standards the Company emphasizes
providing unsurpassed service quality to its passengers through its Smooth as Silk Travel Experience with
Touches of Thai. Ongoing training of cabin staff has been in the areas of service quality, enhancing staff
capability and instilling positive attitude to ensure service quality that is of international standard for all
classes of service and for all destinations. The Cabin Simulator was used to train cabin crew on flight safety
equipment to provide passengers with the highest level of confidence in safety procedures with the
highest quality of service.
A proud achievement for this past year was for THAI to have received recognition by Skytrax, the
renowned English based independent research institute, as the 2nd best airline in its annual Airline of
The Year 2007 review. The ranking reflects customer feedback, which is a major boost for THAI’s pride in being
recognized for the Company’s efforts to improve its products and services.
Security and Operational Safety
A key part of the Company’s responsibility as the National flag carrier has been to continue to strengthen
and uphold security and operational safety at par with that of international standards. The high standard
of security and operational safety is applicable to flight related operations, passenger service and the
environment to enhance confidence that the products and services delivered by THAI’s operating units are
of the highest standards of security and safety for its customers, employees and relevant persons. The
standard upheld complies with all applicable standards and legal guidelines related to the Company’s
business operations. THAI has clear job processes, clear standard of operations, designated training and
an encompassing information system, which complies with internationally accepted standards. To ensure
the highest security and safety standards, THAI has in place a clear review, assessment and evaluation process
at all levels throughout the organization.
29Thai Airways International Public Company Limited
In fiscal year 2007, THAI’s certification of security and operational safety received from the IATA
Operational Safety Audit (IOSA) was a testament to the international standard of security and operational
safety achieved by THAI. Since the certification was presented by the International Air Transport Association
(IATA), a high level of comfort can be derived from knowing that measures taken by THAI on security and
operational safety is comprehensive and provides the highest level of safety for THAI’s passengers.
Regular monthly meetings of the Company Safety Committee (CSC) have been held to review and assess
the effectiveness of security and operational safety measures that have been undertaken. Attending the
meetings were representatives from the various departments and the resolutions reached at these meetings
were implemented to enhance security and operational safety standards.
THAI commenced its Corporate Safety Information System (CSIS) mid 2007 with its staff undergoing
training to enhance their ability to use the system to improve the effectiveness in utilizing the Safety
Management System (SMS), which means that the accident preventive system will be more effective.
In addition to ensuring safety, THAI puts a high priority on managing Aviation Security as the concern
for terrorism still lingers. With stringent security measures being implemented at various airports throughout
the world, the Company is vigilant about new developments in security measure and making sure that
THAI’s own security and safety measures are updated on a regular basis in THAI’s handbook on security and
operational safety. Regular emergency response drills in cooperation with state emergency units along with
constant update and assessment of news serves as basis for devising the most appropriate emergency
response and ensuring efficient flight operations.
In recognizing the importance of hygiene and the safety of its employees, THAI established a policy
on issues of employee occupational health and safety. In compliance with legal requirement, a Committee
was appointed to oversee the issues of occupational health, safety and the environment throughout the
Company.
In regards to standard of quality, the Company devised strategies, purposes and goals including
action plans to enhance quality and service standards. Having earned the ISO 9001 certification for its ground
and in-flight services, THAI will continue to uphold its quality of service and to provide customers with the
highest level of customer satisfaction.
THAI has in place emergency procedures to ensure that there will be uninterrupted operations in case
of emergencies through its Crisis Management Operations Center (CMOC) at THAI’s new Operations Center at
Suvarnabhumi Airport. This CMOC office is the second of its kind similar to the one located at the Company’s
head office. The Board Chairman, the Company President, Executive Vice President of the Standards Assurance
and Risk Management Department and the CMOC Director have the responsibility of managing the crisis,
resolving problems and providing support in anyway possible. There are numerous plans and training scenarios,
30 Annual Report 2007
training on use of the systems developed to enhance the skills and experience of those responsible for
handling crises. A system of quick information display is installed to ensure information integrity, speed
and access to information database of the various departments to enhance the ability to access current
information for immediate decision making. The information system also has the ability to connect to related
external parties.
THAI will continue to improve on its security procedures and enhance its operational safety through
keeping track of changing safety standards and guidelines of the various organizations specializing in safety
measures and standards. THAI continues to assess its operating environment and maintain vigilance on
potential terrorism. A key safety measure for which THAI is placing emphasis on development is the Safety
Management System (SMS) that complies with ICAO’s standards.
Information Technology
Information technology is ever becoming an integral part to the Company’s operations as it
enhances overall efficiency and used properly, generate additional revenue for the Company and reduce
operating expense. Full ongoing support has been given to improving and enhancing the Company’s
information technology capability. Emphasis has been geared towards developing a strong backbone
system and developing systems to support the various business functions of the Company to ensure
competitive advantage in terms of cost, efficiency, accuracy, quality assurance and diversity in products and
services. An annual review is held amongst management to identify key trends and make appropriate changes
to the overall corporate IT master plan for which the budget is to be allocated for development. The planning
session enables a concerted effort on IT development while reducing redundant projects and efforts while ensuring
that necessary changes are made with changing technology and the changing business environment.
In committing to its Magic Service Ring concept, further developments have been made in the area
of e-Services for fiscal year 2007. As customers are at the core of the Magic Service Ring, the effort has been
to utilize the latest IT channels to provide service to customers while improving on quality of service. Royal
Orchid Plus (ROP) members are now able to redeem rewards online for domestic air tickets and hotel vouchers
through THAI’s web site www.thaiairways.com. Air tickets can be printed from the computer whereby
enhancing convenience and flexibility for ROP members. Passengers can also make payment for e-Tickets
via the e-Payment system while plans are being developed to enable multi-currency payment capability for
purchase of air tickets.
IT support for flight operations include the Network Management System which enabled management
to efficiently analyze route performance and make timely adjustments to the routing strategy. Sensitivity
31Thai Airways International Public Company Limited
analysis run by changing variables such as aircraft type, passenger and cargo demands and cost related to flight
operations provides management with optimized operating results thus determining the strategy for
flight routes. The Ground Operations Control Center System has also been developed to support the operations of
the Ground Operations Control Center, the decision making process and operations control at Suvarnabhumi
Airport to ensure effectiveness of ground operations management. The System receives data from the various
points of operations and if there is a problem or an irregularity, the system employed will warn decision
makers so that immediate corrective actions can be taken.
THAI is currently looking to invest in the Project Portfolio Management tool to be used in the process
of developing IT related strategies and IT Project Management within the Company. This centralized system will
enable users of every level to manage and track not only persons responsible for each project but also the
progress and expense related to each project. The Business Service Management system is responsible for
assessing the efficiency of each IT process on an end to end performance basis, which is used to uphold the
service level agreement with the user department. The tool can also assist in running diagnostics to determine
problems with customer’s systems. To also ensure effective communications throughout the organization along
with THAI’s customers and business partners, THAI provides direct access to its information base from anywhere
using a hard token security system.
For human resources development, e-Learning has been incorporated into the learning regiment for
which knowledge development for THAI staff can be done remotely. The purpose has been to support not only
knowledge development but also to develop technical skills to better perform tasks and improve service for
32 Annual Report 2007
THAI’s customers and to achieve the Company’s overall objectives. The program was enhanced for
cockpit crew training enabling pilots to have easy remote access to preferred information on demand. The cockpit
program will serve as blueprint for the program that is being developed for the cabin crew and also for IT
training in general.
In support of the re-opening of Don Muang Airport, THAI successfully installed the necessary network
communication systems and connectivity of remote computers at Don Muang Airport to the Company’s
various information systems as planned and on time for the re-opening.
Human Resources Development and Management
In setting the Company’s vision as “The First Choice Carrier with Touches of Thai” and creating the
highest level of customer satisfaction, THAI’s human resources development and management strategy
emphasized the enhancement of management in leadership skills and fostering team work. A system of
performance-based compensation has also been adopted while ongoing skills and knowledge development
have been provided for staff at all levels to enhance and broaden their capabilities. The above initiatives serve
as tools towards achieving the Company’s overall objectives.
THAI’s human resources development and management strategy reflects the changing environment
for which the commercial airline industry is undergoing to ensure the Company’s long-term competitive
advantage. In fiscal year 2007, the Company undertook an assessment and restructuring of the organization
to streamline operations and improve communications. Assessment and adjustments were made on job
value with respect to compensation and ensuring appropriate and equitable benefit for all employees while
a review of the ongoing job valuation process was also made to ensure integrity and appropriateness of each
job position versus pay. Assessment of manpower requirement was also made to ensure adequate support
to execute assigned tasks. THAI is not only concerned about the employee’s productivity but also their health
and ensures them a working environment that is conducive for learning and performing their duties. The Company
is currently in the process of developing a Performance Management System that measures individual
performance with transparency and justice and determines the corresponding level of compensation. Such
system is expected to not only incentives star performers but also serve as a means to retain them. The system
will also be used to set guidelines in the process of succession planning where qualified managerial staff are
well-prepared to ensure smooth transition and sustained growth for the Company.
A Competency Model has been implemented for competent personnel selection process. The selection
criteria will serve as guideline for staff competency enhancement in career path development. General
training courses and courses designed to correspond to the Company’s Core Competencies and Managerial
Competencies in order to provide its staff a broad knowledge base and enhance management skills.
33Thai Airways International Public Company Limited
The Competency Computer - Based Testing (CCBT) system is being developed to assess the competency of
each employee and serves to enhance planning and customizing training requirements enhancing individual’s
capability and benefitting the Company overall.
In addition, courses were designed and integrated into the Training Roadmap for each functional position
to develop functional competency for all staff levels encompassing areas of ground and air passenger services,
cargo services, safety, marketing and sales, foreign languages and cultural development.
In the push to put the Company at the forefront of the industry regionally, the “TG Ambassador”
program was launched to raise awareness of THAI’s products and services for its frontline staff. In doing so,
the program is designed so that as a Company representative, THAI’s frontline staff will be able to better
recommend products and services to support customers’ needs. Foreign language development and cultural
awareness form part of the Company’s overall strategy to better serve its passengers. Chinese, Japanese,
French, German and Korean are the predominant languages for which the program will first emphasize. This
serves as team-building strategies to create the staff’s multi-skills (multi-skilled workforce).
For optimum efficiency and effectiveness in staff operations, ground services training emphasizes
issues of safety, quality and security as the topics encompass legal guidelines, the Ministry of Transport’s guidelines
along with that of International Air Transport Association (IATA) and International Civil Aviation Organization
(ICAO)’s rules and regulations for management and executive level staff.
An e-Learning software “Tell-me-More” has been launched to facilitate teaching of the 7 foreign
languages for all departments. The e-Courseware and the e-Library are currently being developed for the
library to become the information and news center.
Cooperation with both local and international professional and educational institutions has led to
the interactive exchange of professional experience and knowledge. Course work under the Executive
Program and ongoing seminars of relevant topics have been undertaken to hone the senior executives’
knowledge and skills.
To promote staff’s attitude, value, and corporate culture, THAI’s core values have been reiterated and
engrained into staff’s mindset at each and every training session. The “THAI Spirit” (Teamwork, Happiness,
Awakening and Inspirations) forms the heart of THAI’s operating culture.
34 Annual Report 2007
Business Units
Ground Customer Service
THAI continues its tradition of providing quick and unsurpassed Thai style quality products and
services emphasizing convenience to maximize passenger comfort and exceed customers’ expectations.
To ensure the utmost comfort and luxuries for our premium class passengers, the most modern of luxuries
have been installed at the premium class lounges at Suvarnabhumi Airport, which began operations in September
2006. Services provided to THAI’s premium class passengers include a curbside service with porters handling
passengers’ luggage and a separate “Royal First Check-in Lounge” and a separate “Royal Orchid Premium”
check-in section for Royal Silk Class passengers. A separate fast track immigrations channel is also provided for
THAI’s premium class passengers. An A-la-carte Restaurant Concept is also provided in the Royal Orchid
Premium Lounges. A spa with sauna and a steam room is available at our premium class passenger lounge.
Private entertainment/family rooms along with a kids’ corner are some of the amenities provided for family
travel. A one-stop service is also provided to passengers in making flight reservations, checking travel information,
arranging special assistance for children, the elderly, physically impaired, first time travelers along with
arrangements serving between the THAI City Air Terminal (TCAT) and Don Muang Airport.
35Thai Airways International Public Company Limited
As part of THAI’s commitment to quality passenger service under its Magic Service Ring quality
commitment, a total IT solution approach has been implemented at Suvarnabhumi Airport to enable
comprehensive and seamless service for its passengers. Such services include the iCheck-in or the online
internet check-in service, self-service check-in and check-in via telephone.
To expedite communication and enhance the overall service experience of our passengers, THAI
introduced the use of the Mobile Information Communication System and the Personal Digital Assistance
(PDA) for ground staff. Further facilitating customer convenience, THAI opened its remote advance check-in
site called the “THAI City Air Terminal : TCAT” located at the Ladphrao subway station where passengers
can check-in and be transported to Don Muang Airport.
In the quest to be the First Choice Carrier with premier ground customer service, creative value added
services have been initiated. In addition to value added services, the drivers for success have been related
to THAI’s frontline staff. Clear and comprehensive job process has been established for each job function and
at the heart of it all is the ongoing development of staff capability.
36 Annual Report 2007
Ground Support Equipment Services
With the vision to be the First Choice Ground Support Equipment Services, THAI continues to deliver
unsurpassed quality of service to not only THAI aircraft but also that of its clients. Of the current 76 airlines
giving THAI a 69% of the ground support and equipment services market. The parking area of coverage at
Suvarnabhumi Airport spans 876,541 square meters with 120 parking bays.
The key to THAI’s success has been providing a comprehensive one-stop service to its clients with emphasis
placed on three areas. The first is ensuring internationally accepted standards of service quality with
attention paid to every service detail. Second is to ensure the highest level of safety for which THAI’s
customers expect. Last is the observance of timeliness of service to ensure ontime departure of flights. To
deliver such level of quality of service, THAI ensured that its staff are well trained and are supported by the latest
in tools and equipment. The combination of quality staff and latest equipment has resulted in the level of
confidence entrusted upon THAI’s Ground Support Equipment Services by client airlines.
37Thai Airways International Public Company Limited
Ground Support Equipment Services rendered at Suvarnabhumi Airport this past year totaled more than
200,000 flights both that of THAI and that of customer airlines. A new Baggage Reconciliation System (BRS) was
installed at Suvarnabhumi Airport to work with the Baggage Handling System (BHS) installed by the Airports
Authority of Thailand Plc. (AOT) to automatically check, sort and send passenger baggage to the respective aircraft.
The BRS is currently being used to handle customer airlines’ passenger baggage and the ultimate purpose has
been to minimize errors while enhancing customer satisfaction and peace of mind.
THAI’s Ground Support Equipment Services is by far the largest at Don Muang Airport serving
approximately 2,000 flights per month including other airlines other than THAI’s own flights. The Ground
Support Equipment Services also provides ground service for other airlines flying into the various regional
airports other than that of THAI’s own flights. Revenue generated from provincial airports including
Phuket, Chiang Mai, Hat Yai and Utapao has earned THAI over 150 million baht in the past fiscal year.
THAI seeks to continuously improve its services to meet the changing needs and higher customer
standards through a management process that reflects ISO 9001 : 2000 quality as certified by TUV-NORD
for which THAI has received such accolade for a decade. In regards to health and safety in the working
environment, THAI observes all of AOT’s legal and operating guidelines. THAI also strictly adheres to parking
area safety guidelines as stipulated by IATA. International safety standards are strictly observed under the
Company’s Ground Damage Prevention Program (GDPP), safety measures undertaken at every point of
THAI’s ground operations reflects a unified effort to provide the highest level of safety in providing services
for customer aircraft. Safety measures and procedures are designed to avert risks from international terrorism.
Closed Circuit Television (CCTV) and biometric access control systems have been installed in critical areas of
operations. Adding to technological systems integrated to screen and limit access to sensitive areas of
operations, each member of THAI’s aircraft cleaning team has been trained to be observant of foreign objects
and people working in and around the aircraft of any abnormal behavior under the Secure Clean approach,
a British standard. This safety standard has been in place for over 4 years and has provided THAI’s customers with
a high level of satisfaction. This level of security awareness on the part of THAI’s staff has added to the level of
safety of THAI’s own air service which is a reflection of the commitment to high standards of service and safety,
which has consistently earned safety certification for THAI from IATA’s Operational Safety Audit (IOSA).
38 Annual Report 2007
Cargo and Mail Commercial Services
With the vision to be the First Choice Air Cargo and Mail Service including Cargo Storage Services, THAI
invested heavily in its cargo facilities to ensure the highest quality of products and services. Emphasis in
quality service has been made at every service process to enhance overall customer satisfaction under the
“THAI Cargo Thai Care” slogan. This slogan is at the heart of the most important value, “customers are at the
heart of service” where such service is sprinkled with Thai touch. Operational emphasis is placed on the
Value Chain, operational safety and hygiene. Attention has also been placed on the working space and
the working environment while utilizing the latest in technology to ensure quick, reliable and efficient
customer service.
Air Freight and Mail Services
To ensure that clients understand THAI’s standard of service, direct media communication was
made through commercial and public relations to support sales at each brand contact point. Participating
in various domestic and international exhibitions along with the launch of various promotional packages
not only increased THAI’s product and service exposure but also attracted new clients and retained existing
customers. The latest in information technology has also been integrated in the service process to facilitate
customers - recipients, senders, cargo agents and other interested parties in tracking the location
and status of their packages globally. In addition to the above information, aircraft timetables have also
been provided on the www.thaicargo.com web site on a twenty-four seven basis. Online reservations
(e-Reservation) for cargo space can also be made via the web site to facilitate customer service. General Sales
Agents (GSA) have been appointed for destinations with strong market potential but THAI does not currently
serve (off-line stations) to facilitate the cargo and mail business.
To enhance its revenue, THAI targeted to attract premium products that commands the most handsome
return including fresh produce under the TGFresh service, time sensitive products under TGForce, door-to-door
delivery under the name Thai Express Cargo (TEC) with the cooperation of domestic shipping companies
and small shipment deliverers. The plan going forward is to launch new markets for time sensitive cargo to
encompass more stations for which THAI serves.
Because THAI does not have a dedicated fleet of freighter aircraft, the Company cooperated with other
airlines by using their belly space either through a Special Prorate Agreement (SPA) or a Blocked Space
Agreement (BSA). Such blocked space can be for cargo space on Star Alliance member aircraft or with
sufficient cargo volume, THAI leases an aircraft for the season. To further expand its market reach, THAI has
teamed up with Global Forwarding Agents to increase the freight factor on all THAI flights around the world
utilizing Thailand as the hub.
39Thai Airways International Public Company Limited
Warehouse Services
In anticipation of the growth in imports, exports and transit cargo volume, much emphasis has been
put on efficiency to enhance service competitiveness which has earned THAI the ISO 9001 : 2000 quality
standard certification. THAI’s Cargo Terminal in the Custom Free Zone at Suvarnabhumi Airport spans 152,000
square meters. Of the total available space, 17,601 square meters has been allocated for domestic cargo
with handling capacity of around 88,500 tons of cargo per annum. The space for international cargo totals
95,284 square meters and can handle approximately 1,260,000 tons of cargo per annum. The available space
is divided into 4 main sections. The first section of 30,000 square meters is dedicated for THAI and partner
airline use while another 25,000 square meters have been allocated for customer airlines’ cargo. Express
cargo covers 5,952 square meters of space while the Perishable Center section spans 10,000 square meters.
Preparation has been made for an expansion of another 6,450 square meters of space for international cargo for
which the current space serves 77 customer airlines and other airlines that may seek THAI’s service.
Preferred customers requiring express import cargo service can contact THAI’s Express Cargo Center for
which their customs formalities will be processed via the Customs EDI Service. On the export side, a special
express lane has been provided to customers who have registered with the Customs Department for
express export products.
The Perishable Center’s area is temperature controlled with cold storage rooms able to adjust
temperature to suit each product requirement. The emphasis is to ensure product quality and freshness through
ensuring continuous control of temperature (Cool Chain). Beginning from the point of receiving the
products through the shipment process to ensure that agricultural products, special products and products
requiring temperature controlled environment including pharmaceutical and medical supplies. There are
among items that require strict adherence to temperature control.
Under the Excellent Cargo Care Project, THAI facilitates customs process for its key import clients and
target customer groups utilizing its e-Paperless system. Such system enabled clients to forward the required
information electronically to the Customs Department, shortening the customs process.
To enhance customers’ experience and for THAI to earn additional revenue, THAI plans to provide services
instead of cargo agents for those that do not have the expertise or access to the free trade area.
40 Annual Report 2007
Catering
In the pursuit of being at the forefront of the commercial airline industry, THAI continues to enhance
its capabilities and standards of its catering services as demand for catering services has grown dramatically
with the rapid increase in international flights into and out of Thailand. The success has enabled THAI to
expand its catering capacity at 3 different locations preparing 75,000 meals per day for over 50 customer airlines
including that of THAI’s own flights. Total meals prepared for fiscal year 2007 totaled 18.8 million sets.
The greatest effort for THAI has been to ensure customer satisfaction through emphasis of the highest
level of quality and hygiene. Ongoing development and improvement has been sought for all areas of
operations with the emphasis placed on “meeting customers’ needs with integrity, ethics and duty”. All the
while ensuring hygiene and safety of meal production through a controlled environment ensuring freshness. The
production process has earned THAI the ISO 9001, Good Manufacturing Practice (GMP) System and Hazard Analysis
and Critical Control Point (HACCP) into the production process upholding Quality, Hygiene and Safety (QHS).
Utilized the Cooking Process Management System enabling quality control in food production and the utilization
of the Ware Washing and Material Handling System, which is the latest in technology for cleaning and storing of
cook ware. The systems enhance overall accuracy, efficiency and effectiveness while reducing labor requirement
and better managing the environment. The Vacuum Waste Handling System has been installed to dispose of
waste through pressurized tubes instead of manually removing waste thus reducing overhead cost and is more
environmentally friendly.
Ongoing emphasis has been placed on not only creativity but also food presentation and taste by
our 17 Thai and foreign Executive Chefs, Executive Sous Chefs and Chefs. In terms of taste, THAI’s policy has
been to ensure that the meals served on specific sectors are as authentic in taste as possible. Building variety
is a must as every 15 days a new menu is served and as part of building variety THAI is also cooperating
41Thai Airways International Public Company Limited
with Star Alliance undertaking a chef exchange program to share knowledge and technique. THAI is also
cooperating with Chulalongkorn University’s Halal Food Research Department in preparation for launching
THAI’s Halal Kitchen at THAI’s new catering facility at Suvarnabhumi Airport. THAI was the first to receive the
Halal-GMP/HACCP (Halal-Q) certification in Thailand on September 1, 2007.
In addition to providing in-flight catering service, THAI also undertakes other ground based services
including THAI Puff & Pie bakery business for which there are currently 39 branches located throughout
Bangkok. The wholesale bakery business under the Puff & Pie Supreme Bakery Delight brand was launched
on March 1, 2007 which received a high level of interest and is expected to have 20 branches by the end of
2007. THAI has been entrusted by not only the private sector but also by the Royal Thai Government to
provide catering services for events at the international level such as the Royal Flora Ratchaphruck 2006
International Horticultural Exposition for His Majesty the King that was held in Chiang Mai during the period of
November 1, 2006 through January 31, 2007. THAI’s services were also sought to provide catering services for
the 24th Universiade that was held during August 8-18, 2007. The successes reflect the level of THAI’s catering
efficiency. Such efficiency has translated into generating total revenues of over 7,200 million baht in fiscal year
2007 from its in-flight catering services, restaurant and lounge services (Suvarnabhumi Airport, Chiang Mai,
Chiang Rai, Phuket and Krabi), Puff & Pie Bakery (39 branches), Puff & Pie Supreme Bakery Delight (20 branches),
special event catering services and operating 5 canteens across the country.
THAI’s Catering is not only concerned with producing the highest quality of food, it is also concerned
about the environment. THAI’s Catering has been successful in producing biodiesel fuel from used
cooking vegetable oil at its newly constructed facility at Suvarnabhumi Airport. Production of biodiesel fuel from
9,000 liters of used vegetable oil began July 1, 2007 which is currently being used to fuel the hot water heater. For
such an undertaking, the Company received an environmental conservation award from the Department of
Ministry of Natural Resources and Environment on June 4, 2007. The ability to recycle used cooking oil helps to
alleviate the energy crisis and supports the Government’s national agenda of alternative fuel.
Aircraft Maintenance
THAI has put forth great effort in ensuring the highest level of safety along with the constant push
to enhance overall efficiency to improve overall quality. The level of safety as concerned by THAI meets not
only the guidelines of The Department of Civil Aviation (DCA) of Thailand but also that of the Federal Aviation
Administration (FAA), the European Aviation Safety Agency (EASA) and the safety guidelines of the governing
body of the respective client’s country. As a result of its track record on quality as reflected by its ISO 9001 : 2000
certification and its efforts to protect the environment earning its ISO 14001 : 1996 certification in fiscal year
2007, THAI was entrusted by 50 airlines around the world to service their aircraft.
42 Annual Report 2007
Statistical maintenance data for fiscal year 2007 for the various levels of service :
Light/Line Maintenance (SBA) 71,326 times 47,826 for THAI 23,500 for clients
A-Checks 713 times
Heavy Maintenance C & D-Checks 63 times 41 for THAI 22 for clients
CF6-80C2 Engines 36 times 36 for THAI
RR Trent 800 Engines 20 times 20 for THAI
CF6-50C2 10 times 10 for clients
In the process of upgrading the Company’s product, THAI installed new seats, livery and entertainment
system for most of THAI’s long-haul aircraft during the time in which these aircraft were undergoing their heavy
maintenance checks to reduce the aircraft turnaround time. The last of the 6 Boeing 777-300 aircraft will be
completed in fiscal year 2008.
In emphasizing 3 service points on work performed on client aircraft - quality of work done,
quickness in work completion (turnaround time) and competitive pricing, for the past 10 years has resulted
in ongoing confidence by client airlines in repeat business for THAI. There has and continues to be strong
demand for THAI’s service for heavy maintenance by both renowned Japanese and European airliners
because of service quality and cost competitiveness to European maintenance service providers. Post the
move from its operating hub at Don Muang Airport to Suvarnabhumi Airport, THAI has budgeted 556 million
baht for investment to Increase Maintenance Capacity (ICM) Project at Don Muang Airport to provide heavy
maintenance service to third party which will be completed by year-end 2008.
Hand in hand with growing the maintenance business is the issue of cost of service and supplies
management to ensure the highest level of safety and quality of service. In terms of service quality, the
Company signed a MoU with GE Engine Services Incorporated (GEES) for THAI’s maintenance facilities to
be a Center of Excellence in providing maintenance service for GE’s CF6-80 and CF6-50 series aircraft
engines. Under the agreement, GEES supports THAI with over 151 spare parts worth over 42 million baht,
enabling THAI to provide faster engine maintenance service with a lower cost of acquiring and maintaining
spare parts inventory. As for engines such as the PW4000 series, the terms were altered to be on time and
material basis. The newly negotiated agreement is a warranty spanning the engines’ life or “Maintenance Cost
Guarantee” (MCG) and ensures that there is a facility to provide such maintenance service for THAI’s PW4000
series engines. Such agreement allows THAI to limit its exposure on maintenance cost to a pre-set ceiling. The
Integrated Materials Management Program (IMM) contract has also been signed with Boeing where under this
contract, Boeing is responsible for ensuring sufficient expendable spare parts or IMM parts in THAI’s supplies
warehouse. As these parts belong to Boeing or its certified supplier, THAI is burdened with less inventory cost.
Balanced Scorecards have been implemented and cascaded down through the various operating units
to ensure efficiency in managing maintenance operations. The Balance Scorecards provide guidelines for
which the entire organization will strive towards achieving the same goals. The Enterprise Resource Planning
43Thai Airways International Public Company Limited
System (ERP) will go live on October 6, 2007 to maximize management efficiency which also complements the
Six Sigma program which has been in effect for 7 years helping to better manage investment requirements
and manage expense on an ongoing basis.
Operations at Suvarnabhumi Airport
As the national flag carrier, THAI has embraced the Government’s policy of making Suvarnabhumi
Airport a major hub in Southeast Asia, substantial infrastructure was invested by THAI along with the luxuries of
comfort of international standard. THAI’s investments at Suvarnabhumi Airport include :
Aircraft Maintenance Center (ACM)
Ground Support Equipment Services (GSE)
Ground Customer Services (CUS)
Catering Services
Cargo and Mail Commercial Services (CGO)
Operations Center (OPC)
Since the inauguration of Suvarnabhumi Airport on September 28, 2006, all of THAI’s facilities have
been operational in providing comprehensive services. However, the teething problems caused by the size of
Suvarnabhumi Airport which is much larger than that of Don Muang Airport resulted in inconveniences to
passengers and those who provide passenger services at the outset of commencing operations. Congestion at
the ticketing counters and luggage carrousels, problems with the baggage handling system along with the
problems of not being able to operate the international cargo facility as a custom free zone contributed to
the disruption of services to passengers and customers. In anticipation of such problems, THAI coordinated
with the Airports of Thailand Plc. (AOT) and received strong support from AOT to rectify problems experienced by
THAI which enabled normalized operations.
Other actions taken to improve overall efficiency in providing unsurpassed quality service to our
passengers at Suvarnabhumi Airport include :
Increased 2 additional remote parking bays to increase maintenance capacity.
Closed circuit television (CCTV) were installed to enhance security and safely along with the
installation of Video Analytics System to assess and analyze pictures.
Installed the automated Material Handling Bin System to increase efficiency and speed in food
preparation services of the Catering Services.
Increased efficiency in the cargo warehouse by increasing space for storage of empty ULD/Pallets.
Provided separate group check-in counters to enhance service to passengers.
Amenities provided to enhance passenger experience include air purifier units for smoking rooms
and hair dryers in the shower rooms for Royal Silk and Premium Economy Class lounge.
44 Annual Report 2007
Operations at Don Muang AirportPost commencing international and domestic flight operations at Suvarnabhumi Airport, to maximize
utilization of airport facilities, the Royal Thai Government decided to also commence domestic flight services
from Don Muang Airport. Since March 25, 2007, THAI re-launched its services to domestic destinations from
Don Muang Airport with 30 daily flights. THAI’s service at Don Muang Airport provides non-connecting passengers
easy access and increased frequency of flights to destinations within Thailand. This 2 airport strategy
lends to THAI’s ability to further bolster its domestic market share where other competitors do not have
the flexibility to operate from 2 airports. THAI’s facilities remain at the old domestic terminal with a
business class passenger lounge and a ticketing office providing customers comfort and flexibility to alter
their travel plans.
To avoid causing confusion for passengers as to which airport the designated flight would be
serviced from, a 4 digit flight code beginning with the number “1” was implemented to denote service from
Don Muang Airport e.g. TG 1203.
THAI continues to provide 11 daily connecting service to Thailand’s major tourist destinations - Chiang
Mai, Chiang Rai, Phuket and Krabi from Suvarnabhumi Airport. The flight code is the same as all other THAI
flights operating out of Suvarnabhumi Airport using a 3 digit code e.g. TG 201.
The Launching of the THAI City Air Terminal Check-in Center located at the Subway stationon Lat Phrao
THAI launched its THAI City Air Terminal located on the first floor of the subway’s parking building
at Lat Phrao station. This office provides remote check-in service for domestic passengers flying out of
Don Muang Airport commuting via the subway (BMTS) and the sky train (BTS).
Passengers utilizing the remote check-in service at the THAI City Air Terminal may do so up till 2 hours
prior to the scheduled departure time of the designated flight. A free bus service shuttles passengers between the
City Air Terminal and Don Muang Airport. Other services provided at the remote terminal include a pre-check-in
service and can issue boarding pass one day ahead of the departure date while the baggages are to be security
checked at the airport.
In addition THAI also provides a pre-check-in service at THAI City Air Terminal where the boarding pass
can be issued one day before the flight departure date for the convenience of passengers traveling in groups
(for flight departure from Don Muang and Suvarnabhumi Airport).
Environmental ProtectionTHAI is concerned and aware of environmental issues and has consistently been undertaking
activities to improve the environment. To this end, THAI’s Aircraft Maintenance Center received the ISO 14001
certification on environmental management at Don Muang, Utapao and Suvarnabhumi Airports. THAI has
received the ISO 14001 certification for its head office, Lak Si office, Larn Luang office and the Operations
Center at Suvarnabhumi Airport. The certification requirements include having a clear environmental
45Thai Airways International Public Company Limited
policy, adhering to all legal environmental guidelines, having a clear purpose and goal on environmental issues,
having action plans on managing environmental issues, managing operations to minimize impact on the
environment, assessing and evaluating effectiveness of actions and reviewing policies on managing environmental
issues on an ongoing basis. For its efforts on environmental issues, THAI has received recognition at the annual
State Enterprise Awards 2007 by the Ministry of Finance’s State Enterprise Policy Office.
Projects geared towards addressing environmental concerns include the plan to conserve power
consumption; optimize water consumption; waste water treatment and the recycling of waste water for use at
the head office; use recycled paper and separating waste paper for recycling; phasing out CFC and halon
gas based equipment; optimal management of aviation fuel consumption; instilling staff with awareness of
environmental concerns along with the Reforestation Program are all activities geared towards reducing
impact on the environment directly and indirectly.
Each and every investment of THAI made at Suvarnabhumi Airport including THAI’s aircraft maintenance
facility, the Ground Support Equipment Services Maintenance facility, Catering facility, Operations Center and
other facilities were designed with environmental concerns in mind. Each facility was designed to meet the
ISO 14001 guidelines emphasizing environmental and energy conservation and to benefit from natural
ventilation while glass windows and doors were insulated with double glazing and has an external Low E
reflection coating keeping the inside cool and a noise reduction layer to minimize external sound.
Minimizing power consumption was at the heart of designing the new facilities at Suvarnabhumi Airport.
Entry and exit points or public areas were grouped into a single zone, high quality construction materials
were used and the use of extended external horizontal blinds blocks the sun’s rays until 4 p.m. Such design
enabled a greater amount of natural light to illuminate inside the building while minimizing the need for
the use of curtains and window blinds. Landscaping was also utilized to reduce the impact of heat while
providing a natural view in open areas and protecting the sides of buildings directly exposed to sunlight.
A building automation system has been installed to help effectively manage power consumption.
THAI joined with District Cooling System and Power Plant Co., Ltd. (DCAP) in the co-generation project
where THAI’s catering utilizes excess steam for utensil cleaning and also for laundry purposes.
In managing refuse from the various functions of the Company, a clear procedure has been set for
collecting used fuel and a separate means of collecting chemicals to be dealt with properly. Both the
Catering and Maintenance facilities have their own waste water treatment facilities to ensure environmental
safety. Taking conservation to a higher level, THAI’s Catering has been able to process its used vegetable oil
into biodiesel.
THAI’s fleet upgrade brings direct benefit to environmental conservation as the technical development
of engines have progressed enabling greater power output while consuming less fuel causing less pollution and
generating less noise. The new Airbus A330 aircraft will produce less than ICAO’s Chapter 3 requirement of 19
EPNdB of noise while the Airbus A340 aircraft will generate less than 24.5 EPNdB of noise as stipulated in
Chapter 3 of ICAO’s requirement.
46 Annual Report 200746 Annual Report 2007
47Thai Airways International Public Company Limited
Subsidiaries and Affiliated Companies
Thai-Amadeus Southeast Asia Company Limited
Thai-Amadeus Southeast Asia Co., Ltd. (Thai-Amadeus) provides leading distribution and technology solutions
serving the World’s travel and tourism industry for travel related concerns including air travel reservation, hotel
and car rental reservations and also issues air tickets and provides travel insurance. THAI entered into the
joint venture to launch Thai-Amadeus Southeast Asia Co., Ltd. with the purpose of complementing and supporting
THAI’s core operations of providing air travel service through ease of seat reservation. The company has issued
and paid-up share capital worth 15 million baht in which THAI has a shareholding of 55% in this company’s
paid-up capital totaling 8 million baht.
Thai-Amadeus Southeast Asia Co., Ltd.’s net profit for the year ending September 30, 2007 totaled
130 million baht.
Royal Orchid Hotel (Thailand) Public Company Limited
The Royal Orchid Hotel (Thailand) Plc. was among the founders of the Royal Orchid Sheraton
Hotel, a premium hotel providing food and beverage service along with other services related to the
hospitality industry. The purpose of entering this joint venture was for THAI to be able to provide its
passengers with value added service and enable THAI to be competitive against other airlines by providing
its passengers a comprehensive one stop service. The company has issued and paid-up share capital worth
938 million baht. THAI has a shareholding of 24% in this company’s paid-up capital totaling 225 million baht.
The amount of investment by THAI via equity method is 290 million baht.
Net profit earned for the year ending December 31, 2006 by Royal Orchid Hotel (Thailand) Plc. totaled
307 million baht.
Don Muang International Airport Hotel Company Limited
The Don Muang International Airport Hotel Company Limited runs a hotel and related services at
called the Amari Don Muang Airport Hotel. The company has issued and paid-up share capital of 120
million baht. THAI has a shareholding of 40% in this company’s paid-up capital totaling 48 million baht. The
amount of investment by THAI via equity method is 194 million baht. THAI jointly invested in the hotel venture
with the purpose of providing passengers the convenience of using the hotel as a transit point and to be used
as the designated hotel in case of delays or any flight irregularities. Since moving to Suvarnabhumi Airport,
the hotel has been seeking additional revenue from handling conventions and other functions.
Net profit for the year ending December 31, 2006 earned by Don Muang International Airport Hotel
Co., Ltd. totaled 71 million baht.
47Thai Airways International Public Company Limited
48 Annual Report 2007
Bangkok Aviation Fuel Services Public Company Limited (BAFS)
The Bangkok Aviation Fuel Services Public Company Limited provides storage service for aviation fuel
and provides refueling service at both Don Muang Airport and Suvarnabhumi Airport. The company has issued
and paid-up share capital of 510 million baht. THAI has a shareholding of 22.6% in this company’s paid-up
capital totaling 115 million baht. The amount of investment by THAI via equity method is 514 million baht.
BAFS earned 461 million baht in net profit for the year ending December 31, 2006.
Phuket Air Catering Company Limited
Phuket Air Catering Co., Ltd. provides in-flight meal catering for various airlines on international
flights from Phuket Airport. THAI entered this joint venture to provide catering services for THAI’s own flights
at Phuket International Airport but the business has expanded to provide catering services for other airlines.
The company has issued and paid-up share capital of 100 million baht. THAI has a shareholding of 30% in this
company’s paid-up capital totaling 30 million baht. The amount of investment by THAI via equity method is
54 million baht.
Phuket Air Catering Co., Ltd. earned a net profit totaling 37 million baht for the year ending
December 31, 2006.
Suvarnabhumi Airport Hotel Company Limited
The joint investment in the Suvarnabhumi Airport Hotel Co., Ltd. was made with the purpose of
complementing THAI’s travel services and to enable THAI to provide passengers with an overnight stay
should it be a necessity. The hotel provides a complete range of hospitality services for not only THAI but
also to the general public. The company has issued and paid-up share capital of 1,018 million baht. THAI has a
shareholding of 30% in this company’s paid-up capital totaling 305 million baht. The amount of investment by
THAI via equity method is 233 million baht.
As a recent start-up, the hotel is still incurring a slight loss of 134 million baht for the year ending
September 30, 2006.
49Thai Airways International Public Company Limited
Nok Air Company Limited
THAI’s low cost airline Nok Air was established to enhance THAI’s network and also serve as a
fighting brand to protect THAI’s market share of domestic and regional markets especially with the ongoing
open skies policy. The lower cost structure of Nok Air and through its competitive pricing has attracted a
larger customer base to fly. The company has issued and paid-up share capital of 500 million baht. THAI
has a shareholding of 39% in this company’s paid-up capital totaling 195 million baht. The amount of investment
by THAI via equity method is 234 million baht.
As of the year ending December 31, 2006, Nok Air earned a net profit of 135 million baht.
Other than the above investments in subsidiaries and affiliates, other investments for which THAI holds
a less than 10% shareholding of the company’s issued and paid-up capital include :
- Aeronautical Radio of Thailand Limited is a non-profit organization with the purpose of providing
aerial surveillance at the airports for which THAI holds 2.6% shareholding of issued and paid up capital totaling
660 million baht.
- Fuel Pipeline Transportation Limited stores and transports aviation fuel via underground pipes for
which THAI holds a 8.4% of issued and paid-up capital totaling 1,592 million baht.
- TradeSiam Company Limited runs an Electronic Data Interchange Center with THAI holding 3.5% of
the company’s issued and paid-up capital totaling 50 million baht in value.
- The Syndicate of Thai Hotels and Tourists Enterprises Ltd. is the company that owns the land for
which has been leased for the development of the Grand Hyatt Erawan Hotel. THAI currently holds 1.25% of the
company’s issued and paid-up capital totaling 140 million baht.
- Star Alliance Services GmbH is a joint investment company of member airlines with the purpose
of developing an encompassing air transport network and the launching of new products and services.
Despite the cooperation, the unique cultures represented by member airlines have been retained to ensure
competitive advantage in generating profitability while ensuring efficiency.
50 Annual Report 2007
Adherence to Official Information Act, B.E. 2540
THAI understands the importance of information disclosure in this day and age of information
technology and taking into consideration the legal guidelines as per the reformation of the Constitution
requiring greater participation of the general public in the political process. This is in addition to the
Official Information Act, B.E. 2540 giving the general public the right to have access to information regarding the
Government’s actions and that of business entities. To this end, THAI launched its news and information center
on November 16, 1998 to facilitate the general public in accessing Company related information in accordance
with the Official Information Act, B.E. 2540 as a model for other institutions. THAI’s news and information center
was selected by the Ministry of Transport and per the Cabinet resolution dated December 29, 1998 as a model in
providing information services to the general public in accordance with the Official Information Act.
Internal guidelines were drafted to reflect the Official Information Act, B.E. 2540 and put into effect
on February 12, 1999 and also appointed a THAI Information Committee (TIC) with the Executive Vice
President of the Corporate Secretariat as the Chairperson and the Manager of Public Informative Center
was appointed as a member of the Committee and serving as the Committee’s secretary. The Committee is
charged with the responsibilities of establishing information disclosure guidelines, establishing disclosure
procedures, analyzing information requirement, managing process of disclosure, seeking approval, approving
and disclosing Company related information.
Activities undertaken by the Committee for fiscal year 2007 include :
Information Services to the General Public
For fiscal year 2007, of the 2,496 requests for the Company to provide relevant information, the Company
was not able to respond to 2 requests as the inquiry pertained to issues that were pending decisions and was
not subject to Section 15 of the Official Information Act, B.E. 2540.
Internet-Based Information Disclosure
To cater to the interests of the general public regarding THAI’s information, a sizeable amount of
information has been put in the “About THAI” section of the Company’s web site www.thaiairways.com.
Key information sections include THAI’s key investment projects, destinations of flight and a list of the
Company’s senior management. From statistical data obtained from THAI’s web site, in fiscal year 2007 there
were an average of 255,000 hits per month.
THAI made it a point to also disclose the results of its vendor selection on its web site. An electronic
database system has been employed to manage and enable ease in searching of desired information via a remote
computer without the enquirer having to physically come to the Information Center room.
51Thai Airways International Public Company Limited
Enhancing Staff Understanding and Compliance of with the Official Information Act
Training and seminar sessions have been provided for members of the THAI’s Information Committee,
representatives from the different departments and the Company’s staff to enhance their understanding of
and complying with the Official Information Act. Speakers from the Office of the Official Information
Commision (O.I.C.), Office of the Permanent Secretary Government House have been invited to speak to and
provide knowledge to THAI’s staff regarding the legislation. An internal web site has also been developed to
disclose information and activities related to the legislation. News and activity updates are also distributed
to THAI’s staff via print media to enable everyone to better understand the legislation including the
Company’s guideline related to the Official Information Act and the legislation related to personal information
and resolutions reached by the Company.
Enhancing Information Quality and Distribution Capability of Company Information as
per the Legislation
Over the past year, THAI undertook a corporate restructuring and renamed a number of the various
departments. As a result, a new corporate guideline was drafted in regards to the legislation to be printed
on the government gazette.
Information regarding the Company’s history has also been sent to the National Archives of Thailand,
the Fine Arts Department for safe keeping and reference. These documents include the Company’s annual
report, the Company’s investment plans at Suvarnabhumi Airport, the Royal Charity Flight which was initiated
to raise funds for helping those who have been adversely impacted by floods and providing medical
equipment for hospitals in the 3 troubled southern provinces and activities of social benefit.
Visitations to the THAI Public Information Center
For the fiscal year 2007, visits to the THAI Public Information Center by government bodies were as
follows :
In the capacity as the Chairman of the Official Information Commission, Dr. Thirapat Serirangsan,
Ministers Attached to the Prime Minister’s Office and his team visited THAI’s Public Information Center and
provided insight to the plans and policies for which the Committee is currently considering in regards to information
disclosure.
Representatives from the Port Authority of Thailand visited THAI’s Public Information Center
and took the opportunity to share thoughts and experiences on the issue of development of data in
electronic format, developing an information index, storage of information including the process of
determining the guideline and process for which information is to be disclosed.
52 Annual Report 2007
Status of the Commercial Airline Industry and Competition
Over the past 5 years, the commercial airline industry has faced a multitude of trials and challenges
including the tragedy of nine eleven, measures implemented to counter terrorism, the Bali bombing, the
Iraq War, the SARS epidemic and natural disasters but the operating environment for the commercial airline
industry has begun to stabilize. It is also expected that demand for travel will continue to grow with the rapid
rate of globalization. With greater ease of access to air travel and with geographic boundaries becoming a thing
of the past, growth in air travel is growing to new levels. The ongoing growth in the global economy and for
the most part, a stronger and a more rapid rate of economic growth in Asia especially China, India, Russia
and the Middle East is leading the economic boom. With competition within the commercial airline industry
likely to tighten from the expansion of operations by low cost carriers and the increasing cost of fuel, THAI’s
performance is likely to be directly impacted. The Company has taken actions to ensure its ability to compete on
pricing while controlling its operating cost. In addition to implementing measures to control fuel consumption
and partially hedging its fuel requirements, measures have been implemented to enhance staff efficiency and
the use of electronic tools to improve communications and reduce operating cost.
Passenger Travel IndustryGlobal passenger travel during the first 9 months of 2007 saw a 7.3% growth with the Middle East
leading with a 18.2% growth, which is the fastest resulting from the dramatic economic growth within the
region due to high levels of investments derived from petroleum money. On top of the economic growth,
commercial airlines from the Middle East have added a large amount of aircraft capacity resulting in a high level
of growth in the number of flights to various destinations around the world.
Thailand continued to see strong international travel for the first 8 months with 21.8 million people
or a 6.2% increase as compared to the previous year resulting from continued economic growth and the
expansion of low cost carrier. THAI served 8.7 million passengers, which is an increase of 8.2% over the
previous year. THAI’s rate of growth was higher than the growth of Thailand’s number of international
passengers which is credited to THAI’s ongoing efforts to enhance its products and service quality, enhancing
its marketing and sales channels and enhancing its seat reservation system to better facilitate customer
service and meet customers’ increasing needs.
Air Freight IndustryDespite the cost of aviation fuel remaining high in fiscal year 2007, the air freight industry saw a 4.0%
growth for the first 9 months of 2007 with the highest rate of growth of 9.6% coming from the Middle East,
followed by Africa, Asia Pacific and Europe experiencing 8.7%, 7.6% and 5.9% growth, respectively.
However, Thailand’s air freight industry saw only a slight growth in exports of 0.9% during the first 8
months while imports dropped by 1.8% for the same period as compared to the previous year. Key markets
for Thailand’s air freight in the region include Hong Kong; Taiwan; Tokyo, Japan; Singapore and Seoul, Korea
while intercontinental destinations include Frankfurt, Germany and Paris, France.
53Thai Airways International Public Company Limited
Domestic CompetitionWith the commencement of low cost carrier operations in Thailand beginning 2004, there has been a
dramatic increase in the number of people who have switched to air travel. Currently there are 6 airlines
serving domestic routes with 3 being low cost carriers. Despite the increase in competition, THAI remains
the dominant player in the domestic air travel market.
By increasing its domestic air fares in December 2006, THAI enhanced its marketing flexibility to
maximize benefits for the Company resulting in improved operating performance on THAI’s domestic
services. At the end of August 2007, THAI’s share of domestic operations constituted approximately 32.2%
while THAI’s sister company, Nok Air, commands another 20.2% of the domestic market.
International CompetitionIn moving towards a more liberal policy in regards to open skies to attract business development
and travel to Thailand by the Royal Thai Government, many airlines around the world have geared up their
flight frequency to Thailand. THAI is therefore not only subject to direct competition from increased
frequencies from traditional airlines but is now having to face new players especially airlines from the
Middle East, China and India. Added competition also being confronted by THAI is the growing low cost
airline industry within the region and seasonal scheduled chartered flights have also increased in traffic to
Thailand. As of August 2007, there were 89 airlines providing air travel service into Thailand carrying a total
of 21.8 million passengers. Of the total, THAI served 8.7 million passengers constituting about 39.8% of the
market share, which was an increase from last year’s 39.1%. Despite the increased competition from low
cost carriers in the region, THAI has been able to hold its market share at 35.7%. For intercontinental flights,
THAI increased its flight frequencies for its Australian and North American routes, increasing its proportion
of intercontinental market share from 52.4% to 54.3% over the previous year. For the past year, IATA statistics
indicate that THAI’s international operations is the 11th largest in the world and is the 3rd largest regionally.
In anticipation of further tightening of competition within the commercial airline industry, THAI is
rapidly moving to upgrade its in-flight products which include new passenger seats along with amenities
providing convenience and improving in-flight services. These changes have been geared towards ensuring
THAI’s capability to continue to grow its revenue through unsurpassed quality of service.
54 Annual Report 2007
Risk Factors
To weather the changing operating environment in the commercial airline industry along with
other external factors including the fluctuation in exchange rates and rising aviation fuel, THAI needs to have
in place measures to manage such risks posed to the Company to ensure THAI’s ability to compete in a
rapidly changing environment.
THAI is aware of its internal and external risks and is placing emphasis in managing those risks in order
to raise shareholder and stakeholder confidence in the Company. As such, the major areas of risk have been
identified and prioritized in importance so that plans can be put in place that would provide the most
effective measures benchmarked against international standards in preventing and controlling such risks.
To achieve the Company’s goal of strong internal risk management, all functions within the Company utilize
risk management as the overarching guideline in daily operations is being instilled into the corporate
culture. The outcome derived from a strong risk management culture is transparency and equality which can
be audited and will maximize benefits for all related parties. A strong risk management culture represents a
company also possessing a comprehensive good corporate governance guideline.
The Risk Management Committee was appointed to ensure that THAI has an effective and
comprehensive risk management system. The Committee is charged with establishing risk management
policies, operating guidelines and overseeing the internal risk management process. At the operating level,
department managers are tasked with utilizing risk-based management to develop measures to control and
manage corporate risks and intrinsic risks in each functional unit within an acceptable level or at a level
where the potential adverse impact will be minimal. Updates on key risks are provided to the Executive
Management Meeting (EMM), Business Units Executive Board (BEM), Executive Board and the Company’s Board
of Directors on a regular basis to ensure comprehensive risk management and provides a channel for progress
reports. The regular updates serves to ensure active risk management and assess the effectiveness of risk control
measures in achieving the established purpose and goals.
Risks Potentially Bearing Significant Impact on THAI
1. Risk in Fluctuation in the Number of Tourists to Thailand
As Thailand is among the most attractive tourist destinations around the world, the health of the
Thai tourism industry bears a high correlation to THAI’s operations. The risk to THAI’s operations is the
potential softening of the tourism demand to Thailand should there be an event that bears direct impact
on Thailand’s attractiveness as a tourist destination. Some of these risks include global economic stability,
Thailand’s own economic health, politics, natural disasters, the strengthening of the baht against major
currencies, the tourists’ negative attitude about Thailand, the increase of airport charges, the unrest in the 3
southern provinces of Thailand, the SARS concern, the bird flue scare or other similar events that may occur in
55Thai Airways International Public Company Limited
the region bears direct adverse impact on demand for tourism and thus demand for air travel into Thailand.
THAI is aware of the potential risks and is vigilant about its operating environment. For risks that THAI is able to
take actions to mitigate the potential impact, action plans have been drawn and quickly implemented which not
only serves to strengthen THAI’s image but also the confidence of THAI’s passengers.
2. Risk from Rising Cost of Aviation Fuel
Being the largest proportion of THAI’s operating expense, the rising cost of aviation fuel bears
direct impact on the Company’s financial performance. For fiscal year 2007, cost of fuel constituted 23.80% of
THAI’s total operating expense. To better manage this risk, THAI’s policy enables the hedging of fuel price up to
50% of full year’s demand for aviation fuel. For the past year, the fluctuation in aviation fuel price was high. The
average fuel price hedging was 21.34%, 29.34%, 22.34% and 12.00% for the first, second, third and fourth quarter,
respectively. The fuel impact assessment along with the review of measures and guidelines in regards to fuel
management are on an ongoing basis. Computer software has also been utilized to assist in determining and
collecting the appropriate level of fuel surcharge which is on the rates charged by peers in the respective flight
sectors. The surcharge also serves to reduce the impact of the rising aviation fuel cost.
3. Risk from Fluctuation in Currency Exchange
The Company earns revenue in more than 40 foreign currencies constituting 68.00% of total revenues.
The largest proportion of revenue earned are in Euros (EUR) and Baht (THB) while THAI’s operating expense and
debt are mostly in 4 main currencies which are US Dollars (USD), Yen (JPY), Euros and Baht. To mitigate THAI’s
exposure to fluctuations in currency value, THAI has adopted a natural hedging policy where operating
expense, is to the best of ability, matched with the currency in which revenue is earned. The debt structure is
managed so that it best matches the Company’s net cash position generated from net operating cash flow.
The ability to do so is a result of thorough planning for sources of funding and the use of financial tools such as
the Cross Currency Swaps (CCS) to make necessary adjustments when it is beneficial for the Company. As of
September 30, 2007, THAI’s debt by currency including CCS and aircraft leases were 12.4 : 50.0 : 14.0 : 23.6 in
USD : EUR : JPY : THB terms, respectively.
4. Risk from Open Skies Policy
The Royal Thai Government looking to implement the open skies policy to boost tourism to
Thailand and to promote Bangkok as a regional hub has enabled unlimited flight frequency and capacity for
3rd and 4th freedom traffic rights. With respect to 5th freedom traffic rights, the government has enabled airlines
around the world to an extent, compete on all routes served by Thai carriers with potential liberalization in the
longer term.
Thailand currently has signed unlimited flight frequencies for 3rd, 4th and 5th freedom traffic rights
with United Arab Emirates, Qatar, Sri Lanka, Bahrain, Yemen and Switzerland. As a result, a full exercise of these
56 Annual Report 2007
rights by the various airlines from the above countries could bear impact on THAI’s operations from higher
competition on routes which THAI also serves.
To mitigate the risk of higher competition resulting from the open skies policy, THAI’s strategy has
been to increase its cooperation with Star Alliance and greater cooperation with other non-Star Alliance airlines
along with launching pro-active marketing strategies.
5. Risk from Competition from Low Cost Carriers
To strengthen its ability to compete in areas served by low cost carriers, THAI has launched
its own low cost sister airline Nok Air Company Limited with a 39% shareholding as a fighting brand in the
low cost airline industry. THAI tracks Nok Air’s operations and coordinates with its sister airline to maximize
benefits for both companies. For THAI’s operations, there has been ongoing enhancement in THAI’s product
offerings from the Commercial Department, service quality and facilitating convenience for THAI’s passengers
with every aspect of operations. Greater cooperation with partner airlines, the pitch adjustment for in-flight
seats and the increased flight frequencies resulted in more than satisfactory results. THAI remains vigilant of the
low cost airline industry while reviewing and ensuring that the available capacity matches with that of demand.
Other than the above measures, THAI has also increased its efforts towards network sales with
Bangkok as the hub for connectivity instead of the previous strategy of point to point traffic. The strategy
provides traditional airlines with network capability a competitive edge through its ability to provide global
connectivity. By moving to Suvarnabhumi Airport, the facilities lends to enhancing the network capability. In
March of 2007, the re-openning of Don Muang Airport for service in tandem with the operations of
Suvarnabhumi Airport forced the Company to adjust its route network strategy and have an ongoing assessment
process. Proactive marketing includes the popular Prepaid Value Card - Our Beloved King series, providing our
frequent flyers with a discount for domestic travel. THAI has also been pushing ticket sales via the internet and
cooperating with various financial institutions in providing extended payment plans including extra miles earned
on the rewards program and receiving extra baggage weight on these domestic flights.
57Thai Airways International Public Company Limited
As of September 30, 2007, the Ministry of Finance holds a 53.76% stake in THAI and 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.
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 currency exchange and is subject to future investment plans and other relevant factors.
Shareholder and Management Structure
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 130,289,400 7.67
Public Company Limited
4 Chase Nominees Limited 1 65,486,200 3.85
5 Littledown Nominees Limited 5 27,251,100 1.60
6 Thai NVDR Company Limited 26,390,590 1.55
7 Vayupak Fund 1 by MFC Asset Management Public Company Limited 24,599,300 1.45
8 Vayupak Fund 1 by Krung Thai Asset Management 24,599,300 1.45
Public Company Limited
9 Nortrust Nominees Ltd. 19,555,761 1.15
10 Investors Bank and Trust Company 18,809,600 1.11
11 Other Shareholders 318,222,573 18.74
Total paid up capital 1,698,900,950 100.00
Thai Shareholders 1,379,317,956 81.19
Foreign Shareholders 319,582,994 18.81
Note : Information on current shareholders can be accessed via the Company’s web site www.thaiairways.com prior to the Annual General Shareholders’Meeting.
Shareholders
The names of major shareholders, number of shares held and percentage of shareholding as of the
January 10, 2007 Share Register Book closure date are as follows:
Ranking Name of Shareholders Number of PercentageShares
58 Annual Report 2007
President
Organization Chart
58 Annual Report 2007
59Thai Airways International Public Company Limited
Audit Committee
59Thai Airways International Public Company Limited
60 Annual Report 2007
Management StructureBoard of Directors
As of September 30, 2007 the Company’s Board of Directors consist of the following members:
1. ACM Chalit Pukbhasuk Chairman
2. Mr. Suparut Kawatkul Vice Chairman
3. Mr. Chaisawasd Kittipornpaiboon Vice Chairman
4. Mr. Chartsiri Sophonpanich Independent Director
5. Mr. Borwornsak Uwanno Independent Director
6. Gen. Pairoj Panichsamai Independent Director
7. Gen. Ruengroj Mahasaranond Independent Director
8. Mr. Sivaporn Dardarananda Independent Director
9. Khun Pornthip Jala Independent Director
10. Mr. Chaisak Saeng-Xuto Director
11. Mr. Pichai Chunhavajira Director
12. Mr. Wisudhi Srisuphan Director
13. Mr. Wichit Na-Ranong Director
14. Mr. Aviruth Wongbuddhapitak Director
15. Flg. Off. Apinan Sumanaseni Director
Directors Authorized to Sign Legal and Binding Contracts on the Company’s Behalf
ACM Chalit Pukbhasuk, Chairman of the Board of Directors and another Board member may sign legal
and binding contracts on the Company’s behalf and such document must be stamped with the Company seal or
any three of the Board members may sign legal and binding contracts and such document must be stamped
with the Company seal.
Scope of Authority and Responsibilities of Board of Directors
Members of the Board of Directors (BoD) are required to perform their duties in compliance with
legal and Company objectives and to execute resolutions as reached at the Ordinary Shareholders’ Meeting.
The BoD may appoint a person to run the Company’s operations but such person must report to the BoD. The
BoD may provide a proxy to persons to act on behalf of the Company in accordance with the stipulation and
within the given time frame as deemed appropriate by the BoD but the BoD has the power to nullify,
rescind, modify or change in part or in whole the proxy in which such appointed person is to act on behalf of the
Company.
The Company’s Board of Directors met in total 19 times in fiscal year 2007. During the fiscal year, a
number of Committees were appointed to undertake specific tasks which include the following:
Audit CommitteeTo ensure abidance with policies on good corporate governance as stipulated by the Ministry of
Finance and the Stock Exchange of Thailand to increase shareholder and investor confidence, the Company’s
Board of Directors appointed an Audit Committee consisting of non-executive Board members.
61Thai Airways International Public Company Limited
1. Khun Pornthip Jala Chairman
2. Mr. Sivaporn Dardarananda Member
3. Mr. Chartsiri Sophonpanich Member
4. Vice President Secretary
Office of the Internal Audit
Mrs. Keseree Narongdej served as advisor to the Audit Committee
Audit Committee’s Authority and Responsibilities
1. Ensure the integrity of the Company’s financial statements including the correct and complete
disclosure of related party transactions or transactions that have conflicts of interest.
2. Ensure that the Company has an adequate, appropriate and efficient internal control and internal
audit process.
3. Ensure strict abidance with the Stock Exchange of Thailand’s guidelines, commitments to third party
entities and related legal guidelines.
4. Screen and choose the Company’s financial auditor and establish compensation rate to be
submitted for shareholders approval.
5. Appoint sub-committees and working groups as necessary.
6. Execute other matters as assigned by the Board of Directors.
The Audit Committee met a total of 8 times during fiscal year 2007 and provided progress reports to
the Company’s Board of Directors.
Independent CommitteeTo ensure that THAI meets the principles of good corporate governance as stipulated by the Ministry
of Finance, the Stock Exchange of Thailand, the guidelines for which the Company is assessed on an annual
basis and to be at par with internationally accepted standards, the Board of Directors appointed the following
persons to the Independent Committee :
1. Mr. Chartsiri Sophonpanich Member
2. Mr. Borwornsak Uwanno Member
3. Gen. Pairoj Panichsamai Member
4. Gen. Ruengroj Mahasaranond Member
5. Mr. Sivaporn Dardarananda Member
6. Khun Pornthip Jala Member
Independent Committee’s Authority and Responsibilities
1. Freely provide comments/suggestions and/or provide progress reports on undertakings as
assigned by the Board of Directors to ensure that the Company has a robust good corporate governance system,
which complies with the Ministry of Finance and the Stock Exchange of Thailand’s guidelines and guidelines
for which the Company is evaluated annually including international best practices.
62 Annual Report 2007
2. The Committee has the authority to obtain documents and summon relevant persons to provide
information in regards to assigned task(s).
3. Execute other matters as assigned by the Board of Directors.
In fiscal year 2007, this Committee performed its duties by providing independent thoughts and comments
while ensuring equal benefits for all shareholders.
Good Corporate Governance CommitteeTo ensure integrity of the Company’s operations with respect to the good corporate governance
principles as stipulated by both the Ministry of Finance and the Stock Exchange of Thailand which is in line with
international best practices, the Company’s Board of Directors appointed the following persons to the Good
Corporate Governance Committee along with appointing a Committee secretary along with an assistant
secretary :
1. Mr. Borwornsak Uwanno Chairman
2. Gen. Pairoj Panichsamai Member
3. Mr. Wisudhi Srisuphan Member
4. Mr. Sivaporn Dardarananda Member
5. Mr. Thosaporn Sirisumphand Member
6. Mr. Tummasak Chutiwong Member
7. Mrs. Ngamnit Sombutpibool Member
8. Executive Vice President Member and Secretary
Corporate Secretariat
9. Director of the Compliance Department Assistant Secretary
Good Corporate Governance Committee’s Authority and Responsibities
1. Audit and make recommendations to the Board of Directors to enhance good corporate governance
policies in accordance with the guidelines of the Ministry of Finance and that of the Stock Exchange of Thailand
along with international best practices.
2. Is authorized to coordinate and request information from the Audit Committee, Risk Management
Committee, other Committees and working groups as deemed necessary.
3. The Committee has the authority to obtain documents and summon relevant persons to provide
information in regards to assigned task(s).
4. If necessary, the Committee may propose to commission consultants/ specialists to assist in the process
as deemed necessary.
5. Execute other matters as assigned by the Board of Directors.
The Committee met in total 7 times in fiscal year 2007 and provided progress reports to the Company’s
Board of Directors.
Nomination, Remuneration and Human Resource Development CommitteeFollowing the good corporate governance principles of both the Ministry of Finance, that of the Stock
Exchange of Thailand and international best practices, the Company’s Board of Directors appointed the following
members to the Nomination, Remuneration and Human Resource Development Committee :
63Thai Airways International Public Company Limited
1. ACM Chalit Pukbhasuk Chairman
2. Mr. Suparut Kawatkul Member
3. Mr. Chaisawasd Kittipornpaiboon Member
4. Gen. Pairoj Panichsamai Member
5. Flg. Off. Apinan Sumanaseni Member
Nomination, Remuneration and Human Resource Development Committee’s Authority and
Responsibities
1. The Committee is charged with the obligation to establish a selection and appointment process
for the Company’s Board members along with the Company’s senior management and the Company’s human
resource development. Such process must be ethical and comply with the good corporate governance
principles as stipulated by the Ministry of Finance and the Stock Exchange of Thailand and conforms to international
best practices. Such process must reflect the latest approach in human resource management to acquire persons
with the highest qualification and quality to sit on the Company’s Board of Directors and senior management
posts. The selection process must be fair, just, transparent and is subject to audit.
2. The Committee is also responsible for determining the appropriate level of compensation for
members of the Board of Directors, Sub-Committees, the Company’s management and outsiders who have
been commissioned to perform tasks on the Company’s behalf. The compensation scheme should be
comparable to companies within the industry but must be sufficient to attract and retain persons possessing
desired qualities. Board members who have been assigned additional tasks and responsibilities are also
appropriately compensated for their extra effort and commitment. For members of the Board with management
responsibilities and that of the Company’s senior management, compensation is tied to the Company’s overall
performance and each individual’s effort and contribution. Such guidelines reflect the Company’s
efforts in fulfilling the good corporate governance guidelines stipulated by both the Ministry of Finance and
the Stock Exchange of Thailand while observing international best practices.
3. The Committee has the authority to obtain documents and summon relevant persons to provide
information in regards to assigned task(s).
4. Execute other matters as assigned by the Board of Directors.
In fiscal year 2007, the Committee met a total of 4 times and provided progress reports to the Company’s
Board of Directors.
Risk Management CommitteeTo ensure that the Company has a robust risk management system that not only conforms to the
Ministry of Finance and the Stock Exchange of Thailand’s good corporate governance guidelines and
meeting international best practices, the Risk Management Committee was established to ensure adherence
to the stipulated guidelines as it forms part of the Company’s annual performance assessment. The Company’s
Board of Directors appointed the following persons to the Risk Management Committee :
64 Annual Report 2007
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
Risk Management Committee’s Authority and Responsibilities
1. Provide advice and counseling on risk issues and the management of such risks spanning all areas
of the Company’s operations.
2. Has the authority to summon and procure relevant persons and documents to clarify matters
under consideration.
3. Execute other matters as assigned by the Board of Directors.
In fiscal year 2007, the Risk Management Committee met a total of 2 times and provided progress reports
to the Company’s Board of Directors.
Executive BoardThe Executive Board consisting of the persons below were appointed and given the responsibility
to ensure that the Company is run with maximum efficiency and to be able to meet the challenges of a
dynamic operating environment while ensuring maximum benefit to the Company.
1. Mr. Chaisak Saeng-Xuto Chairman
2. Mr. Pichai Chunhavajira Member
3. Gen. Pairoj Panichsamai Member
4. Mr. Wichit Na-Ranong Member
5. Flg. Off. Apinan Sumanaseni Member
The Executive Board’s Authority and Responsibilities
1. Oversee the various aspects of the Company’s operations to ensure abidance with the corporate
policies, corporate plans and that of the Company’s Board of Directors.
2. Screen issues to be submitted for the Board of Directors’ consideration.
3. Provide suggestions as in regards to approach and measures to improve and effectiveness and
efficiency in the Company’s operations.
4. Approve purchases within budget approved by the Board of Directors, which comply to the
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 bestowed upon the Board of Directors and
has the authority to approve payments of up to 500 million baht.
5. Has the authority to approve non-budgeted investments of more than 1 million baht and less
than 50 million baht and must report such authorizations to the Board of Directors.
65Thai Airways International Public Company Limited
6. Has the authority to summon and procure relevant staff and documents to clarify matters
under consideration.
7. Has the authority to appoint Sub-Committees and Working Groups as deemed appropriate.
8. Execute other matters as assigned by the Board of Directors.
9. In case of necessity, the Executive Board may propose for Board of Directors to approve hiring of
consultants to perform tasks on the Company’s behalf.
In fiscal year 2007, the Executive Board met a total of 24 times and provided progress reports of
undertakings to the Board of Directors.
The Board of Directors also appointed various committees and sub-committees including the Sub-Committee
overseeing the purchase of aviation fuel and the Legal Sub-Committee.
Note : All Committees, Sub-Committees and Working Groups appointed by the Board of Directors will continue to function through the end of the
2007 Annual General Shareholders’ Meeting
THAI Management ExecutivesAs of September 30, 2007, the Company had 15 Senior Management positions : President - 1, Special
Activities Advisor Senior Executive Vice President Level - 1, Executive Vice Presidents - 10, Vice Presidents - 3,
comprising :
1. Flg. Off. Apinan Sumanaseni President
2. Wg. Cdr. Supachai Limpisvasti Special Activities Advisor, Technical
Senior Executive Vice President Level
3. ACM Narongsak Sangapong Executive Vice President
Corporate Secretariat Department
4. Flt. Lt. Pisal Chayakula Executive Vice President
Corporate Planning and Information
Technology Services Department
5. Mr. Wallop Bhukkanasut Executive Vice President
Commercial Department
6. Mrs. Ngamnit Sombutpibool Executive Vice President
Finance and Accounting Department
Acting Vice President, Management
Accounting and Budget Department
7. Flg. Off. Chinawut Naressaenee Executive Vice President
Corporate General Administration Department
8. Flt. Lt. Prasart Khoon-In Executive Vice President
Operations Department
9. Flg. Off. Norahuch Ployyai Executive Vice President
Standards Assurance and
Risk Management Department
10. Mr. Chanchai Singtoroj Executive Vice President
Human Resources Development and
Management Department
66 Annual Report 2007
11. Mr. Tummasak Chutiwong Managing Director, Technical Department
Executive Vice President Level
12. Mr. Kaweepan Raungpaka Executive Vice President
Office of the President
13. Mr. Thongchai Singhakul Vice President
Financial Accounting Department
14. 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
The President’s Authority and Responsibilities
The President’s authority and responsibilities as stipulated by the Company’s guidelines include:
1. Authority and duties stated in the “Policies of Thai Airways International Plc.” under the General
Administration Section B.E. 2540.
The President is responsible for managing the Company’s operations and to achieve corporate
objectives as set by the Board of Directors. The President oversees the Company’s management and staff and is
subject to the Company’s guidelines or directives as mandated by the Company’s Board of Directors.
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 binding contracts on behalf of the Company with
regard to procurement or disposal of supplies. This includes procurement of supplies, hiring, leasing of or to
lease supplies to others. The President may issue orders as per the given guidelines that refer to the President’s
authority in approving such transactions subject to authorized limits per the stipulated guidelines.
- Contracts to obtain consultant services - up to 15 million baht
- Contracts or transactions related to supplies procurement through special process - up to
25 million baht
- Contracts or transactions related to supplies procurement through normal procedures - up to
50 million baht
- Contracts or transactions related to procuring aviation fuel, equipment and advertising
and promotion products, procuring insurance for other assets, purchase of pre-packaged food and
beverage, services and merchandising at the various service stations in the provinces or abroad, leasing of office
space and staff housing (within 1 year duration), ad hoc and planned procurement of aviation fuel for a period
not exceeding a year - up to 100 million baht
- Procurement of aviation fuel with better terms - up to 200 million baht
- Aircraft and/or passenger insurance - up to 500 million baht
- Emergency procurement of aviation fuel - no pre-set limit
Transaction value exceeding the President’s authorized limit must be submitted to the Board of
Directors for approval.
67Thai Airways International Public Company Limited
3. Authority and duties under the Company’s Financial Authority and Duties B.E. 2549.
The President has the authority to enter financial contracts and approve financial undertakings
as per the guidelines approved by the Board of Directors and contracts related to the Company’s
operations must also observe the Company’s stipulated guidelines.
The President may not approve or enter into transactions beyond the pre-approved guidelines.
According to the Board meeting resolution 14/2002 on November 27, 2002, the Company’s Board of Directors
entrusts the President to handle all routine matters but does not enable the President to undertake
transactions in which involves the President or persons that may be considered to have conflicts of interest
(these include : (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 with (A), (B) or (C) such as parents, spouse,
children or a close relative and (E) a legal entity in which (A), (B) or (C) holds shares, controls or has direct or
indirect vested interest or a person stipulated by the Securities and Exchange Commission). Persons that may
have vested interest or may have any conflicts of interest with the Company or its subsidiaries are also prohibited.
Appointment of the Board of Directors and Management ExecutivesThe Company’s Board of Directors
Per the Company’s rules and 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 upon at the Annual General Shareholders’
Meeting. At least half of the Board members must reside in Thailand and each person must possess the appropriate
qualifications and is not subject to any legal prohibitions.
Directors are appointed by 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 vote all votes by selecting one or several persons as Directors but the votes
may not be divided.
3. The person(s) 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 Directorship, a
lottery is to be drawn to choose the last member.
In the case that a Board seat becomes vacant other than due to term completion, the Company’s
Board of Directors shall elect any person who has the qualifications and is not subject to legal prohibitions
to fill the vacant seat at the next Board Meeting. The inducted Board member must receive at least a 75% vote
from the remaining Board members. Unless the remaining term of the outgoing Board member is less than
2 months, the inducted Board member will remain part of the Board for the remaining duration of the
outgoing Board member’s term.
Board members can be voted out by no less than three fourths of eligible votes in attendance. The
number of shares shall not be less than one-half of shares held by shareholders present and eligible 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
68 Annual Report 2007
lots. Subsequent retirements are based on length of service but Directors retiring by term can be re-appointed
(Corporate regulation No.17).
Other Committees
Other Committees established by the Company’s Board of Directors include the Audit Committee, the
Independent Committee, the Good Corporate Governance Committee, the Nomination, Remuneration and
Human Resource Development Committee, the Risk Management Committee and the Executive Board.
The Scope and Limitations of Independent Directors include the following:
1. Independent Directors are able to freely perform duties, express opinions and submit reports as
assigned by the Board of Directors. Performance of duties must be based on a clean conscience and without
being under the influence of an individual or group and must be free from pressures preventing independent
assessment and freedom of expression and opinion.
2. Must hold less than 5% of the Company’s, subsidiaries, affiliates and partner companies’ paid-up
capital which includes persons related to the Independent Director.
3. Must not hold a management position within the Company, its subsidiaries, affiliates, partner
companies or major shareholders of the Company. The Independent Director must not be an employee, staff
or a consultant that receives monthly compensation from the Company, its subsidiaries, its affiliates, partner
companies or the Company’s major shareholders.
4. Must not have vested interest either direct or indirect in terms of financial benefits and in terms
of management control of the Company, its subsidiaries, its affiliates or major shareholders of the Company.
Independent Directors must not have such vested interest 1 year prior to being inducted as an Independent
Director unless the Company’s Board of Directors deems such benefits to have no bearing on the Independent
Director’s ability to perform his/her duties independently.
5. Neither being involved nor related to executives or major shareholders of the Company as per
the legal definition stated under the Regulations for Civil Service and Governance.
6. Not appointed to represent or safeguard the interests of the Company’s Board of Directors,
major shareholders or shareholders who are related to the Company’s major shareholders.
The term “Related Parties” refers to people with relationships or connections to the Company that
does not enable them to think and act independently such as suppliers, customers, creditors, debtors or
companies that have business relationships with THAI.
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).
69Thai Airways International Public Company Limited
The Nominating Committee will submit for a majority vote by the Company’s Board of Directors persons
whose qualifications meet the minimum requirements.
For other members of management, the Board of Directors has mandated the Nomination, Remuneration
and Human Resource Development to select the most appropriate candidate to fill each available position.
Remuneration for Members of the Board of DirectorsThe resolution reached on the issue of remuneration for members of the Board are as proposed by the
Remuneration Committee and the Board of Directors for shareholder approval.
Monetary Remuneration
- Each Board member receives a fixed 20,000 baht monthly remuneration and a monthly allowance
of no more than 30,000 baht for Board Meeting attendance. The Chairman and the Vice Chairman
receive meeting allowance that is 25% and 12.5% higher than other Board members, respectively.
- Members of the Audit Committee receive a monthly remuneration equivalent to that of meeting
allowance of Board members whether or not a meeting is called.
- Upon being appointed by the Board or the Chairman of the Board to a Committee, a Sub-Committee
or a Working Group, the Director receives an additional 10,000 baht per meeting attendance.
However, the maximum allowance paid is 10,000 baht no matter how many meetings are called.
Bonus: Paid at the rate of 0.5% of dividend paid.
Board member remuneration for fiscal year 2007 ending September 30, 2007
Unit : Million Baht
Number of Persons Remuneration including allowance and bonus
Company’s Board of Directors 29 22.62
Audit Committee 6 1.03
Other Committees 16 1.75
Note : One Board member also holds a Management position
Other Benefits
Air Ticket Benefits
Each Board Director and one accompanying person are entitled to 15 domestic and 15 international
free round trip tickets on the highest class of service as long as such individual remains a member of the Board.
If the ticket allowance has been fully utilized, the Director may purchase bookable tickets at 25% of the normal
rate 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 when
traveling together is not possible, the named companion will have the same ticket privileges.
- Former members of the Board and a named companion are entitled to receive 12 international
and 6 domestic round trip tickets at 25% of the normal rate fare of the preferred class of travel.
The President has the authority to approve such ticket requisitions, however the Executive
Vice President, Commercial Department may be entrusted to approve such tickets on the President’s behalf.
70 Annual Report 2007
Remuneration for Management ExecutivesMonetary Remuneration
Compensation for Executive Management for fiscal year 2007 ending September 30, 2007
Unit : Million Baht
Number of Persons Compensation including salary, bonus & benefits
Executive Management 14 82.17
Other Compensation
Air Ticket Benefits
Company Executive Officers, their spouse and children receive bookable air tickets at no charge
while the parents of such officers are entitled to air tickets at discounts similar to staff rates.
Per the resolution reached at the Extraordinary Shareholders’ Meeting 1/2002 held on August
30, 2002, Company Executive Officers and staff received the same benefits from the Employee Securities
Option Plan (ESOP).
Benefits received from both the provident fund and the pension fund for Executive Officers are
the same as that of other staff.
Provident Fund - The Company’s Provident Fund was registered on June 26, 1992, for which
contributions are made by both staff and the Company. A 9% contribution is made to the fund by the Company
for staff whose tenure is less than 20 years while those with tenures greater than 20 years receive a 10% contribution.
Each employee is required to make contributions not less than 2% of monthly salary and no more than the
Company’s contribution.
Pension Fund - The Company established a staff pension fund with a policy of contributing 10% of
staff’s salary for which the funds are invested and earn interest. Should there be a shortfall of available
funds against its liabilities the Company will make a one-time contribution to the fund to match its liabilities.
Staff must have worked for the Company at 3 years before being eligible to receive payment
upon resignation, retirement or death. Staff hired post the inception of the provident fund in June of 1992 are
only allowed to participate in the Staff Provident Fund. As a result, no new members have been added to
the Pension Fund since June 1992.
Total contribution made to Executive Management’s provident fund and pension fund for fiscal
year 2007
Unit : Million Baht
Number of Persons Total Amount
Executive Management 12 3.09
71Thai Airways International Public Company Limited
Good Corporate Governance Committee Report
The importance of corporate management based on the principles of good corporate governance
benchmarked to international best practices is well understood as it enhances efficiency, effectiveness and
competitiveness resulting in greater shareholder, investor, customer, stakeholder including employees’
confidence in the Company. The transparent nature of operations, the ability to be audited and ensuring
equitable treatment of all parties while being socially responsible are key drivers for the Company’s stable
growth providing long-term sustainable returns to both the Company and the country.
The Company’s Good Corporate Governance Committee established a framework and pushed for the
principles of good corporate governance to be adopted as the Company’s operating policy. Continued
emphasis will be placed on developing good corporate governance benchmarked against international
best practices and provide ongoing support for activities geared towards development of such principles. For
the principles of good corporate governance to be deeply rooted in the corporate culture, senior management
and employees alike need to understand the importance of these principles. The key to developing such
understanding is ensuring ongoing internal communication. To further promote a culture of good corporate
governance within, the Committee has been pushing to raise the awareness of employee responsibility in
executing their tasks in accordance with Thai Airways International’s code of ethics.
The Good Corporate Governance Committee appointed 4 sub-committees to assist in overseeing the
Company’s code of conduct, good corporate governance and the review of the Company’s internal work
processes making sure that they comply with the principles of Good Corporate Governance. The sub-committees
are expected to also provide thoughtful suggestions, insights and coordinate with relevant parties to improve
the Company’s good corporate governance rating, which will be beneficial for the Company upon being
assessed on its performance.
The Committee was tasked by the Company’s Board of Directors to ensure good corporate governance
and compliance with the principles as stipulated by the Ministry of Finance and the Stock Exchange of
Thailand and that of international best practices.
In fiscal year 2007, the Good Corporate Governance Committee met a total of 7 times. Important actions
undertaken as per the given authority were as follows :
- Recommended that shareholders be given the opportunity to propose issues and to nominate
persons to be considered for the Company’s directorship at the Annual General Shareholders’ Meeting.
The Committee’s recommendation is in line with the principles of good corporate governance and will be
effective at the 2007 Annual General Shareholders Meeting. Shareholders have been notified through the
posting of this notification on the Company’s website.
- Determined that the Royal Decree on Good Governance should be implemented within the
Company, which will lead to enhanced good corporate governance. Section 53 of the Royal Decree on Good
Governance states that State Enterprise should possess guidelines in managing good corporate governance in
accordance with this Royal Decree.
72 Annual Report 2007
- Promoted and supported the Company’s efforts for social events in accordance with the Corporate
Social Responsibility (CSR) guidelines. THAI is currently in the process of establishing a CSR program for the
Company.
- A Self-Assessment Form, a Cross Evaluation Form and a Group Assessment Form have been developed
for the Board of Directors for assessing the Board’s effectiveness in managing the Company. The assessment
lends to good corporate governance which will be an important impetus in enhancing the Company’s
transparency and credibility, which also conforms to the good corporate governance principles of both the
Ministry of Finance and the Stock Exchange of Thailand.
- Held seminars to establish guidelines to promote corporate ethics and aggregated thoughts from
the various sub-committees, employees and related persons to analyze ethics related risks within the Company.
The Committee also developed strategies to promote enduring ethical practices within the Company.
By actively promoting good corporate governance within the Company, THAI has been given a “Very
Good” rating, by the Thai Institute of Directors Association for fiscal year 2006, which is considered to be high
among publicly listed companies.
THAI is confident that the ongoing internal development of good corporate governance will provide
THAI with stability and a solid base for which the company will use to transform the Company’s image and
continue to build on good corporate governance going forward.
Mr. Borwornsak Uwanno
Chairman
73Thai Airways International Public Company Limited
Good Corporate Governance
As a publicly listed company, THAI understands the importance of adopting good corporate
governance and diligently observes such principles. To ensure comprehensiveness in observing such
principles, the Company’s Board of Directors has appointed a Good Corporate Governance Committee and its
various sub-committees, a Corporate Secretariat Department, an Investor Relations Department and a Risk
Management Department with mandates to function and observe the principles of good corporate
governance. The goal is to instill a culture of good corporate governance to enhance THAI competitiveness
leading to long-term sustainable growth and building shareholder value over time. For THAI’s efforts in
embracing principles of good corporate governance, THAI was recognized in fiscal year 2005 and 2006 with a
rating of “Good” and “Very Good”, respectively.
In 2004, THAI participated in the first rating exercise initiated by the Securities and Exchange
Commission (SEC) for which the services of the Thai Rating and Information Services Company Limited (TRIS)
was sought to undertake the rating process. The process included analysis and evaluation of THAI’s
performance for the period between 2002-2004 obtained from the Company. Information was also
obtained through interviews with senior management and staff as well as other credible sources. Observance
of Shareholders’ rights, the composition and responsibilities of the Company’s Board of Directors and
Executive Management, corporate information disclosure and the good corporate governance culture were
all part of the evaluation process. The result of the first ever rating of the Company undertaken yielded a
“Good” rating.
In 2005, THAI had the Thai Institute of Directors Association (IOD) prepare a company specific
assessment report to be used as an analytical tool to assess the Company. The report served as a handbook
to improve on the Company’s good corporate governance policies. The results of the assessment were not
only benchmarked against other publicly listed companies but was also used as reference to reflect THAI’s
strengths and weaknesses and aggregating constructive suggestions to be used in enhancing the Company’s
information disclosure. The assessment also analyzed by groups based on the international standards of the
Organization for Economic Cooperation and Development (OECD). The resulting assessment earned THAI a
rating of “Very Good” in 2005.
In 2006, THAI acquired the services of the IOD to undertake an assessment of the Company’s good
corporate governance policies for the second year running. The resulting assessment was a “Very Good”
overall rating and achieving an “Excellent” rating in the area of information disclosure and three “Very Good”
ratings for the areas of shareholders’ rights, equitable treatment of shareholders and consideration given to
stakeholders. As for the category of Board of Directors’ responsibility, THAI received a rating of “Good”.
Compared to the average of all rating participants, THAI’s rating in each category ranked above the aggregate
average.
The results of THAI’s rating for the third consecutive year reflects the commitment of the Company’s
Board of Directors, management and employees towards good corporate governance. Providing equitable
treatment to all stakeholders will serve to enable the Company to sustain growth in the longer term.
74 Annual Report 2007
1. Policies on Good Corporate GovernanceTHAI is fully committed to the principles of good corporate governance to ensure long-term sustainable
growth for the Company. This commitment is reflected in the Board of Directors’ resolution dated October
28, 2005 to embrace a culture of good corporate governance both in thought and action of members of the
Board of Directors, management and employees serving as a strong foundation for improving efficiency and
effectiveness in running the Company. The purpose is to ensure equitable treatment of all stakeholders, build
confidence in the Company and enable the Company to operate transparently and ethically. All the above is
geared towards sustainable long-term growth and to serve as a tool to achieve the Company’s ultimate goal
of enhancing value for shareholders, investors and related parties through upholding the Company’s code of
ethics including :
Adherence to doing things right
Appropriate response to stakeholder and shareholder needs
Transparency
Job responsibility and duty
Operational Responsibility
Equitable treatment
Vision
Ethics
In addition to emphasis placed on ethics, THAI adheres to the standards and principles of good
corporate governance of state enterprises as stipulated by the Ministry of Finance. THAI adheres to 7 important
points which conforms to the 15 principles of good corporate governance stipulated for publicly listed
companies put into effect in March of 2002, which are in line with international best practices including :
1. Upholding shareholder rights and ensuring equitable treatment
2. Ensuring integrity of structure, role and duties of independent directors
3. Ensuring sufficient information disclosure and transparency
4. Ensuring sufficient internal control and risk management
5. Upholding the Company’s code of conduct
6. Pursuing long-term creation of stakeholder value
7. Promoting best practices
The Board of Directors appointed a Good Corporate Governance Committee comprising members of
the Board, management and qualified persons charging them with the responsibility of reviewing and advising
the Board on good corporate governance practices. The Committee is also responsible for ensuring adherence
to such principles as stated by the Ministry of Finance, the Stock Exchange of Thailand and that of international
best practices. The Committee may coordinate with the Audit Committee, the Risk Management Committee
and other committees as deemed necessary to accomplish their tasks. The Good Corporate Governance
Committee is also responsible for devising a comprehensive review process and making necessary adjustments
to good corporate governance policies on an ongoing basis. All Board members are encouraged to attend
75Thai Airways International Public Company Limited
seminars provided by IOD and other institutions on relevant topics.
In fiscal year 2007, THAI performed a self assessment in relation to the implementation of good
corporate governance policies to enhance the governance process and to ensure that the Company
complies with the 2005 good corporate governance principles stipulated for publicly listed companies by
the SET. In practice, THAI modified its good corporate governance principles to conform to the 15 principles
as stipulated by the SET which is also in line with the 2004 Principles of Corporate Governance as stipulated
by the Organization for Economic Cooperation and Development (OECD) and guidelines proposed by the
World Bank through their Corporate Governance program. Through the participation of the Corporate
Governance program - Reports on the Observance of Standards and Codes, THAI’s Ethics Committee appointed 4
working sub-committees :
- Code of Conduct and Good Corporate Governance Promotion Sub-Committee
The Sub-Committee is responsible for improving Company ethics and building understanding of the
good corporate governance concept on an ongoing basis. This past year, the Sub-Committee revised the
Company’s code of conduct handbook (THAI’s Code of Conduct) published in print both in Thai and English,
spelling out operating guidelines and procedures for conducting business reflecting feedback by employees on
these guidelines. Handbooks have been circulated to all Company employees both domestic and abroad while a
copy has been posted on the Company’s web site for reference.
The Sub-Committee organized a variety of activities to promote awareness of the importance of good
corporate governance among which a quarterly print publication is designed to promote awareness for the
Board of Directors, management and THAI’s staff as to the importance of good corporate governance. A group
and individual slogan competition, was held during the “Promote Good Corporate Governance Week” for
the various departments within THAI along with visiting other organizations to get first hand observation
corporate governance in action and developing a PR video, internal audio announcements, posting related
information on the intranet, developing a staff questionnaire to obtain staff feedback and is planning to
establish a coaching team in the ratio of 1 : 7 to promote corporate ethics and good corporate governance to
ensure that every employee receives news updates on a regular basis.
- The Good Corporate Governance in Work Process Sub-Committee
The Sub-Committee is responsible for reviewing the Company’s work processes and making necessary
changes to the selection, appointment and reshuffling process of the Company’s management to better reflect
good corporate governance principles. As such, employees and related persons within the Company were given
the opportunity to comment and provide feedback via the Company’s internal web site.
- Sub-Committee to Improve Good Corporate Governance Rating
The Sub-Committee is responsible for making recommendations and coordinating with relevant
parties to ensure the Company’s overall good corporate governance rating is maintained at a level that is at
par with that of international standards as per the principles stipulated by the Ministry of Finance and the
Stock Exchange of Thailand.
76 Annual Report 2007
- Sub-Committee to Integrate the Guidelines of the Royal Decree on Good Governance into Thai
Airways International Plc.
The Sub-Committee is responsible for submitting recommendations to the Company’s Board of
Directors, Good Corporate Governance Committee and management on issues related to good corporate
governance. The Sub-Committee was tasked to support the Company’s management to achieve the stipulated
principles on good corporate governance. Another function of the Sub-Committee was to perform ongoing
review of such principles through benchmarking with international standards. All recommendations by the
Sub-Committee are presented to the Good Corporate Governance Committee prior submitting to the
Company’s Board of Directors.
2. Shareholders : Rights and Equitable TreatmentShareholders’ Rights
THAI recognizes the importance of shareholders and their rights. To this end, THAI has implemented
policies to protect the basic rights of its shareholders which include the right to purchase, sell or transfer
Company shares, a share in the Company’s profits, receive sufficient and timely Company information,
participating in the Annual General Shareholders’ Meeting (AGM), give proxy to vote on shareholder’s
behalf, make inquiries during the AGM, take part in making key decisions (Board member selection, approval
of important agendas that bear impact on the Company’s long-term direction) and making amendments to
Company’s Articles of Association.
Equitable Treatment of All Shareholders
THAI’s policy is to facilitate the needs of its shareholders and to ensure equitable and fair treatment
which also complies with applicable laws and guidelines protecting shareholders’ basic rights. Voting rights
are based on a one vote per share basis with Independent Directors mandated to look after the benefits
of minority shareholders. Measures have been taken to prevent insider trading and the misuse of internal
information by the Company’s Board members, management including their spouses and their under aged
children. Board members and those that have retired from office of no more than 6 months are prohibited
from making any transactions in regards to THAI’s shares from 1 month prior and 3 days post disclosure of
the Company’s financial performance. The Company’s Board members and its executives are required to
disclose their investments in THAI’s shares and reports of their holding must be updated and submitted to the
Board of Directors on a regular basis. These measures are to ensure the integrity of members of the Board and
that of management.
3. Stakeholders’ RightsTHAI’s main goal is to provide comprehensive air transport services encompassing domestic and
international routes, focusing on safety, convenience and unsurpassed quality service to satisfy its customers
and gain their trust. Effective and efficient management at par with international standards combined with
satisfactory financial performance serves to maximize shareholders value. To optimize staff effectiveness and
77Thai Airways International Public Company Limited
growth potential, the Company seeks to provide a stable, safe and friendly working environment so that
everyone can feel proud to be part of the success story. THAI, in its role as the national carrier, supports the
nation through its various charity and social contributions.
To achieve the Company’s objectives, it is important to take into consideration the rights of each of
the Company’s internal stakeholders including shareholders, the Company’s Board member and the
Company’s staff and external stakeholders including customers, business partners, creditors, competitors,
government bodies and other entities for which the Company interacts. THAI’s internal and external
interactions are founded on the basis of Corporate Social Responsibility (CSR). Written guidelines in the Thai
Airways International Code of Conduct of 2005 lays the ground rules for which Board members, management
and staff is expected to abide. Currently the Good Corporate Governance Committee has revised Thai Airways
International Code of Conduct to be more encompassing, more precise and better reflecting the current
operating environment. The revision process took into consideration constructive feedback from the
Company’s employees. Upon completion of the revision, each employee was given their own copy of the
code of conduct and the contents were also distributed through THAI’s print circular “TG Update”, video TV and
seminars were held to facilitate understanding of the importance of THAI’s code of conduct. The above undertakings
took into consideration of stakeholder right were as follows :
Shareholders - Perform duties with honesty, integrity and fairness for the benefit of major and
minor shareholders as well as other related parties.
- Manage for stable long-term sustainable growth while maximizing shareholder
wealth.
- Knowledgeably execute responsibilities with utmost care and professionalism.
- Safeguarding the Company’s assets.
- Disclose sufficient and accurate financial and non-financial information on a
consistent and timely manner reflecting the Company’s operating and financial
status.
Customers - Adopt a positive attitude with emphasis placed on customer care and service,
providing service with enthusiasm and courtesy, keeping customer’s personal
information confidential and ensure equitable treatment of all customers to
provide unsurpassed service quality leaving passengers with an indelible experience.
- Study and understand customers’ needs to develop ensure and the highest
standard of service for each customer touch point. To meet customers’ needs it is
necessary to regularly assess and make changes to service standards. THAI’s
employees are encouraged to keep abreast of the latest in information and
build experience through field work to gain expertise and efficiency. The expectation
is for THAI’s staff to use their experience to provide unsurpassed service quality
and through customer satisfaction, customer retention is achieved.
- Establish a strong working relationship to build customer loyalty. A channel has
78 Annual Report 2007
been established enabling customers to provide the Company with constructive
feedback on its products and services while having a system that quickly and
satisfactorily handle customer complaints.
Business Partners, - Treat business partners, creditors and debtors equitably and fairly while maximizing
Creditors and Debtors Company benefit but on the basis of equality and fairness to partners.
- Avoid conflicts of interest and honor outstanding obligations.
- Disclose accurate and factual information. Resolutions to business problems
should be on business terms.
Competitors - Abide by the framework of fair competition.
- Avoid defamation of competitors through negative information or false accusations.
- Avoid illegal access of competitor’s confidential information.
Suppliers of Products - Implement transparent procurement and service acquisition process.
and Services - Strict abidance with terms and conditions stipulated in contracts.
- Make timely payments.
- Provide necessary information to suppliers of products and services.
Employees - THAI deems its human resource to be an important asset through which the
Company is able to achieve its objectives and thus its vision. To be able to achieve
the Company’s vision and objectives, the Company seeks to recruit and employ
knowledgeable, capable and experienced staff with the required qualifications
and in line with the Company’s growth requirements. Ongoing personnel
development programs have been provided to supplement staff knowledge,
capabilities and enhance skills. A key indicator determining THAI’s commitment
to furthering staff ’s knowledge and skills is the number of days of training
attended by each staff member. Salary adjustments have been made which is now
comparable to other in the commercial airline industry. The Company also offers
fringe benefits including the establishment of a provident fund and lent support
for the launch of the Thai Airways International Club and the Thai Employees’
Savings and Credit Coop Limited.
- THAI has put a high level of importance in the development of its human resource
through offering professional development courses to help staff enhance their
competencies to improve task execution and thus customer satisfaction. The
success is reflected in the plan for personnel development that parallels and
supports the stipulated guidelines for state enterprises and the Company’s own
policies.
79Thai Airways International Public Company Limited
Society and Community - Undertake activities that are of mutual benefit to the Company and that of the
community. Avoid activities that will bring negative impact to the country, adverse
impact on natural resources and the environment and that of the general public.
- Provide ongoing support for activities that are beneficial to the general public.
- Instill a culture of being socially responsible for all staff levels.
- Avoid undertaking illegal actions or being accessory to illegal acts.
- Manage the Company free of political agenda.
The Environment - THAI developed its environmental management system based on international
standards ensuring that THAI’s standard of operations meets all legal requirements
on environmental issues.
- Continuously improve approach to environmental management for all functions
to reduce pollution and impact on the environment through clear objectives,
targets, action plans and standardized evaluation processes.
- Consider environmental impact at every step of operations beginning from
the planning and designing phase through procurement, service and related
activities keeping in mind efficiency and effectiveness in utilizing assets while
maximizing benefits to the Company and society.
- Raise awareness and continuously develop staff awareness of environmental
concerns to ensure maximum effectiveness in environmental management.
- Support conservation, distribute relevant information, cooperate with staff,
customers, government agencies, the private sector and the general public to
build a positive corporate image and enable a better understanding of the
Company’s efforts towards managing the environmental management.
- Quick, efficient and effective response on situations caused by the Company
bearing impact on the environment and community.
4. Annual General Shareholders’ Meeting
The Company held the 2006 Annual General Shareholders’ Meeting in accordance with the guidelines
of the Stock Exchange of Thailand and that of the Securities and Exchange Commission (SEC). The format of
the meeting took into consideration recommendations made by the Thai Rating and Information Services
Company Limited (TRIS) along with recommendations from the Thai Institute of Directors Association (IOD).
An Annual General Shareholders’ Meeting Checklist was used in preparation of holding the Annual General
Shareholders’ Meeting (AGM), which is the basis for which publicly listed companies will be rated for this
coming year by the Thai Investors Association and the Securities and Exchange Commission (SEC) to enhance
the quality of AGM. Areas of evaluation include the following :
80 Annual Report 2007
Date, Time and Place to Hold the Annual General Shareholders’ Meeting
At the Board of Directors’ meeting 21/2006 held on September 22, 2006, a resolution was reached to
hold the 2006 AGM on December 27, 2006 and posted the relevant information for everyone to see on the
SET’s web site beginning September 23, 2006, which complies with the articles of association of Thai Airways
International requiring the AGM to be held within 4 months post the fiscal year end. The venue for the AGM
was held the Boonyajinda Hall at the Royal Thai Police Club on Vibhavadee Rangsit Road, Bangkok. A total of
1,106 shareholders and proxies attended the meeting representing a total of 1,169,987,367 shares, which
was more than one third of the Company’s paid-up capital constituting a quorum.
Prior to the AGM
Along with the letter of invitation to attend the AGM, details of the various issues which were to be
considered for approval were also included in the information packet as legal requirements, SET guidelines
and the Company’s own guidelines require the distribution of such information. Adequate information
and details were provided to shareholders on each issue to ensure that shareholders have appropriate and
sufficient information to make sound decisions. Clear identification was made for each issue as whether it
was just “for your information”, “for approval” or “for consideration”. The Company also provided shareholders
with a viewpoint from the Board of Directors on each issue for better insight. Included in the information
packet were the minutes to the previous year’s AGM, a copy of the previous fiscal year’s annual report, copies of
relevant information and a copy of a proxy along with detailed procedures to be observed.
Day of the Annual General Shareholders’ Meeting
Attendance and Registration
Information relevant to the AGM was also included in the information packet sent to shareholders
along with the letter of invitation to attend the AGM to enable shareholders to have sufficient information to
make sound decisions on the various issues proposed for consideration. The time and date of the AGM was
clearly disclosed while the meeting location was selected to ensure maximum security for shareholders.
Shareholders and their proxies were expedited through the registration process with a large number of staff
on hand to facilitate the process. Registration to attend the AGM began 2 hours prior to the commencement of
the meeting and continued through the end of the AGM. A small token of appreciation was also given upon
registration and shareholders were treated to snacks and refreshments.
Attendance of Board Members at the Annual General Shareholders’ Meeting
Members of the Board of Directors have placed importance in attending the 2006 AGM with the
Chairman of the Board of Directors presiding as Chairman of the AGM. A total of 12 Board members attended
the AGM including the Chairman of the Board of Directors, Chairman of the Audit Committee, Chairman of
the Good Corporate Governance Committee, Chairman of Independent Directors, Chairman of the Risk
Management Committee, Chairman of the Nomination and Remuneration Committee, Chairman of the
81Thai Airways International Public Company Limited
Executive Board and representatives from the various departments took note of shareholders’ comments,
concerns and answered questions that shareholders may have. Board members attending the AGM include :
1. ACM Chalit Pukbhasuk Chairman and
Chairman, Nomination and Remuneration Committee
2. Mr. Suparut Kawatkul Vice Chairman
3. Mr. Chaisak Saeng-Xuto Chairman, Executive Board
4. Mr. Chaisawasd Kittipornpaiboon Director
5. Pol. Gen. Nopadol Somboonsub Director, Audit Committee and
Director, Independent Committee
6. Mr. Sivaporn Dardarananda Director, Audit Committee and
Director, Independent Committee
7. Gen. Pairoj Panichsamai Director, Independent Committee
8. Gen. Ruengroj Mahasaranond Director, Independent Committee
9. Mr. Borwornsak Uwanno Chairman, Good Corporate Governance Committee and
Chairman, Risk Management Committee
10.Mr. Pichai Chunhavajira Director
11.Mr. Sirin Nimmanahaeminda Director
12.Flg. Off. Apinan Sumanaseni Director and President
Senior Management who attended the AGM to hear recommendations and answer shareholder
questions include :
1. ACM Narongsak Sangapong Executive Vice President
Corporate Secretariat Department and
Secretary to the Board of Directors
2. Flt. Lt. Pisal Chayakula Executive Vice President
Corporate Planning and
Information Technology Services Department
3. Mr. Wallop Bhukkanasut Executive Vice President
Commercial Department
4. Mrs. Ngamnit Sombutpibool Executive Vice President
Finance and Accounting Department
5. Flg. Off. Chinawut Naressaenee Executive Vice President
Customer Services and
General Administration Department
6. Flt. Lt. Prasart Khoon-In Executive Vice President
Operations Department
82 Annual Report 2007
7. Flg. Off. Norahuch Ployyai Executive Vice President
Standards Assurance and
Risk Management Department
8. Mr. Chanchai Singtoroj Executive Vice President
Human Resources Development and
Management Department
9. Mr. Tummasak Chutiwong Managing Director
Technical Department
Providing Shareholders with the opportunity to ask questions, make comments, vote on resolutions and
record the minutes
Prior to commencing the AGM, the Company’s Board Chairman presiding over the AGM as Chairman
provided the attendees a summary regarding the votes represented at the meeting, explained the voting
procedure, vote counting process, the voting process via video TV, the vote collection process, the vote
counting process and the summary of votes. The voting documents have been kept for future reference.
During the AGM, shareholders were given sufficient time to pose questions or make suggestions. Detailed and
encompassing answers were provided by Board members in response to questions posed by shareholders. In
counting votes, the Company abides strictly by its own guideline of one share one vote basis and approval is
based on majority vote. The “nay” and “refrain from” votes are kept for future reference. The Company also
records detailed minutes of the AGM in the form of video TV and is available for shareholders to review.
Post the Annual General Shareholders’ Meeting
Resolutions reached at the AGM are disclosed the following business day to the general public via the
Stock Exchange of Thailand’s information channel. Details regarding the approved/disapproved resolution and
the vote counts (approve/disapprove/refrain from voting) have been clearly indicated for each issue that was
submitted for consideration. The detailed minutes to the AGM containing names of Board members and
management attending the meeting along with the resulting resolutions, (approved/disapproved) and the
vote count (approve/disapprove/refrain from voting) on issues posed for shareholder consideration along
with major issues posed by shareholders and the response made by the Company were submitted to the
Stock Exchange of Thailand and other relevant government bodies within 14 days post the AGM. The minutes
to the AGM has also been posted on the Company’s web site www.thaiairways.com.
5. Leadership and VisionTHAI’s Board of Directors is made up of knowledgeable and qualified persons of diverse backgrounds
and experience including the areas of commercial airline industry, finance, accounting, legal, executives and
high ranking government officials representing the respective Ministries. Each Board member understands their
roles and responsibilities enabling a smooth functioning of the Board of Directors. Members of the Board
83Thai Airways International Public Company Limited
actively contribute in various areas of the Company’s operations including the Company’s vision, mission,
objectives, strategies goals and approving the Company’s strategic directions and policies. The Board of
Directors is also responsible for devising the annual plan and the corresponding budget while overseeing
management and ensuring adherence to and the effectiveness in meeting corporate strategies and the established
budget. The Board needs to also ensure that all activities undertaken by the Company are in compliance with
all legal and regulatory guidelines, the Company’s own regulations and guidelines including those of the respective
Ministries overseeing THAI along with the resolutions reached at the AGM. A robust internal audit process
must be in place and a comprehensive risk management system must also be in effect to ensure maximum
benefit for the Company and for the Company’s stakeholders which complies to the principles of good
corporate governance to increase the Company’s economic value and provide shareholders with the
greatest level of security.
6. Conflicts of InterestOne aim of the principles of good corporate governance is to prevent conflicts of interest. The Board
of Directors screens transactions based on moral guidelines for transactions that may have conflicts of
interest including related party transactions or transactions amongst business units within. It is required
of everyone within the Company from Board members down to the Company’s staff to strictly adhere to the
guidelines below as stipulated by the SET.
A guideline was announced in regards to disclosure of information on related party transactions as per
the guidelines and procedures as stipulated by the SET since September 2004 to let members of the Board
and management know that information disclosure is a must should there be any relationship that falls
within the definition as stipulated by the SEC. Disclosure is made on the person or entity that is related and
every time there is a new management appointment, the Company Secretariat sends the “Details of Related
Persons Form as per the SEC’s guidelines relating to information disclosure for listed companies on related
party transactions, B.E. 2546” for the newly appointed person to fill and sign-off on the integrity of information
provided. The document must be returned to the Company’s Secretariat who is responsible for summarizing
the information of related persons and business entities for review purposes and send copies to management
and persons responsible for tracking related party information in each business unit. The information
provided to each business unit serves as reference for screening proposals seeking management or Board of
Directors approval. If there is an issue that requires information disclosure, the respective units can prepare
the necessary related party documents to be disclosed to the SET. Related party transactions have been
disclosed in the Annual Report (form 56-2) and the annual disclosure of the Company’s information (form 56-1).
To improve disclosure on related party transactions and compliance with the Stock Exchange of
Thailand’s guidelines and that of accounting standards, THAI released an announcement in January of 2005
on “Transfer Pricing Guidelines for Thai Airways International Plc.” The announcement details the application of
non-related party pricing as benchmark but provides flexibility for using conditional pricing for related
party transactions. In abidance of the above procedure, THAI is in compliance with SET’s guidelines and meets
84 Annual Report 2007
the generally accepted accounting standards.
In addition, at each monthly Board of Directors’ meeting and Management’s meeting, the Company
Secretariat prepares a summary on related party transactions which is submitted for both the Board of
Directors and management to be aware of these related party transactions on a monthly basis.
7. Business MoralsThe Company asserts its commitment to all its stakeholders and takes to heart concerns over
environment and social issues and upholding national interests while conducting ongoing transparent,
honest and ethical business undertaking in line with the principles of good corporate governance. The
Company regards Thai Airways International Code of Conduct to be very important as it is considered to be
an element to THAI’s ongoing success. Revisions were made to the “Thai Airways International Code of Conduct”
handbook which was drafted and approved in 2002 to better reflect the changing environment and better
serve as guiding principles for THAI employees of all levels to achieve THAI’s vision and goals.
Effort has been put forth in instilling ethics into the corporate culture at THAI by getting employees
involved in the process of making changes to Thai Airways International Code of Conduct, participating in a
good corporate governance slogan competition and attending seminars on good corporate governance
such as the Good Corporate Governance seminars for middle management by the King Prajadhipok’s
Institute. Changes in job processes for front line service and supporting functions were undertaken to comply
with the principles of good corporate governance and the increased utilization of computers as a means to
increase efficiency and effectiveness in operations management benefiting both stakeholders and the nation as
a whole.
8. Balance of Power by Non-Executive DirectorsThe appointment of Board members were approved by the AGM. Candidates were screened by
the Nomination, Remuneration and Human Resource Development Committee and reviewed by the
Company’s Board of Directors respectively which is in line with the Company’s guidelines. The Company’s Board
of Directors is made up of at least 5 persons but not more than 15. As at September 30, 2007 the Company’s
Board of Directors consisted of 15 persons.
- Non-Executive Board Members - 8
- Independent Directors - 6
- Executive Directors - 1
Of the 15 Board members, 93% are Non-Executive Directors and 40% are Independent Directors, which
is considered to be sufficient to have a built-in check and balance system. With the current composition of
Board members, stakeholders can be rest assured that shareholders’ interests are upheld with an adequate
check and balance system.
The Company’s Board of Directors has the responsibility of ensuring that the Company’s operations
85Thai Airways International Public Company Limited
abide by the relevant rules and regulations, purpose and the Company’s regulations including the
resolutions reached at the AGM. Board members are expected to execute their responsibilities with honesty
and due care in protecting shareholders’ benefits. Each Board member has a fixed tenure as stipulated by the
Company’s regulations requiring that at least one third of the existing Board members retire based on the
length of tenure at each AGM.
9. Evaluation of Board MembersThe Company’s Board of Directors has mandated that there be an annual self-assessment for the
purpose of assessing the effectiveness of its actions and to reflect upon the problems and obstacles faced by
the Company over the past year. There are 2 parts to the evaluation. The first part is an individual self
assessment and a cross evaluation of Board members and the second is an assessment of the whole Board.
The result of the assessment by the Board is prepared and submitted for Board review. The Board uses the
assessment as a guideline for improving Board of effectiveness. The assessment guidelines are in line with the
principles of good corporate governance and the duties of the Board.
10. Combined and Segregation of PositionsThe Chairman of the Board of Directors does not hold a management position within the Company
and is not the same person holding the position of Company President. The Chairman of the Board has
no relations to other members of the Board or members of Management. There is also a clear written
segregation in roles of the Company’s Board of Directors and that of the Company’s Management.
11. Remuneration for Directors and ManagementThe Company’s Board of Directors appointed the Nomination Remuneration and Human Resource
Development Committee and tasked the Committee to determine the appropriate level of remuneration
for members of the Board, member of various sub-committees and the Company’s management. This also
includes setting remuneration for non-company personnel hired to execute tasks for the Company. The
remuneration guidelines are clear and transparent while being attractive to retain qualified Board members
and is benchmarked against other companies in the industry. Board members who took on additional
responsibility were given an appropriate level of extra remuneration. As for Executive Board members and
remuneration for management is determined based on the Company’s financial performance along with
the performance of each Board member and Senior Executive Management need to be taken into consideration.
To comply with the Ministry of Finance’s good corporate governance principles and that of the SET including
internationally accepted guidelines, remuneration for Board members must comply with the amount
approved at the AGM. Fiscal year 2007 Board and Executive Management remuneration has been disclosed in the
Board and Executive Management Remuneration section.
86 Annual Report 2007
12. Board of Directors MeetingsBoard meetings have been scheduled ahead for the fiscal year with monthly meetings held on the second
Wednesday of the month and special rounds of meetings are called as necessary. Both the agenda and details
are provided for each Board member 7 days prior to the Board meeting. There is also a follow-up section
in regards to resolutions reached at the previous Board meeting for which the Company Secretariat has
been charged to provide progress updates. Prior to the Board meeting, an invitation to attend the meeting
along with the supporting documents are submitted 7 days ahead of time for each Board members to review.
In fiscal year 2007, the Board convened 19 times with attendance details for each Board member provided
in the Board of Director’s Shareholding and Meeting Attendance for Fiscal Year 2007 section of the 2007
annual report.
The Company Secretariat prepares minutes to each Board meeting and submits the minutes to each
Board member for review prior to the ratification of the minutes at the next Board meeting. Agendas approved
by the Board are filed and can be reviewed by the Board and other related departments.
13. Sub-CommitteesThe Company’s Board of Directors appointed knowledgeable and experienced Board members to
various sub-committees to assist in analyzing and screening of important issues that may require close
monitoring in the various areas of operations. The various sub-committees are expected to provide thoughts,
comments and recommendations to the Board of Directors for consideration and decision making. The
various sub-committees as defined by the principles of Good Corporate Governance, the Company assigned
these sub-committees to be responsible for various areas. Information on the sub-committees has been
detailed in the Board of Directors and Sub-Committees Section.
14. Internal Control and Internal AuditTHAI recognizes the importance of internal control system and has emphasized on establishing a sufficient
and appropriate control measures to prevent overall potential losses which may arise out of financial sector
and other related operations, risk management and management deficiencies, THAI therefore implemented an
internal control system to comply with the 2001 State Audit Commission guidelines. THAI has submitted a yearly
internal control assessment report to the State Audit Commission, related authorities and the Audit Committee.
THAI also concerns on internal cooperation, the Internal Control Policy handbook was widely distributed to the
management and employees as a guidance. Moreover, in the fiscal year 2006, the Company had introduced the
Control Self Assessment (CSA) as a management tool to enhance control on all work/business processes by
seeking the consultant service to develop an appropriate Control Self Assessment system on a co-source basis
starting on Finance and Accounting Department and Catering Department as the pilot projects and aiming to
cover the whole company.
The Company realizes the importance of having a strong internal audit by which the Office of the
Internal Audit undertaking the work/business process as well as reviewing the internal control system based
on the risk level. The Office of the Internal Audit shall provide recommendation to the management for
87Thai Airways International Public Company Limited
their control improvement to ensure compliance to all rules and regulations and enhancing the efficiency
and effectiveness of the company overall operations and presents the audit report to the Audit Committee
at least on a quarterly basis with a copy to the line management. The comment and notification on highly
significant to loss would be reported by the management of the Office of the Internal Audit to the President
for corrective action along with immediate notification to the Audit Committee. In addition, the audit
satisfaction survey is regularly given to the auditees to enhance the effectiveness of the auditing process.
The Audit Committee is responsible for determining the adequacy of the internal control system of the
company include ensuring the compliance with all laws, rules, regulations and related policies through the
reviewing audit performance undertaken by the Office of the Internal Audit and the independent auditor
consecutively. Should the Audit Committee has any recommendations or finds any significant flaws, the
committee shall report to the Board of Directors for consideration to take further corrective actions. The
Audit Committee shall perform under the charter which in line with 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.
Therefore, the Board of Directors has concurred with the Audit Committee that THAI has sufficient
and appropriate internal control system for business operations.
15. Board of Directors’ ReportThe Board of Directors is responsible for preparing a summary of the Company’s performance and
discuss about issues that impacted the Company’s operations during the year. The Board is also responsible for
putting in place a strong and effective risk management and internal control process. An Internal Audit
Committee was appointed to ensure comprehensive and transparent disclosure of financial information
and ensure that the Company has a robust internal control process that is in abidance with generally accepted
accounting standards. Both the Board of Directors and the Audit Committee have provided summary
statements regarding their respective areas of concern in the annual report.
16. Investor RelationsAs a publicly listed company on the Stock Exchange of Thailand, THAI supports the investment
community in terms of providing information to promote the understanding and knowledge of the
Commercial Airline Industry and fostering a strong working relationship with Thai and foreign investors,
shareholders, analysts and other related institutions. The Vice President overseeing Investor Relations is the
center for disclosing accurate, transparent and timely information relating to the Company’s operations
and financial performance for all stakeholders. The Vice President is also responsible for effectively responding
to domestic and foreign investor, analyst and shareholder inquiries on an equal, comprehensive and factual
basis. The purpose is to build a trust in the Company’s operating results and to enhance THAI’s corporate
image as a publicly listed company with strong Good Corporate Governance and a strong Board of Directors
that is able to maximize shareholders’ benefits.
88 Annual Report 2007
Direct and indirect communication channels with the Company’s stakeholders :
1. The Stock Exchange of Thailand (SET)
- Company visits
- The Annual General Shareholders’ Meeting
2. The Securities and Exchange Commission
3. Ministry of Commerce
4. Meetings with analysts, investors, shareholders and management of other related institutions.
5. Dissemination of information via newsprint, magazines and other print media.
6. Domestic and international non-deal road shows.
7. Communication via e-mail, telephone and facsimile.
Direct Channels - Disclosing information and responding to queries on a regular basis regarding
the Company’s information for investors, analysts, fund managers, shareholders, employees and other
stakeholders through various channels. Analyst meetings, participated in road shows, held conference calls,
participated in SET related activities and one-on-one meetings were some of the direct communication
channels used including company visits to the Company’s various business units to provide stakeholders an
opportunity to learn about the Company. Activities undertaken by the Investor Relations Department for
fiscal year 2007 includes :
Activities Frequency
Domestic Non-deal Road Shows 3 times
International Non-deal Road Shows 7 times
SET Related Activities 2 times
Analyst Briefings 2 times
One-on-one meeting/conference calls 120 times
Responding to emails & phone calls 3-5 per day
The Company’s data update/General information update 3-6 times per week
Company visits/Site visits 1 time
Indirect Channels - Relevant statistical information, financial statements and notifications to the SET
have been provided for easy access through its Investor Relations website www.thaiair.com.
Contact the Investor Relations Department at :
http://www.thaiair.com/About_Thai/Investor_Relations/default.htm
Contact The Vice President, Investor Relations Department - Telephone : 662-545-2113 Facsimile :
662-545-3971
17. Office of the SecretariatIn recognizing the importance of the role of the Company Secretariat and to be in compliance with
the guidelines as stipulated by the SEC and the SET, the position of the Company Secretary was established
89Thai Airways International Public Company Limited
to ensure the effective functioning of Board of Directors. The Company Secretary’s key role is to ensure that
the undertakings by the Board abide by all legal requirements and guidelines, Company guidelines and resolutions
of the AGM along with preparing and filing of information considered in Board meetings, the AGMs and to
coordinate with all relevant parties to achieve the Board’s goals and objectives.
The current Company Secretary is ACM Narongsak Sangapong, Executive Vice President Company
Secretariat and reports directly to the President and is charged with the responsibility of being the Secretary
to the Board of Directors. The Company Secretariat also has the all important responsibility of facilitating
functions of the Board of Directors. This includes ensuring that Board decisions and actions comply with all
legal regulations, that of the Company’s own Charter and related guidelines. Another role of the Company
Secretariat is the support in fostering Good Corporate Governance. The 5 divisions currently under
management by the Company Secretariat include :
- Compliance Department
- Legal Department
- Council of the Board Members and Management Meeting Department
- Secretariat Management Department
- Corporate Strategy Department
The Secretariat is charged with the following duties :
- Coordinate and manage the various activities of the Board of Directors to ensure compliance with laws
and regulations and resolution of the AGMS
- Prepare the minutes of the Board and Shareholders’ meetings within a reasonable time
- Prepare and file all concerned Board meetings and AGMs’ documents and also coordinate with concerned
parties
- Serve as consultant and secretary to the Board of Directors
- Serve as consultant and coordinator and serve as secretary for the various sub-committees that the
Board has established
- Oversee good corporate governance issues
- Ensure legal compliance and compliance of the Company’s internal guidelines
- Coordinate between legal advisor and the financial auditor
- Serve as a communications center and provide information to members of the Board, committees and
external parties
- Provide advice to the Board regarding legal issues and the Company rules and regulations and ensure
compliance with such rules and regulations. Report changes or amendments of such rules or regulations to the
Board of Directors
18. Policies on Insider InformationTHAI strictly adheres to and abides by the guidelines of both the SET and the SEC as emphasis is placed
on good corporate governance. An internal guideline was announced in 2005 that current Board members
and those that have retired from office of less than 6 months are not allowed to buy or sell THAI shares during
90 Annual Report 2007
the period of 1 month prior to and 3 days post the disclosure of the Company’s financial statements. The
Company Secretariat is responsible for notifying both the Board of Directors and the Executive Management
in regards to the blackout period for which THAI’s shares cannot be traded. A monthly shareholding report
is provided to both the Board of Directors and Executive Management summarizing changes in shareholding
of THAI shares by persons stipulated by the SET, SEC and the Company’s guidelines. Both the BoD and Executive
Management have been notified of ensuing penalties for not complying with the established guidelines within
the stipulated time. THAI’s ethics handbook clearly prohibits the use of Company information for personal gains
which is also considered to be a breach of discipline.
19. Personal Development for Directors and Senior ExecutivesThere has been enhanced interest by stakeholders, investors, shareholders, government’s governing units
and listed companies themselves in the role in which directors of publicly listed companies are playing
to champion good corporate governance. With the ever increasing important role that members of the
Board are taking on, stakeholders are no longer satisfied with just a summary report but are expecting the
Board of Directors to successfully steer and guide the Company towards sustainable growth. Growth in itself
is a function of employed capital where the mix consists of 2 portions, internally generated capital and
that which has been obtained from investors or creditors (other peoples’ money). It is therefore an important
role for the Board of Directors to look after the interests of institutional and retail shareholders and to
provide such shareholders with the highest rate of return. With the role of Board members becoming
increasingly important, broad knowledge and vision are key ingredients for a Company to sustain its growth.
To meet the growing challenges, the Board of Directors mandated that Board members, Executive
management and the Corporate Secretary register as members of the Thai Institute of Directors Association
(IOD). The benefit of such membership is the wealth of knowledge that can be obtained to expand knowledge
and sharpen skills by attending the various courses and seminars provided by IOD - the Director Accreditation
Program (DAP), the Director Certification Program (DCP) along with DCP Refresher Courses, the Audit
Committee Program (ACP), the Improving the Quality of Financial Reporting (QFR) course, The Role of
Chairman Program (RCP/RCM), the Role of Compensation Committee (RCC) program, the Finance for
Non-Finance Director (FN) program, the Understanding the Fundamental of Financial Statements (UFS) program,
the Company Secretary Program (CSP), the Effective Minute Taking (EMT) course and other courses which
are offered by the SET and the Association of Publicly Listed Companies. The Board of Directors and
management are given notice of available courses for which they can attend.
Board and Executive Management TrainingThe Company’s Board of Directors has placed great importance in attending seminars on issues related
to ongoing knowledge development in regards to executing the Board’s duties. As of September 30, 2007,
the Company’s Board of Directors along with the Company’s Executive Management is attending the
following seminars provided by the Thai Institute of Directors (IOD) to utilize the knowledge and experience
gained to benefit the Company and its subsidiaries :
Name Position Course Attended
ACM Chalit Pukbhasuk Chairman DAP 64/2007
Mr. Suparut Kawatkul Vice Chairman DAP 45/2005, DCP 72/2006
91Thai Airways International Public Company Limited
Mr. Chaisawasd Kittipornpaiboon Vice Chairman DAP 77/2006, DCP 77/2006
Mr. Chartsiri Sophonpanich Director DAP 25/2004, RCM 2/2001, DCP 3/2000
Mr. Borwornsak Uwanno Director DAP 25/2004
Gen. Pairoj Panichsamai Director DAP 61/2007, DCP 86/2007,
ACP 17/2007, FN 34/2007
Gen. Ruengroj Mahasaranond Director DAP 63/2007, UFS 10/2007, FN 36/2007
Mr. Sivaporn Dardarananda Director DAP 42/2005, RCP 2/2001
Mr. Chaisak Saeng-Xuto Director DAP 9/2004
Mr. Pichai Chunhavajira Director DAP 49/2005
Mr. Wisudhi Srisuphan Director DAP 3/2000, DCP 3/2000, RCP 12/2005
Mr. Aviruth Wongbuddhapitak Director DAP 8/2001, DCP 8/2001, DAP 64/2007
Flg. Off. Apinan Sumanaseni Director DAP 63/2007
ACM Narongsak Sangapong Management DAP 2/2003, DAP 25/2004
Mrs. Ngamnit Sombutpibool Management DAP 25/2004, DCP 72/2006
Flg. Off. Chinawut Naressaenee Management DAP 25/2004
Flg. Off. Norahuch Ployyai Management DAP 25/2004
Mr. Tummasak Chutiwong Management DAP 25/2004, CSP 11/2005, UFS 1/2006
Orientation of New DirectorsTo conform with the principles of Good Corporate Governance in relation to the Board’s responsibilities
as per the Company Corporate Governance Assessment Report & Recommendations of the Thai Institute
of Directors Association (IOD), the Company held orientations for newly appointed Board members and
provided relevant information to facilitate the execution of Board member’s tasks. A briefing was held to
provide information relating to the Company and that of its operations. Documents provided to each newly
appointed Board member include:
1. THAI’s Director Handbook - 2007
2. Good Corporate Governance Report - 2006
3. Legal guidelines for publicly listed companies
4. Certification from Department of Business Development, Ministry of Commerce and THAI’s
Memorandum & Articles of Association
5. Annual timetable for disclosure of the Company important information
6. A list of important disclosures to be made to the Stock Exchange of Thailand
7. THAI’s Ethics Handbook
8. Principles of Good Corporate Governance - 2006
9. Recommendations on information disclosure for publicly listed companies
10.Training courses for THAI’s the Board Director related to executing the duties of a director by IOD.
11.A recorded DVD (visual and sound) and CD (sound) of the previous year’s Annual General
Shareholders’ Meeting.
12.A copy of THAI’s 2006 Annual Report on CD.
13.Copies of THAI’s 2006 Annual Report both in Thai and English.
92 Annual Report 2007
Audit Fee and Related Expenses
As a state enterprise, Thai Airways International Plc. 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 2007, the audit fee was 2.90 million baht and other
audit expenses were 1.78 million baht.
Other Factors That May Affect Investment Decision
Inherent to the commercial airline industry is its capital intensive nature and is subject to a multitude
of global and domestic factors that are not readily manageable by the airlines but bears direct impact on
their financial performance. Such factors include the impact of respective country’s economic growth on
travel demand, natural disasters, fluctuations in currency value, capital markets as well as the fluctuation in
cost of fuel. Political stability and the changing competitive environment all bear significant impact
on the financial performance of commercial airlines and its share price. Despite these uncertainties, THAI’s
management and staff are utilizing their experience and knowledge to make sound decisions and
to execute duties to their utmost ability to maximize benefits for the Company and its shareholders.
With the range of factors potentially bearing direct impact on the Company’s financial performance,
it is highly recommended that investors take the time to study factors affecting the Company’s performance
prior to investing in the Company’s shares to maximize shareholders benefits.
93Thai Airways International Public Company Limited
Board of Directors’ Shareholding and Meeting Attendance for Fiscal Year 2007
Number of Number of Attendance/Total Meeting (times) Period of
Shares Board of Directors Audit Committee Time
Board of Directors
Note : Former Chairman, former Vice Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positionsbefore September 30, 2007
1. ACM Chalit Pukbhasuk Chairman
2. Mr. Wanchai Sarathulthat Former Chairman
3. Mr. Suparut Kawatkul 1st Vice Chairman
4. Mr. Chaisawasd Kittipornpaiboon 2nd Vice Chairman
5. Mr. Chai-Anan Samudavanija Former Director
6. Mr. Tirachai Vutithum Former Director
7. Pol. Gen. Nopadol Somboonsub Former Director
8. Mr. Pachara Yutidhammadamrong Former Director
9. Mr. Prasit Damrongchai Former Director
10. Mr. Vichit Suraphongchai Former Director
11. Mr. Vudhibhandhu Vichairatana Former Director
12. Mr. Srisook Chandrangsu Former Director
13. Mr. Somchainuk Engtrakul Former Director
14. Mr. Vikrom Koompirochana Former Director
15. Mr. Olarn Chaipravat Former Director
16. Mr. Kanok Abhiradee Former Director
17. Mr. Chartsiri Sophonpanich Director
18. Mr. Borwornsak Uwanno Director
19. Gen. Pairoj Panichsamai Director
20. Gen. Ruengroj Mahasaranond Director
21. Mr. Sivaporn Dardarananda Director
22. Khun Pornthip Jala Director
23. Mr. Chaisak Saeng-Xuto Director
24. Mr. Pichai Chunhavajira Director
25. Mr. Wisudhi Srisuphan Director
26. Mr. Wichit Na-Ranong Director
27. Mr. Aviruth Wongbuddhapitak Director
28. Flg. Off. Apinan Sumanaseni Director
29. Mr. Sirin Nimmanahaeminda Director
-
-
-
-
-
-
-
-
-
-
2,000
-
-
-
-
-
-
-
-
-
200
-
-
-
200
200
-
2,600
-
-
-
-
-
-
-
2/2
1/1
-
-
2/2
-
-
-
-
-
7/8
-
-
-
9/9
8/8
-
-
-
-
-
-
-
8 Nov 06 - 30 Sep 07
17 Dec 04 - 7 Nov 06
17 Dec 04 - 30 Sep 07
8 Nov 06 - 30 Sep 07
20 Dec 02 - 23 Dec 05
23 Dec 05 - 7 Nov 06
9 Mar 05 - 27 Dec 06
23 Dec 05 - 7 Nov 06
23 Mar 05 - 16 Feb 06
17 Dec 04 - 4 Apr 06
27 Oct 04 - 27 Dec 06
20 Dec 02 - 23 Dec 05
23 Dec 05 - 7 Nov 06
10 May 06 - 6 Nov 06
17 Dec 04 - 4 Apr 06
23 Dec 03 - 2 May 06
23 Dec 05 - 30 Sep 07
17 Dec 04 - 30 Sep 07
8 Nov 06 - 30 Sep 07
10 May 06 - 30 Sep 07
8 Nov 06 - 30 Sep 07
27 Dec 06 - 30 Sep 07
6 Nov 06 - 30 Sep 07
14 Sep 05 - 30 Sep 07
27 Dec 06 - 30 Sep 07
27 Dec 06 - 30 Sep 07
16 May 07 - 30 Sep 07
10 May 06 - 30 Sep 07
8 Nov 06 - 1 Mar 07
15/20
1/1
20/20
10/17
-
1/2
4/6
2/2
-
-
5/6
-
1/2
1/1
-
-
16/20
11/20
17/17
13/20
13/17
11/14
18/18
13/20
11/14
10/14
4/5
20/20
7/8
94 Annual Report 2007
Meeting Allowance Meeting Allowance Bonus Totalof Board of of Subsidiaries of RemunerationDirectors Committee fiscal year (Baht)
(Baht) (Baht) 2006
Board of Directors
1. ACM Chalit Pukbhasuk Chairman 631,946.00 50,000.00 705,757.01 1,387,703.01
2. Mr. Wanchai Sarathulthat Former Chairman 57,500.00 - 1,139,503.51 1,197,003.51
3. Mr. Suparut Kawatkul 1st Vice Chairman 645,000.00 100,000.00 1,025,553.16 1,770,553.16
4. Mr. Chaisawasd Kittipornpaiboon 2nd Vice Chairman 474,083.00 20,000.00 - 494,083.00
5. Mr. Chai-Anan Samudavanija Former Director - - 205,845.80 205,845.80
6. Mr. Tirachai Vutithum Former Director 50,000.00 - 911,602.81 961,602.81
7. Pol. Gen. Nopadol Somboonsub Former Director 150,000.00 20,000.00 911,602.81 1,081,602.81
8. Mr. Pachara Yutidhammadamrong Former Director 100,000.00 20,000.00 705,757.01 825,757.01
9. Mr. Prasit Damrongchai Former Director - - 344,564.16 344,564.16
10. Mr. Vichit Suraphongchai Former Director - - 463,398.10 463,398.10
11. Mr. Vudhibhandhu Vichairatana Former Director 150,000.00 10,000.00 911,602.81 1,071,602.81
12. Mr. Srisook Chandrangsu Former Director - - 205,845.80 205,845.80
13. Mr. Somchainuk Engtrakul Former Director 50,000.00 10,000.00 911,602.81 971,602.81
14. Mr. Vikrom Koompirochana Former Director 50,000.00 - 357,779.60 407,779.60
15. Mr. Olarn Chaipravat Former Director - - 463,398.10 463,398.10
16. Mr. Kanok Abhiradee Former Director - - 534,218.85 534,218.85
17. Mr. Chartsiri Sophonpanich Director 600,000.00 110,000.00 911,602.81 1,621,602.81
18. Mr. Borwornsak Uwanno Director 510,000.00 120,000.00 911,602.81 1,541,602.81
19. Gen. Pairoj Panichsamai Director 545,333.00 160,000.00 - 705,333.00
20. Gen. Ruengroj Mahasaranond Director 510,000.00 40,000.00 357,779.60 907,779.60
21. Mr. Sivaporn Dardarananda Director 485,333.00 30,000.00 - 515,333.00
22. Khun Pornthip Jala Director 450,000.00 - - 450,000.00
23. Mr. Chaisak Saeng-Xuto Director 550,000.00 120,000.00 - 670,000.00
24. Mr. Pichai Chunhavajira Director 450,000.00 110,000.00 911,602.81 1,471,602.81
25. Mr. Wisudhi Srisuphan Director 420,000.00 20,000.00 - 440,000.00
26. Mr. Wichit Na-Ranong Director 420,000.00 60,000.00 - 480,000.00
27. Mr. Aviruth Wongbuddhapitak Director 200,000.00 - - 200,000.00
28. Flg. Off. Apinan Sumanaseni Director 600,000.00 30,000.00 357,779.60 987,779.60
29. Mr. Sirin Nimmanahaeminda Director 200,000.00 40,000.00 - 240,000.00
Note : Former Chairman, former Vice Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positionsbefore September 30, 2007
Remuneration for the Board of Directors for Fiscal Year 2007
95Thai Airways International Public Company Limited
Related Parties
Ministry of Finance • The MOF is a major Loans via the MOF are follows : 1. The MOF is the guarantor of
(MOF) shareholder of THAI with • Long-term Loan The loans bear interest loans as follows :
53.76% equity interest. - Initial amount : 11,075.42 rate of 1.70, 7.07% per • Loans from local financial The loans bear interest
million baht annum and are institutions rate of 8.80% per
- Outstanding balance : repayable in two - Initial amount : annum and are
4,074.62 million baht instalments per year 3,000.00 million baht repayable in two
- Interest expense : over a 7 and 20 year - Outstanding balance : instalments per year
145.47 million baht term. 150.00 million baht over a 10 year term.
• Short-term Loan The loans bear interest - Interest expense and accrued :
- Initial amount : rates between 20.95 million baht
12,121.06 million baht 0.60-5.20% per annum 2. Loans via the MOF The loans bear interest
- Outstanding balance : and one year of - Initial amount : rates between
12,121.06 million baht advance interest paid 30,510.91 million baht 1.13-7.07% per annum
- Interest expense : for a year. - Outstanding balance : and are repayable at
365.49 million baht 17,873.32 million baht maturity over terms
- Interest expense and accrued : of 5-20 years for
637.50 million baht long-term loans and
within one year for
short-term loans.
Thai-Amadeus • THAI is a major shareholder THAI leased to Thai-Amadeus The Company purchases THAI leased to Thai-Amadeus The Company purchases
Southeast Asia with 55% equity interest. Southeast Asia Company Limited goods and services at a Southeast Asia Company Limited goods and services
Company Limited • For the year ended 30 office area, computers and office market price from related office area, computer and office from related parties
(Subsidiary Company) September 2007, three of equipment. THAI also sold tickets parties on normal equipment. In addition, THAI on normal commercial
THAI’s Executives, Mr. Wallop to the subsidiary commercial term as provided the subsidiary with terms.
Bhukkanasut, Mrs. Ngamnit - Aggregate amount : unrelated parties. accounting services and had
Sombutpibool and Mr. Danuj 30.29 million baht seconded THAI personnel for its
Bunnag are Chairman and - Outstanding balance : operations. THAI also sold tickets to
Directors of Thai-Amadeus 3.00 million baht the subsidiary
Southeast Asia Company - Aggregate amount :
Limited, respectively. 49.12 million baht
• For the year ended 30 - Outstanding balance :
September 2006, three of 10.63 million baht
THAI’s Executives,
Mr. Vasing Kittikul, Mr. Kobchai
Srivilas, Mr. Wallop Bhukkanasut
are Chairman and Directors of
Thai-Amadeus Southeast Asia
Company Limited, respectively.
Donmuang • THAI holds 40% equity interest THAI purchased accommodation The Company purchases THAI purchased accommodation The Company purchases
International Airport in Donmuang International services for its passengers from goods and services at a services for its passengers from goods and services
Hotel Company Airport Hotel Company Limited. Donmuang International Airport market price from related Donmuang International Airport from related parties
Limited • For the year ended 30 Hotel Company Limited parties on normal Hotel Company Limited on normal commercial
(Associated Company) September 2007 and 2006, - Aggregate amount : commercial term as - Aggregate amount : terms.
four of THAI’s Executives, 14.76 million baht unrelated parties. 56.00 million baht
Wg.Cdr. Supachai Limpisvasti, - Outstanding balance :
Flg.Off. Chinawut Naressaenee, 0.80 million baht
Mrs. Ngamnit Sombutpibool
and Mr. Tummasak Chutiwong
are Chairman and Directors of
Donmuang International
Airport Hotel Company Limited,
respectively.
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
96 Annual Report 2007
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
Bangkok Aviation • THAI holds 22.59% equity 1. BAF provides fuel services for The Company purchases 1. BAF provides fuel services for The Company purchases
Fuel Services Public interest in BAFS. THAI goods and services at a THAI goods and services
Company Limited • For the year ended 30 - Aggregate amount : market price from related - Aggregate amount : from related parties
(BAFS) September 2007, two of THAI’s 405.26 million baht parties on normal 295.30 million baht on normal commercial
(Associated Company) Executives, ACM Narongsak - Outstanding balance : commercial term as - Outstanding balance : terms.
Sangapong and Flt.Lt. Pisal 32.95 million baht unrelated parties. 25.64 million baht
Chayakula are Vice Chairman 2. THAI sold tickets to BAFS 2. THAI sold tickets to BAFS
and Director of BAFS, - Aggregate amount : - Aggregate amount :
respectively. 0.03 million baht 0.22 million baht
• For the year ended 30 - Outstanding balance : - Outstanding balance :
September 2006, three of 0.01 million baht 0.01 million baht
THAI’s Executives,
ACM Narongsak Sangapong,
Mr. Kobchai Srivilas and
Flt.Lt. Pisal Chayakula
are Directors of BAFS.
Royal Orchid Hotel • THAI holds 24% equity interest 1. THAI purchased accommodation The Company purchases 1. THAI purchased accommodation The Company purchases
(Thailand) Public in Royal Orchid Hotel (Thailand) services for its passengers goods and services at a services for its passengers from goods and services
Company Limited Public Company Limited. from Royal Orchid Hotel market price from related by Royal Orchid Hotel (Thailand) from related parties
(Associated Company) • For the year ended (Thailand) Public Company parties on normal Public Company Limited on normal commercial
30 September 2007, four of Limited commercial term as - Aggregate amount : terms.
THAI’s Executives, - Aggregate amount : unrelated parties. 21.77 million baht
Mrs. Ngamnit Sombutpibool, 21.24 million baht - Outstanding balance :
Mr. Wallop Bhukkanasut, 0.83 million baht
Flt.Lt. Pisal Chayakula and 2. THAI sold tickets to Royal Orchid 2. THAI sold tickets to Royal Orchid
Mr. Kaweepan Raungpaka are Hotel (Thailand) Public Hotel (Thailand) Public Company
Directors of Royal Orchid Hotel Company Limited Limited
(Thailand) Public Company - Aggregate amount : - Aggregate amount :
Limited. 0.05 million baht 0.03 million baht
• For the year ended - Outstanding balance : - Outstanding balance :
30 September 2006, one of 0.05 million baht 0.01 million baht
THAI’s Directors,
Mr. Somchainuk Engtrakul and
three of THAI’s Executives,
Mr. Vasing Kittikul,
Flt.Lt. Pisal Chayakula and
Mr. Kaweepan Raungpaka are
Directors of Royal Orchid Hotel
(Thailand) Public Company
Limited.
Phuket Air Catering • THAI holds 30% equity interest 1. THAI purchased food and The Company purchases 1. THAI purchased food and The Company purchases
Company Limited in Phuket Air Catering catering services from Phuket goods and services at a catering services from Phuket goods and services
(Associated Company) Company Limited. Air Catering Company Limited market price from related Air Catering Company Limited from related parties on
• For the year ended - Aggregate amount : parties on normal - Aggregate amount : normal commercial
30 September 2007, one 3.73 million baht commercial term as 3.84 million baht terms.
of THAI’s Directors, - Outstanding balance : unrelated parties. - Outstanding balance :
Mr. Wichit Na-Ranong is 0.75 million baht 0.45 million baht
Director of Phuket Air Catering 2. THAI sold food and catering 2. THAI sold food and catering
Company Limited on behalf of services to Phuket Air Catering services to Phuket Air Catering
Pearl Company Limited, and Company Limited Company Limited
97Thai Airways International Public Company Limited
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
three of THAI’s Executives, - Aggregate amount : - Aggregate amount :
Mr. Kaweepan Raungpaka, 6.20 million baht 5.67 million baht
Mr. Kawin Asawachatroj and - Outstanding balance : - Outstanding balance :
Mrs. Pismai Chandrubeksa are 1.01 million baht 0.29 million baht
Chairman and Directors of
Phuket Air Catering Company
Limited, respectively.
• For the year ended
30 September 2006, three of
THAI’s Executives,
Mr. Kaweepan Raungpaka,
Mr. Kawin Asawachatroj and
Mrs. Pismai Chandrubeksa are
Directors of Phuket Air Catering
Company Limited.
Suvarnabhumi • THAI holds 30% equity interest THAI purchased accommodation The Company purchases Commenced operations -
Airport Hotel in Suvarnabhumi Airport Hotel services for its passengers from goods and services at a on 10 September 2006,
Company Limited Company Limited. Suvarnabhumi Airport Hotel market price from related no transactions
(Associated Company) • For the year ended Company Limited parties on normal
30 September 2007, three of - Aggregate amount : commercial term as
THAI’s Executives, 44.00 million baht unrelated parties.
Mr. Teerapol Chotichanapibal, - Outstanding balance :
Flt.Lt. Montree Jumrieng and 0.55 million baht
Mr.Chokchai Panyayong are
Directors of Suvarnabhumi
Airport Hotel Company Limited.
• For the year ended
30 September 2006, three of
THAI’s Executives,
Flg.Off. Norahuch Ployyai,
Mr. Wallop Bhukkanasut and
Mr. Chokchai Panyayong are
Directors of Suvarnabhumi
Airport Hotel Company Limited.
Nok Airlines • THAI holds 39% equity interest THAI has been leasing out aircraft The Company purchases THAI has been leasing out aircraft The Company purchases
Company Limited in Nok Airlines Company and providing aviation operation goods and services at a and providing aviation operation goods and services
(Associated Company) Limited. services to Nok Airlines market price from related services to Nok Airlines Company from related parties on
• For the year ended Company Limited parties on normal Limited normal commercial
30 September 2007, three of - Aggregate amount : commercial term as - Aggregate amount : terms.
THAI’s Directors, 1,806.23 million baht unrelated parties. 1,694.07 million baht
Mr. Somchainuk Engtrakul on - Outstanding balance : - Outstanding balance :
behalf of Dhipaya Insurance 116.22 million baht 143.90 million baht
Public Company Limited,
ACM Chalit Pukbhasuk,
Gen. Pairoj Panichsamai and
three of THAI’s Executives,
Mr. Wallop Bhukkanasut,
Mr. Tummasak Chutiwong and
Mrs. Ngamnit Sombutpibool
are Directors of Nok Airlines
Company Limited.
98 Annual Report 2007
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
Note : Mr. Somchainuk
Engtrakul resigned from THAI’s
Board of Directors on
7 November 2006 and
ACM Chalit Pukbhasuk resigned
from Board of Directors of
Nok Airline Company Limited
on 17 October 2006.
• For the year ended
30 September 2006,
one of THAI’s Directors,
ACM Chalit Pukbhasuk and
three of THAI’s Executives,
Mr. Wallop Bhukkanasut,
Mr. Tummasak Chutiwong and
Mrs. Ngamnit Sombutpibool
are Directors of Nok Airlines
Company Limited.
Fuel Pipeline • THAI holds 8.35% equity THAI purchased fuel transportation The Company purchases THAI purchased fuel transportation The Company purchases
Transportation interest in Fuel Pipeline services from Fuel Pipeline goods and services at a services from Fuel Pipeline goods and services
Limited Transportation Limited. Transportation Limited market price from related Transportation Limited from related parties
(Joint Venture • For the year ended - Aggregate amount : parties on normal - Aggregate amount : on normal commercial
Company) 30 September 2007, two of 14.28 million baht commercial term as 57.32 million baht terms.
THAI’s Executives, - Outstanding balance : unrelated parties. - Outstanding balance :
Flt.Lt. Pisal Chayakula on 1.91 million baht 5.24 million baht
behalf of Bangkok Aviation
Fuel Service Public Company
Limited, and Mr. Prakobkiat
Ninnad are Directors of Fuel
Pipeline Transportation Limited.
• For the year ended
30 September 2006, one of
THAI’s Executives,
Mr. Prakobkiat Ninnad is a
Director of Fuel Pipeline
Transportation Limited.
Aeronautical Radio of • THAI holds 2.56% equity 1. THAI purchased aeronautical The Company purchases 1. THAI purchased aeronautical The Company purchases
Thailand Limited interest in AEROTHAI. navigation and leased goods and services at a navigation and leased equipment goods and services
(AEROTHAI) • The MOF, a major shareholder equipment from AEROTHAI market price from related from AEROTHAI from related parties on
(Joint Venture of THAI, is a major shareholder - Aggregate amount : parties on normal - Aggregate amount : normal commercial
Company) of AEROTHAI. 1,180.35 million baht commercial term as 921.72 million baht terms.
• For the year ended - Outstanding balance : unrelated parties.
30 September 2007, two of 97.56 million baht
THAI’s Executives, 2. THAI sold tickets to AEROTHAI 2. THAI sold tickets to AEROTHAI
ACM Narongsak Sangapong on - Aggregate amount : - Aggregate amount :
behalf of Ministry of Transport 26.17 million baht 0.40 million baht
and Flt.Lt. Pravit Shinawatra - Outstanding balance : - Outstanding balance :
are Directors of AEROTHAI. 0.07 million baht 0.08 million baht
Note : ACM Narongsak
Sangapong resigned from the
Board of Directors of AEROTHAI
on 19 October 2006.
99Thai Airways International Public Company Limited
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
• For the year ended
30 September 2006, one of
THAI’s Executives, Captain
Kasem Panpat, is a Director of
AEROTHAI.
PTT Public • The MOF, a major shareholder 1. THAI purchased fuel for its The Company purchases 1. THAI purchased fuel for its The Company purchases
Company Limited of THAI, is a major shareholder aircraft from PTT Public goods and services at a aircraft from PTT Public goods and services
(Related Company) of PTT Public Company Limited. Company Limited market price from related Company Limited from related parties on
• For the year ended - Aggregate amount : parties on normal - Aggregate amount : normal commercial
30 September 2007, two of 9,772.61 million baht commercial term as 8,072.40 million baht terms.
THAI’s Directors, Khun Pornthip - Outstanding balance : unrelated parties. - Outstanding balance :
Jala is an Independent Director 888.62 million baht 787.38 million baht
of PTT Public Company Limited 2. THAI sold tickets to PTT 2. THAI sold tickets to PTT Public
and Mr. Pichai Chunhavajira is Public Company Limited Company Limited
an Executive of PTT Public - Aggregate amount : - Aggregate amount :
Company Limited. 87.31 million baht 1.00 million baht
• For the year ended - Outstanding balance :
30 September 2006, two of 10.53 million baht
THAI’s Directors,
Mr. Suparut Kawatkul is a
Director and Mr. Pichai
Chunhavajira is an Executive of
PTT Public Company Limited.
Airports of Thailand • The MOF, a major shareholder 1. THAI leased land and building The Company purchases 1. THAI leased land and building at The Company purchases
Public Company of THAI, is a major shareholder at Bangkok International goods and services at a Bangkok International Airport goods and services from
Limited (AOT) of AOT. Airport and other airports in market price from related and other airports in Thailand related parties on
(Related Company) • For the year ended Thailand from AOT parties on normal from AOT normal commercial
30 September 2007, one of - Aggregate amount : commercial term as - Aggregate amount : terms.
THAI’s Directors, 2,473.13 million baht unrelated parties. 2,158.34 million baht
Mr. Vudhibhandhu Vichairatana - Outstanding balance : - Outstanding balance :
is a Director of AOT and one of 938.00 million baht 119.29 million baht
THAI’s Executives, 2. THAI sold tickets to AOT 2. THAI sold tickets to AOT
ACM Narongsak Sangapong is - Aggregate amount : - Aggregate amount :
a Vice Chairman of AOT. 23.34 million baht 1.19 million baht
Note : Mr. Vudhibhandhu - Outstanding balance : - Outstanding balance :
Vichairatana resigned from 5.33 million baht 0.08 million baht
THAI’s Board of Directors on
27 December 2006.
• For the year ended
30 September 2006, one of
THAI’s Directors,
Mr. Vudhibhandhu Vichairatana
is a Director of AOT.
Bangchak Petroleum • The MOF, a major shareholder THAI purchased fuel from The Company purchases THAI purchased fuel from The Company purchases
Public Company of THAI, is a major shareholder Bangchak Petroleum Public goods and services at a Bangchak Petroleum Public goods and services
Limited of Bangchak Petroleum Public Company Limited market price from related Company Limited from related parties
(Related Company) Company Limited. - Aggregate amount : parties on normal - Aggregate amount : on normal commercial
• For the year ended 7,706.35 million baht commercial term as 8,264.06 million baht terms.
30 September 2007 and 2006, - Outstanding balance : unrelated parties. - Outstanding balance :
one of THAI’s Directors, 674.42 million baht 820.65 million baht
Mr. Pichai Chunhavajira is a
Director of Bangchak
Petroleum Public Company
Limited.
100 Annual Report 2007
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
Dhipaya Insurance • The MOF, a major shareholder 1. THAI purchased non-life and The Company purchases 1. THAI purchased non-life and life The Company purchases
Public Company of THAI, is a major shareholder life insurances from Dhipaya goods and services at a insurances from Dhipaya goods and services
Limited (Dhipaya) of Dhipaya. - Aggregate amount : market price from related - Aggregate amount : from related parties
(Related Company) • For the year ended 56.03 million baht parties on normal 126.52 million baht on normal commercial
30 September 2007 and 2006, 2. THAI sold tickets to Dhipaya commercial term as - Outstanding balance : terms.
two of THAI’s Directors, - Aggregate amount : unrelated parties. 0.01 million baht
Mr. Somchainuk Engtrakul and 0.29 million baht 2. THAI sold tickets to Dhipaya
Mr. Pichai Chunhavajira are - Outstanding balance : - Aggregate amount :
Chairman and Vice Chairman 0.01 million baht 0.08 million baht
of Dhipaya, respectively.
Note : Mr. Somchainuk
Engtrakul resigned from THAI’s
Board of Directors on
7 November 2006.
Civil Aviation • Civil Aviation Training Center THAI purchased training services The Company purchases 1. THAI purchased training services The Company purchases
Training Center is a state enterprise under from Civil Aviation Training Center goods and services at a from Civil Aviation Training goods and services
(Related Company) Ministry of Transport. - Aggregate amount : market price from related Center from related parties
• For the year ended 12.58 million baht parties on normal - Aggregate amount : on normal commercial
30 September 2007, two of commercial term as 120.31 million baht terms.
THAI’s Executives, unrelated parties. 2. THAI sold tickets to Civil Aviation
ACM Narongsak Sangapong Training Center
and Flt.Lt. Pravit Shinawatra - Aggregate amount :
are Directors of Civil Aviation 0.13 million baht
Training Center.
Note : ACM Narongsak
Sangapong resigned from
Board of Directors of Civil
Aviation Training Center on
18 October 2006.
• For the year ended
30 September 2006, one of
THAI’s Executives, Captain
Kasem Panpat is a Director of
Civil Aviation Training Center.
Eastern Water • For the year ended THAI purchased water for Utapao The Company purchases THAI purchased water for Utapao The Company purchases
Resource 30 September 2007 and 2006, Maintenance Center from Eastern goods and services at a maintenance Center from Eastern goods and services
Development and one of THAI’s Directors, Water Resource Development and market price from related Water Resource Development and from related parties
Management Mr. Borwornsak Uwanno is management PLC. parties on normal management PLC. on normal commercial
Public Company Chairman of Audit Committee - Aggregate amount : commercial term as - Aggregate amount : terms.
Limited of Eastern Water Resource 0.25 million baht unrelated parties. 0.26 million baht
(Related Company) Development and - Outstanding balance : - Outstanding balance :
Management PLC. 0.02 million baht 0.02 million baht
The Deves Insurance • For the year ended THAI purchased non-life and life The Company purchases Unrelated party -
Public Company 30 September 2007, one of insurances from The Deves goods and services at a
Limited THAI’s Directors, Insurance Public Company market price from
(Related Company) Mr. Aviruth Wongbuddhapitak, Limited related parties on normal
is Chairman of the Executive - Aggregate amount : commercial term as
Board and Director of The 0.44 million baht unrelated parties.
Deves Insurance Public
Company Limited.
101Thai Airways International Public Company Limited
Name of persons Relationship Type of Transaction Conditions/Pricing Type of Transaction Conditions/Pricing
who may have for the Year Ended Policy for the Year Ended for the Year Ended Policy for the Year Ended
conflicts of interest 30 September 2007 30 September 2007 30 September 2006 30 September 2006
(1) (2) (3) (4) (5) (6)
Thai British Security • For the year ended THAI purchased the advertising The Company purchases Unrelated party -
Printing Public 30 September 2007, one of from Thai British Security Printing goods and services at a
Company Limited THAI’s Directors, Public Company Limited market price from related
(Related Company) Mr. Chaisak Seang-xuto is a - Aggregate amount : parties on normal
Director of Thai British Security 14.82 million baht commercial term as
Printing Public Company - Outstanding balance : unrelated parties.
Limited. 0.02 million baht
Advanced Info • For the year ended 1. THAI purchased telephone The Company purchases Unrelated party -
Service Public 30 September 2007, one of service from Advanced Info goods and services at a
Company Limited THAI’s Directors, Mr. Aviruth Service Public Company Limited market price from related
(Related Company) Wongbuddhapitak is - Aggregate amount : parties on normal
Chairman of Audit Committee 4.63 million baht commercial term as
and Independent Director of 2. THAI sold tickets to Advanced unrelated parties.
Advanced Info Service Public Info Service Public Company
Company Limited. Limited
- Aggregate amount :
0.74 million baht
Pearl Company • For the year ended THAI purchased accommodation The Company purchases Unrelated party -
Limited 30 September 2007, services for its passenges from goods and services at a
(Related Company) one of THAI’s Directors, Pearl Company Limited market price from
Mr. Wichit Na-Ranong is a - Aggregate amount : related parties on normal
Director of Pearl Company 0.05 million baht commercial term as
Limited. unrelated parties.
Pearl Village • For the year ended THAI purchased accommodation The Company purchases Unrelated party -
Company Limited 30 September 2007, one of services for its passenges from goods and services at a
(Related Company) THAI’s Directors, Mr. Wichit Pearl Village Company Limited market price from related
Na-Ranong is a Director of - Aggregate amount : parties on normal
Pearl Village Company Limited. 0.60 million baht commercial term as
unrelated parties.
Necessity and reasonableness of related parties transactions
Having scrutinized items on related parties transactions during fiscal year 2007, ending 30 September 2007,
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, subsidiary, joint
ventures, associated, related companies 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 of 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.
102 Annual Report 2007
Management’s Discussion and Analysis
1. Operating Results
For the fiscal year 2007 (Oct 1, 2006 - Sep 30, 2007), the first year of
the Company’s services at Suvarnabhumi Airport, the Company has
launched its new destinations to Johannesburg in South Africa as well as
Hyderabad, Bodhgaya and Varanasi in India. In addition, the Company
has increased and improved its both international and domestic flight
frequencies to cope with increase in passenger demand as well as the
re-operation of Don Muang Airport for point to point domestic flights.
The Company took the delivery of 6 aircraft - 5 Boeing 777-200ER and
1 Airbus A340-500 and phased out 4 aircraft - 2 Airbus A300-600 and
2 Boeing 747-300. Passenger production (Available Seat - Kilometer : ASK)
increased by 7.3% from last year. The Company’s passenger traffic
(Revenue Passenger - Kilometer : RPK) increased by 11.7% from last year.
Nevertheless, the Company severely encounters with a highly
competitive airline industry such as the Company’s competitive airlines,
the rapid growth in low cost airlines, the recession in Thailand and the
world’s economy, the effect from natural disaster, the continuing high
increase in jet fuel price and especially the fluctuation in currency
exchange in the fourth quarter of fiscal year 2007. As a result, the
Company has a net profit from its 2007 operation amount of 6,342
million baht, which was 2,650 million baht or 29.5% decrease from
the previous year. The earning per share was THB 3.73 lower than
THB 5.29 of fiscal year 2006.
The Company’s revenue from the sale of goods and the rendering
of services increased by 13,430 million baht or 7.5% from fiscal year 2006
to 192,037 million baht in fiscal year 2007. Operating expense totaled
179,249 million baht, which is an increase of 9,006 million baht or 5.3%
over fiscal year 2006, mainly due to production expansion, the moving
base of operation from Don Muang Airport to Suvarnabhumi Airport and
also the increase in depreciation from the delivery of new aircraft.
for Fiscal Year Ending September 30, 2007for Thai Airways International Public Company Limited and Its Subsidiary
103Thai Airways International Public Company Limited
As a result, profit from the sale of goods and the rendering of service was
12,788 million baht, which is an increase of 4,424 million baht or
52.9% over fiscal year 2006. However, the gain on foreign currency
exchange, mostly arising from converting the Company’s outstanding
loan into Baht terms at the end of fiscal year 2007 was 4,993 million
baht much lower than the year 2006. As a result, the Company’s
profit before interest and tax amounted to 13,840 million baht,
which is 3,433 million baht or 19.9% lower than the previous year.
Profit before tax was 9,141 million baht, which was a decrease of 3,681
million baht or 28.7% from the previous year.
Summary of operating results for fiscal year 2007 :
Units: million baht 2007 % Change
Revenues from the sale of goods and the
rendering of services 192,037 + 7.5%
Profit from the sale of goods and
the rendering of services 12,788 + 52.9%
Gain on foreign currency exchange 1,185 - 80.8%
Profit before tax 9,141 - 28.7%
Net profits 6,342 - 29.5%
Earnings per share (Baht) 3.73 - 1.56
Production and Traffic
In fiscal year 2007, the Company launched services to new
destinations and increased its flight frequencies in order to satisfy the
growing demand for air transport. Passenger production (Available
Seat - Kilometer) increased by 7.3% from fiscal year 2006. Passenger
traffic (Revenue Passenger - Kilometer) increased 11.7%, higher than
passenger production. Cabin factor was 78.5% higher than fiscal year
2006. The details are as follows:
104 Annual Report 2007
2007 % Change
Production (MATK) 11,315 + 10.2%
Traffic (MRTK) 7,910 + 13.0%
Load Factor (%) 69.9 + 1.7
Passenger Production (MASK) 76,830 + 7.3%
Passenger Traffic (MRPK) 60,305 + 11.7%
Cabin Factor (%) 78.5 + 3.1
Freight Production (MADTK) 4,401 + 16.4%
Freight Traffic (MRFTK) 2,382 + 16.3%
Freight Load Factor (%) 54.1 - 0.1
The number of passengers carried totaled 19.59 million
passengers, 5.5% increase from last year. Operating flight hours clocked
was 350,644 hours, 8.1% increase from last year. An average of aircraft
utilization increased to 11.6 hours per aircraft per day, compare to 10.8
hours per aircraft per day last year.
Revenue
In fiscal year 2007, total revenue reached 194,040 million baht,
an increase of 11,728 million baht or 6.4% over the previous year.
The details are as follows:
Units: million baht 2007 % Change
Revenue from Transportation Activities
- Passenger and Excess Baggage 156,259 + 9.0%
- Freight 25,737 + 0.3%
- Mail 992 - 4.2%
Total Revenue from Transportation Activities 182,988 + 7.6%
Revenue from Other Activities 9,049 + 6.2%
Total Revenue from the Sale of Goods
and the Rendering of Services 192,037 + 7.5%
Other Income 2,003 - 45.9%
Total Revenue 194,040 + 6.4%
105Thai Airways International Public Company Limited
Revenue from the sale of goods and the rendering of services
for fiscal year 2007 totaled 192,037 million baht, which is an increase of
13,430 million baht or 7.5% over the previous year. Details are as follows:
Revenue from transportation activities amounted to 182,988
million baht, an increase of 12,901 million baht or 7.6% over fiscal
year 2006 which consists of:
- Passenger and excess baggage revenue was 156,259 million
baht representing 81.4% of total revenues from the sale of goods and
the rendering of services or is an increase of 12,858 million baht or
9% increase over the previous year. The main reason is greater number
of passengers than last year. Moreover, fuel surcharge collected
from passengers increased by 3,261 million baht due to the adjustment
in fuel surcharge rate since July, 15 2007.
- Freight revenue was 25,737 million baht, almost the same as
last year. That accounted for 13.4% of total revenues from the sale of
goods and the rendering of services.
The Company’s yield excluding insurance and fuel surcharge
decreased from fiscal year 2006. The major causes were mainly due to
the increase in intensity of competition. As well as a stronger Thai baht,
revenue earned in foreign currency was lower after converted to Thai
baht. Details are as follows:
2007 % Change
System-wide (Baht/RTK) 19.87 - 5.7%
Passenger (Baht/RPK) 2.24 - 3.4%
Freight (Baht/RFTK) 8.58 - 14.2%
106 Annual Report 2007
Revenue from other activities was 9,049 million baht, an
increase of 529 million baht or 6.2% over last year.
- Revenue from business units - Technical Services, Cargo and Mail
Commercial, Ground Support Equipment Services, Ground Customer
Services, and Catering Services totaled 7,869 million baht, an increase
of 481 million baht or 6.5% over the previous year.
- Revenue from Thai-Amadeus Southeast Asia Company Limited,
a 55% subsidiary, contributed 360 million baht, which was nearly the
same as last year.
- Revenue from other activities totaled 820 million baht, an
increase of 48 million baht or 6.2% over the previous year, mainly
deriving from the lease of aircraft and providing services to Nok
Airlines Company Ltd.
Other Income was 2,003 million baht, a decrease of 1,702 million
baht or 45.9% from the previous year. This comprised of 621 million baht
in interest income, an increase of 304 million baht or 95.9% from
the previous year and other income decreased to 1,382 million baht,
which is 2,006 million baht or 59.2% lower than the previous year.
This was mainly due to the gain on sales of 2 Airbus A300-600 and
1 Boeing 747-300 aircraft totaling 442 million baht, which is lower
than last year gain on sales of 4 MD-11 aircrafts in amount of 2,095
million baht.
Expenses
Total operating expenses amounted to 179,249 million baht,
which is 9,006 million baht or a 5.3% higher than the previous year.
Details are as follows:
107Thai Airways International Public Company Limited
Units: million baht 2007 % Change
Operating expenses :
Personnel 32,635 + 6.2%
Fuel and oil 58,893 - 1.8%
Cost of inventories and supplies 9,997 - 2.0%
Lease of aircraft and spare parts 6,768 + 24.5%
Flight operation 41,557 + 10.3%
Depreciation 17,751 + 14.4%
Marketing 3,198 + 2.6%
Insurance 1,016 - 33.0%
Remuneration to board of directors 25 - 4.0%
Other operating expenses 7,409 + 22.6%
Total operating expenses 179,249 + 5.3%
The change in operating expenses can be summarized as follows:
- Personnel expense totaled 32,635 million baht, which is an increase of 1,905 million baht or 6.2%
over previous year mostly resulting from an annual salary increment.
- Fuel cost was 58,893 million baht, a decrease of 1,106 million baht or 1.8% from the previous
year caused by the Thai baht strength partially offset fuel cost that paid in other currencies. Although,
average fuel price was almost the same as last year and also fuel consumption has been increased from
production expansion.
- Lease aircraft equipment 6,768 million baht, an increase of 1,334 million baht or 24.5% mainly
due to leasing of additional cargo block space in order to better serve cargo demand especially on insufficient
capacity routes.
- Flight operation expenses, mostly from maintenance and overhaul cost for aircraft and engines,
passenger service expense and ground operation expense, totaled 41,557 million baht, which was an increase
of 3,897 million baht or 10.3% from last year due to an expansion of production.
- Depreciation was 17,751 million baht, an increase of 2,237 million baht or 14.4% from delivery of
new aircrafts. In additional, depreciation of other fixed assets has been increased, resulting from an investment
at Suvarnabhumi Airport.
108 Annual Report 2007
- Insurance expense was 1,016 million baht, a decrease of 500 million baht or 33% from the
previous year from the reduction in insurance premium.
- Other operating expenses totaled 7,409 million baht, an increase of 1,364 million baht or 22.6%
from last year due to the moving base of operation from Don Muang Airport to Suvarnabhumi Airport.
Gain on foreign currency exchange for fiscal year 2007 amounted to 1,185 million baht, which included
a gain on foreign currency exchange arising from a risk management of foreign loans during a stronger baht
amount of 654 million baht, 4,993 million baht lower than a gain of 6,178 million baht in fiscal year 2006.
Other expenses amounted to 2,157 million baht, which is an increase of 1,003 million baht or
86.9% over the previous year arising from a reserve for obsolete aircraft spare parts to be disposed and
impairment of aircraft spare parts.
Share of net profit from associated companies was 123 million baht, a decrease of 133 million baht or
52% from last year due to net loss in Don Muang International Airport Hotel Co., Ltd. The net loss was from
a decrease in revenue because of the moving operation of main airport to Suvarnabhumi. Moreover,
Suvarnabhumi Airport Hotel Co., Ltd. incurred more loss and also a decrease in profit from Royal Orchid
Holiday Hotel (Thailand) Plc. Co., Ltd.
Interest expense totaled 4,699 million baht, an increase from last year of 248 million baht or 5.6%
mainly due to the increase in loan amount and interest rate. However, the Company has managed an
interest rate risk by entering into Interest Rate Swap from floating to fixed interest rate during a downward
interest rate. As a result, the Company’s interest expense declined by approximately 540 million baht.
2. Financial Position
Assets
At the end of fiscal year 2007 (September 30, 2007), the Company’s total assets were 272,086 million
baht, which was an increase of 23,052 million baht or 9.3% from the end of fiscal year 2006 (September 30, 2006).
Current and non-current assets accounted for 21.9% and 78.1% of total assets, respectively consisting of :
109Thai Airways International Public Company Limited
September 30, 2007 September 30, 2006
MTHB % of MTHB % of
total assets total assets
Current assets 59,499 21.9 45,702 18.4
Property, plant and equipment-net 204,714 75.2 196,031 78.7
Other non-current assets 7,873 2.9 7,301 2.9
Current assets increased by 13,797 million baht or 30.2% mainly due to an increase in cash and
cash equivalent in the amount of 11,409 million baht or 124.3%. Moreover, trade account receivables-net
also increased in the amount of 1,371 million baht or 8.3% resulting from increase sales and also inventories
and supplies-net amounted to 743 million baht or 14.1%
Property, plant and equipment-net increased by 8,683 million baht or 4.4%. The increase was mainly
due to the acquisition of 6 new aircraft - 1 Airbus A340-500 and 5 Boeing 777-200ER and also phased out
4 old aircraft - 2 Airbus A300- 600 and 2 Boeing 747-300.
Liabilities
The Company has total liabilities as at the end of fiscal year 2007 totaling 202,858 million baht,
which is an increase of 19,505 million baht or 10.6% from the end of fiscal year 2006 which consist of :
September 30, 2007 September 30, 2006
MTHB % of total MTHB % of total
liabilities liabilities
Current liabilities 73,824 36.4 60,440 33.0
(excluding current portion of long-term loans)
Long-term debts 124,262 61.3 118,417 64.6
Staff pension fund 4,772 2.3 4,496 2.4
110 Annual Report 2007
Current liability excluding current portion of long-term loans increased from fiscal year-end 2006 by
13,384 million baht or 22.1% due to an increase in short-term loan in the form of Euro Commercial Paper
(ECP). This loan was a standby loan during the Company was looking for more appropriate loan. In addition,
unearned transportation revenue also increased due to growth sales.
Long-term debt as at September 30, 2007 including the current portion of long-term loans totaled
124,262 million baht increased by 5,845 million baht or 4.9% from fiscal year-end 2006 due to an increase
in financial lease for acquiring new aircraft in the amounts of 15,238 million baht while long-term loan
and promissory notes decreased by 8,343 million baht and 1,050 million baht, respectively.
Shareholders’ Equity
As of fiscal year-end 2007, Shareholders’ Equity totaled 69,228 million baht, which is an increase of
3,547 million baht or 5.4% from the end of fiscal year 2006 resulting from an increase in net operating profit
net of dividend payment, which from the result of year 2006.
Capital structure as of September 30, 2007 consisted of total liabilities of 202,858 million baht or
74.6% and shareholders’ equity of 69,228 million baht or 25.4%. Debt to Equity Ratio as of September 30,
2007 was 2.93 times.
Liquidity
Cash and cash equivalents as at the end of fiscal year 2007 (September 30, 2007) totaled 20,584 million
baht increased from the beginning of fiscal year 2007 (October 1, 2006) amount of 11,409 million baht. Net
cash from and used in other activities are as follows :
- Net cash from operating activities amounted to 27,524 million baht.
- Net cash used in investing activities amounted to 20,896 million baht mainly from aircraft investment.
- Net cash from financing activities amounted to 4,665 million baht consisting of net acquiring from
long-term loans 1,997 million baht and short-term loan 6,567 million baht less dividend payment of 2,845
million baht and repayment of promissory note 1,050 million baht.
For the fiscal year 2007 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
obligation. Credit rating trend is stable.
111Thai Airways International Public Company Limited
Change in Accounting Policy
To comply with the Announcement of Federation of Accounting Profession No. 26/2549 and 32/2549,
the Company has changed its accounting policy since October 1, 2006, regarding the investment in
subsidiary and associated companies of the Company’s financial statements which formerly recorded by
equity method to record by cost method, using historical cost as the original cost. This adjustment caused
net profit on the Company income statement to differ from that reported in the Consolidated income
statement. This is because the Company’s income statements did not include share of income from
investments accounted for under equity method but recognized revenue from investment in subsidiary
and associated companies whenever receiving dividend.
After restating, the investment in subsidiary and associated companies in the Company’s financial
statements as of September 30, 2007 was 927 million baht which decreased by 908 million baht.
Shareholder’s equity in the Company statements of changes in shareholders’ equity presented under the
heading of “Cumulative effect of change in accounting policy for investments by cost method” as at October 1,
2006 and 2005 decreased by 917 million baht and 760 million baht, respectively. Consequently, the
Company’s net profit for the year ended September 30, 2007 and 2006 increased by 8 million baht and
decreased by 156 million baht, respectively.
This change in accounting policy affected transaction related to the investment in subsidiary and
associated of the Company’s financial statements only. Nevertheless, it has no effect on the Consolidated
financial statements preparation and also the other factors related to business operation.
112 Annual Report 2007
The commercial airline industry has seen a dramatic increase in competition from increased flight
frequency of traditional airlines, the use of Thailand as a platform for expansion in international traffic by
foreign based airlines forming joint ventures within Thailand, the ongoing open skies policy and competition
from new low cost carriers and increased frequency of existing low cost carriers that is transforming itself into a
low cost network. The next phase of challenge being brought on is the launch of long-haul low cost airlines
which is in addition to the ever increasing cost of aviation fuel. In the face of dramatic changes in the operating
environment of the commercial airline industry, THAI has also taken dramatic steps to mitigate their effects
and ensure the Company’s long-term survivable.
A comprehensive strategic corporate plan has been developed to cope with the changing operating
environment and to ensure that THAI retains the necessary competitive advantage through its SWOT (Strength,
Weakness, Opportunity and Threat) assessment. At the core of the Company’s operation is its vision to be
“The First Choice Carrier with Touches of Thai” to ensure that the Company’s operation increases overall
shareholder value.
The balanced scorecard of each and every operating unit, division, department and business unit
has been aligned with that of the corporate balanced scorecard. Strategies and performance measures
related to financial objectives, customer oriented policies and staff development goals have been established to
ensure that everyone is united and working towards the same goals.
Financial Strategies - The goal is to ensure that THAI maintains its financial strength. On the revenue
side, the corporate strategic plan is designed to grow passenger revenue and that of its business units by
expanding its business into high potential areas and markets while maximizing the utilization of its assets. The
other variable in the equation is the ability to be cost effective in its operations. Underlying the Company’s
long-term financial health is the Company’s ability to maintain an appropriate capital structure.
Customer Strategies - THAI is using the concept of Ultimate Service Full Network Airline to ensure
the highest level of service provided to its passengers. The goal is to provide passengers with the highest level
of service on all destinations and a level of safety which is at par with international standards under its “High
Service Quality and Safety” concept. THAI’s goal is to ensure at least an 82.5% on time performance for
international flights and 92.0% for domestic flights and ensure that its products remain competitive with
its peers. In terms of third party rankings, THAI intends to remain among the top in world rankings and to
maintain its market share of air travel traffic. All the above goals are designed to target customer retention
as a result of customer satisfaction.
Corporate Direction and Strategy
113Thai Airways International Public Company Limited
Internal Process Strategies - THAI has undertaken activities to upgrade its products and services to
meet customer demands, provide Smooth as Silk Travel Experience with Touches of Thai to increase its
competitiveness against its peers. Ensuring such success will come from greater cooperation with Star Alliance,
partner airlines and THAI’s other business partners while reducing unnecessary processes and focus on the
results. In addition to process efficiency, using the latest in informationing technology to improve THAI’s own
network connectivity and operations all go towards enhancing the Company’s overall operating performance
through speed of communication.
Learning and Growth Strategies - To enhance the Company’s competitive advantage, THAI has undertaken
various activities to change its culture - improving organization structure to enable management efficiency,
improving human resource management and improving teamwork and accountability. To improve staff
productivity, the Company has initiated performance-based pay system as well as procedures to fairly and
transparently appraise employee performance. Strengthening staff’s skills is another strategy to promote staff
professionalism driving the achievement of the Company’s objectives while observing social and environmental
responsibilities.
In fiscal year 2007 THAI launched the “Flying Together” - the strategic action plan which encompasses
the alignment of aircraft fleet planning, network development planning, customer satisfaction targets, marketing
and sales targets, business unit development targets, alliance cooperation initiatives, information technology
strategies, human resource management goals, efficiency enhancement and finance and accounting strategies
geared towards achieving the Company’s vision.
114 Annual Report 2007
2007 2006 2005 2004 2003
Number of Aircraft 84 82 84 83 81
Flight Hours (Block Hours) 350,644 324,366 304,535 304,325 279,654
Available Ton-Kilometers (Million) 11,315 10,269 9,791 9,686 8,870
Revenue Ton-Kilometers (Million) 7,910 7,001 6,565 6,478 5,850
Load Factor (%) 69.9 68.2 67.1 66.9 66.0
Number of Passengers (000) 19,586 18,574 18,133 19,540 17,048
Available Seat-Kilometers (Million) 76,830 71,594 69,843 69,830 63,826
Revenue Passenger-Kilometers (Million) 60,305 53,989 49,931 50,633 44,396
Cabin Factor (%) 78.5 75.4 71.5 72.5 69.6
Available Dead Load Ton-Kilometers (Million) 4,401 3,780 3,492 3,401 3,125
Revenue Freight Ton-Kilometers (Million) 2,382 2,048 1,986 1,839 1,780
Freight Load Factor (%) 54.1 54.2 56.9 54.1 57.0
Number of Personnel (People) 26,897 26,488 25,876 25,884 25,531
Profitability (Result before Tax) (Million Baht) 9,141 12,822 9,906 14,284 17,431
Note : All data shown for fiscal year from 1 October - 30 September, or as at 30 September.
Five-Year Review
115Thai Airways International Public Company Limited
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
multiplied by flown kilometers.
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 multiplied by flown kilometers.
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.
116 Annual Report 2007
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 2007 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 2007 financial statements including other information that
have 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 to ensure 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 a
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 2007
financial statements ending 30 September 2007, 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.
ACM Chalit Pukbhasuk Flg. Off. Apinan Sumanaseni
Chairman of the Board of Directors President
117Thai Airways International Public Company Limited
Audit Committee’s Report
To Shareholders,
The Audit Committee of Thai Airways International Public Company Limited is comprised of three
Independent Directors. None of which are executive directors, employees or advisors of the Company. The Audit
Committee members are :
1. Khun Pornthip Jala Chairman
2. Mr. Sivaporn Dardarananda Member
3. Mr. Chartsiri Sophonpanich Member
The Audit Committee performed its duties as assigned by the Board of Directors and according to
the Audit Committee’s Charter and in-line with the Stock Exchange of Thailand’s guidelines for the Audit
Committee as best practice.
In 2007, the Committee convened ten times. The head of the Office of the Internal Audit, external auditors
and the Management were invited to attend the meetings as appropriate. Significant activities undertaken by
the Committee include :
Review of quarterly and annual financial statements for fiscal year 2007. The Committee reviewed
both the consolidated and THAI’s financial statements, ensuring integrity in all material aspects and sufficient
disclosure of information and that the financial statements were prepared in accordance with generally
accepted accounting standards. 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
before being compiled for the Board of Directors. These reviews were conducted with a focus on completeness
and accuracy of financial statements and adequacy of information disclosure.
Oversight of internal audit. The Committee reviewed and approved a long-term audit plan spanning
2008 - 2010 and an annual audit plan which were prepared in relation to the Company’s risk factors. The audit
plans are modified with changing in risk profile encompassing all significant business and work processes. To
ensure adequate internal control and mitigation of THAI’s overall risk, the Committee reviewed internal
audit results, monitored actions taken by the Management as per the recommendations of Audit Reports and
reviewed quarterly updates of activities undertaken by the Office of the Internal Audit. The Committee deems
THAI’s internal audit approach to be adequate, appropriate and effective.
Reviewed internal control process. The Committee reviewed the policy and overall direction of risk
management as put forth by the Risk Management Committee. The Committee was also responsible for
reviewing the internal control process and Control Self-Assessment reports as per the State Audit Commission’s
internal audit guidelines of B.E. 2544 as well as over seeing the function of the Office of the Internal Audit.
The Committee deems THAI’s internal controls to be adequate and sufficient.
118 Annual Report 2007
Ensuring of compliance. The Committee is tasked to ensure THAI’s compliance with the Securities and
Exchange Acts and laws related to the Company’s business based on the internal audit reports and the report
provided by the Company Secretary, who is responsible for compliance monitoring. Upon review, the Audit
Committee deems THAI’s operations to be in accordance with relevant laws and regulations.
Self-assessment. The Committee conducted a self-assessment to evaluate its performance by
benchmarking with the Audit Committee’s Charter based on current best practice guidelines from the Stock
Exchange of Thailand and the Audit Committee Guidelines for State Enterprises as detailed by the Ministry of
Finance. The result of the assessment for the fiscal year 2007 performance was considered to be “Very Good.”
Appointment of and remuneration for external auditors. The Committee reviewed the re-appointment
of and remuneration for the Auditor General as THAI’s external auditors for fiscal year 2008 prior to the Board of
Directors submission for approval at the Annual General Meeting of Shareholders.
Khun Pornthip Jala
Chairman
November 22, 2007
119Thai Airways International Public Company Limited
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, 2007 and 2006, 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, 2007 and 2006, 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) Khunying Jaruvan Maintaka
(Jaruvan Maintaka)
Auditor General
(Signed) Rungravee Sahsomsuwan
(Rungravee Sahsomsuwan)
Director of Auditor Office
Auditor’s Report
Office of the Auditor GeneralNovember 20, 2007
120 Annual Report 2007
Balance SheetsThai Airways International Public Company Limited and Its Subsidiary
As at September 30, 2007 and 2006
ASSETS
Current Assets
Cash and cash equivalents 5.1 20,583,897,733 9,175,267,322 20,241,103,098 8,937,827,934
Current investment-available 131,873,024 102,256,496 - -
Trade account receivables-net 5.2 17,985,430,375 16,613,734,289 17,948,254,495 16,576,817,194
Inventories and supplies-net 5.3 5,997,875,383 5,255,350,885 5,997,875,383 5,255,350,885
Other current assets 5.4 14,800,019,875 14,556,067,780 14,756,089,261 14,524,282,369
Total Current Assets 59,499,096,390 45,702,676,772 58,943,322,237 45,294,278,382
Non-Current Assets
Investments in associated and
subsidiary companies 5.5.1 1,519,888,879 1,523,006,071 926,770,500 907,572,750
Other long-term investments 5.5.2 104,182,823 191,846,188 83,598,922 86,534,540
Property, Plant and Equipment-Net 5.7 204,714,573,949 196,030,545,530 204,653,040,673 195,937,578,431
Intangible assets-net 5.8 856,819,811 421,211,394 853,269,727 418,776,627
Deferred income taxes 5.9 3,901,537,844 4,020,317,829 3,889,351,863 4,008,711,086
Other non-current assets 5.10 1,490,103,840 1,144,792,764 1,490,103,840 1,144,792,764
Total Non-Current Assets 212,587,107,146 203,331,719,776 211,896,135,525 202,503,966,198
Total Assets 272,086,203,536 249,034,396,548 270,839,457,762 247,798,244,580
The accompanying notes are an integral part of these financial statements.
Units : Baht
CONSOLIDATED THE COMPANY
Notes 2007 2006 2007 2006
(restated)
121Thai Airways International Public Company Limited
LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent Liabilities
Trade account payables 7,950,593,217 9,423,137,305 7,942,173,649 9,411,603,172Short-term loans 5.11 12,121,060,200 5,606,417,700 12,121,060,200 5,606,417,700Current portion of long-term loans
Debentures 5.15 6,000,000,000 - 6,000,000,000 -Long-term loans 5.12 - 8,023,757,350 - 8,023,757,350Liabilities under financial leases 5.13 8,667,640,690 8,314,392,593 8,667,640,690 8,314,392,593Promissory notes 5.14 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000
Other current liabilitiesAccrued expenses 20,488,319,740 16,417,248,467 20,465,787,505 16,398,217,085Accrued dividends 62,901,721 57,863,117 62,901,721 57,863,117Accrued income taxes 28,593,987 20,613,157 - -Unearned transportation revenues 30,537,000,786 24,287,909,663 30,537,000,786 24,287,909,663Others 5.16 2,636,244,727 4,627,275,264 2,615,403,652 4,605,732,387
Total Current Liabilities 89,542,355,068 77,828,614,616 89,461,968,203 77,755,893,067
Non-Current LiabilitiesLong-term debts
Debentures 5.15 34,000,000,000 40,000,000,000 34,000,000,000 40,000,000,000Long-term loans 5.12 4,074,621,000 4,393,142,000 4,074,621,000 4,393,142,000Liabilities under financial leases 5.13 68,369,645,625 53,485,647,432 68,369,645,625 53,485,647,432Promissory notes 5.14 2,100,000,000 3,150,000,000 2,100,000,000 3,150,000,000
Staff pension fund 5.24 4,771,886,386 4,495,820,618 4,771,886,386 4,495,820,618
Total Non-Current Liabilities 113,316,153,011 105,524,610,050 113,316,153,011 105,524,610,050
Total Liabilities 202,858,508,079 183,353,224,666 202,778,121,214 183,280,503,117Shareholders’ Equity
Share capital 5.18Authorized
1,700.00 million ordinary sharespar value of Baht 10 each 17,000,000,000 17,000,000,000 17,000,000,000 17,000,000,000
Issued and paid-up1,698.90 million ordinary shares
par value of Baht 10 each 16,989,009,500 16,988,961,500 16,989,009,500 16,988,961,500Premium on share capital 15,639,064,110 15,642,835,031 15,639,064,110 15,642,835,031Unrealised gain on current
investment-available-for-sale securities (2,579) - - -Retained earnings
AppropriatedLegal reserve 5.19 1,700,000,000 1,700,000,000 1,700,000,000 1,700,000,000
Unappropriated 34,641,666,188 31,102,776,657 33,733,262,938 30,185,944,932
Total Company Shareholders’ Equity 68,969,737,219 65,434,573,188 68,061,336,548 64,517,741,463Minority interests 257,958,238 246,598,694 - -
Total Shareholders’ Equity 69,227,695,457 65,681,171,882 68,061,336,548 64,517,741,463
Total Liabilities and Shareholders’ Equity 272,086,203,536 249,034,396,548 270,839,457,762 247,798,244,580
The accompanying notes are an integral part of these financial statements.
Units : Baht
CONSOLIDATED THE COMPANY
Notes 2007 2006 2007 2006
(restated)
(Signed) Flg.Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President
Finance and Accounting
122 Annual Report 2007
Revenues from the Sale of Goods and
the Rendering of Services
Passenger and excess baggage 156,258,304,364 143,401,184,068 156,258,304,364 143,401,184,068
Freight 25,737,296,643 25,649,667,924 25,737,296,643 25,649,667,924
Mail 992,282,983 1,036,188,352 992,282,983 1,036,188,352
Other activities 9,049,138,039 8,519,843,512 8,689,395,806 8,159,740,321
Total Revenues from the Sale of Goods and
the Rendering of Services 192,037,022,029 178,606,883,856 191,677,279,796 178,246,780,665
Operating expenses
Personnel 32,634,774,287 30,729,663,179 32,603,597,343 30,697,016,022
Fuel and oil 58,892,664,167 59,999,262,178 58,892,664,167 59,999,262,178
Inventories and supplies 9,996,537,252 10,201,744,088 9,996,537,252 10,201,744,088
Lease of aircraft and spare parts 6,767,821,949 5,434,434,982 6,767,821,949 5,434,434,982
Flight operations 41,557,103,822 37,659,857,591 41,557,103,822 37,659,857,591
Depreciation 17,751,341,713 15,514,467,423 17,716,486,919 15,484,615,707
Marketing 3,198,407,158 3,115,691,548 3,151,111,310 3,075,578,993
Insurance 1,016,273,298 1,516,417,024 1,016,273,298 1,516,417,024
Remuneration to board of directors 25,416,858 26,493,191 24,143,805 25,051,680
Other operating expenses 7,408,591,010 6,044,654,090 7,328,108,029 5,957,823,150
Total operating expenses 179,248,931,514 170,242,685,294 179,053,847,894 170,051,801,415
Profit from the Sale of Goods and
the Rendering of Services 12,788,090,515 8,364,198,562 12,623,431,902 8,194,979,250
The accompanying notes are an integral part of these financial statements.
Units : Baht
CONSOLIDATED THE COMPANY
2007 2006 2007 2006
(restated)
Statements of IncomeThai Airways International Public Company Limited and Its Subsidiary
For the years ended September 30, 2007 and 2006
123Thai Airways International Public Company Limited
Profits from the Sale of Goods and
the Rendering of Services 12,788,090,515 8,364,198,562 12,623,431,902 8,194,979,250
Other Income
Interest income 620,971,083 316,822,629 609,306,786 315,364,272
Others 5.20 1,381,793,717 3,388,247,464 1,574,025,926 3,547,894,973
Total Other Income 2,002,764,800 3,705,070,093 2,183,332,712 3,863,259,245
Other Expenses
Gains on foreign currency exchange (1,184,797,148) (6,178,102,699) (1,184,797,148) (6,178,102,699)
Yields from pension fund 102,110,925 75,923,013 102,110,925 75,923,013
Others 5.21 2,156,963,358 1,154,594,702 2,154,739,436 1,146,427,301
Total Other Expenses 1,074,277,135 (4,947,584,984) 1,072,053,213 (4,955,752,385)
Profits from Operations 13,716,578,180 17,016,853,639 13,734,711,401 17,013,990,880
Share of Profits from Investments
by the Equity Method
Share of net profit from associated companies 122,787,633 256,226,137 - -
Total Share of Profits from Investments
by the Equity Method 5.5.1 122,787,633 256,226,137 - -
Profits before Interest and Income Tax Expenses 13,839,365,813 17,273,079,776 13,734,711,401 17,013,990,880
Interest expenses 4,698,766,508 4,450,936,258 4,698,766,508 4,450,936,258
Income tax expenses 2,739,919,472 3,777,437,609 2,685,448,239 3,727,555,881
Profits after Tax 6,400,679,833 9,044,705,909 6,350,496,654 8,835,498,741
Net profit of minority interest 58,611,654 53,108,828 - -
Net profits 6,342,068,179 8,991,597,081 6,350,496,654 8,835,498,741
Basic earnings per share 5.22
Net profits 3.73 5.29 3.74 5.20
Diluted earnings per share 5.22
Net profits 3.73 5.29 3.74 5.20
The accompanying notes are an integral part of these financial statements.
Units : Baht
CONSOLIDATED THE COMPANY
Notes 2007 2006 2007 2006
(restated)
(Signed) Flg.Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President
Finance and Accounting
124 Annual Report 2007
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
investment - available-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 - - - - - (2,548,334,625) (24,300,000) (2,572,634,625)
Add Proceeds from ESOP offering - - 108,000 - - - - 108,000
Add Issued share capital 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
Balance as at October 1, 2006 16,988,961,500 15,642,835,031 - - 1,700,000,000 31,102,776,657 246,598,694 65,681,171,882
- Unrealised losses on current
investment- available-for-sale
securities - - - (2,579) - - (2,110) (4,689)
Add Net Profits - - - - - 6,342,068,179 58,611,654 6,400,679,833
Less Dividends paid 5.17 - - - - - (2,803,178,648) (47,250,000) (2,850,428,648)
Add Issued share capital 48,000 24,000 - - - - - 72,000
Less Share offering expense - (3,794,921) - - - - - (3,794,921)
Balance as at September 30, 2007 16,989,009,500 15,639,064,110 - (2,579) 1,700,000,000 34,641,666,188 257,958,238 69,227,695,457
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Shareholders’ EquityThai Airways International Public Company Limited and Its Subsidiary
For the years ended September 30, 2007 and 2006
Units : Baht
CONSOLIDATED
Share Capital Premium Proceeds Unrealised gain Legal Retained Minority Total
Notes issued and on share from (losses) on Reserve Earnings Interest
fully paid capital ESOP available-for-sale Unappropriated
offering securities
(Signed) Flg.Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President
Finance and Accounting
125Thai Airways International Public Company Limited
Balance as at October 1, 2005
(before adjustment) 16,988,881,500 15,646,761,354 12,000 (477,805) 1,700,000,000 24,659,514,201 58,994,691,250
- Cumulative effect of change in
accounting policy for investment
by cost method - - - 477,805 - (760,733,385) (760,255,580)
Balance as at October 1, 2005
(after adjustment) 16,988,881,500 15,646,761,354 12,000 - 1,700,000,000 23,898,780,816 58,234,435,670
Add Net Profits - - - - - 8,835,498,741 8,835,498,741
Less Dividends paid - - - - - (2,548,334,625) (2,548,334,625)
Add Proceeds from ESOP offering - - 108,000 - - - 108,000
Add Issued share capital 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 30,185,944,932 64,517,741,463
Balance as at October 1, 2006
(before adjustment) 16,988,961,500 15,642,835,031 - - 1,700,000,000 31,102,776,657 65,434,573,188
- Cumulative effect of change in
accounting policy for investment
by cost method - - - - - (916,831,725) (916,831,725)
Balance as at October 1, 2006
(after adjustment) 16,988,961,500 15,642,835,031 - - 1,700,000,000 30,185,944,932 64,517,741,463
Add Net Profits - - - - - 6,350,496,654 6,350,496,654
Less Dividends paid 5.17 - - - - - (2,803,178,648) (2,803,178,648)
Add Issued share capital 48,000 24,000 - - - - 72,000
Less Share offering expense - (3,794,921) - - - - (3,794,921)
Balance as at September 30, 2007 16,989,009,500 15,639,064,110 - - 1,700,000,000 33,733,262,938 68,061,336,548
The accompanying notes are an integral part of these financial statements.
restated
Units : Baht
THE COMPANY
Share Capital Premium Proceeds Unrealised gain Legal Retained Total
Notes issued and on share from (losses) on Reserve Earnings
fully paid capital ESOP available-for-sale Unappropriated
offering securities
(Signed) Flg.Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President
Finance and Accounting
126 Annual Report 2007
Cash flows from operating activities
Net profit 6,342,068,179 8,991,597,081 6,350,496,654 8,835,498,741
Adjustment to reconcile net profit to cash
provided by (paid from) operating activities :
Depreciation 17,751,341,713 15,514,467,423 17,716,486,919 15,484,615,707
Income from investments by the equity method (122,787,633) (256,226,137) - -
Stock dividend - - (19,197,750) -
Losses (gains) on sales of assets 5,194,235 (991,232,983) 5,194,235 (991,373,592)
Gain on current investments-available-for-sale securities (6,623,970) (4,587,358) - -
Amortisation of deferred charges 214,270,101 176,512,541 214,270,101 176,512,541
Gains on foreign currency exchange (12,298,234) (5,646,399,237) (12,298,234) (5,646,399,237)
Net profit of minority interests 58,611,654 53,108,828 - -
Provision for obsolete inventories and supplies (14,146,942) 144,151,808 (14,146,942) 144,151,808
Allowance for doubtful accounts and
impairment in value of assets 633,476,587 97,541,894 631,345,791 89,632,317
Operating profit before changes in operating assets
and liabilities 24,849,105,690 18,078,933,860 24,872,150,774 18,092,638,285
Decrease (increase) in operating assets :
Trade account receivables (1,618,301,394) (1,338,153,082) (1,615,911,813) (1,338,470,881)
Inventories and supplies (728,377,555) (303,517,666) (728,377,555) (303,517,666)
Prepaid expenses and deposits (944,544,652) 394,254,749 (944,505,056) 396,709,604
Tax refund 1,218,851,394 (448,783,917) 1,218,851,394 (448,783,917)
Other current assets (1,197,796,398) (998,114,588) (1,185,690,791) (992,047,374)
Deferred income taxes 118,779,984 119,175,442 119,359,223 121,473,315
Other assets (59,007,009) - (59,007,009) -
Deferred charges (500,574,167) (462,344,246) (500,574,167) (462,344,246)
Increase (decrease) in operating liabilities :
Trade account payables (1,499,522,851) 1,428,218,890 (1,496,408,286) 1,429,135,671
Accrued expenses and other current liabilities 1,973,738,498 19,223,004 1,962,958,617 24,737,122
Staff pension fund 276,065,768 (46,920,753) 276,065,768 (46,920,753)
Unearned transportation revenue 5,635,890,877 6,363,320,218 5,635,890,877 6,363,320,218
Net cash from operating activities 27,524,308,185 22,805,291,911 27,554,801,976 22,835,929,378
The accompanying notes are an integral part of these financial statements.
Statements of Cash FlowsThai Airways International Public Company Limited and Its Subsidiary
For the years ended September 30, 2007 and 2006
Units : Baht
CONSOLIDATED THE COMPANY
2007 2006 2007 2006
(restated)
127Thai Airways International Public Company Limited
Cash flows from investing activities
Short-term investments increase - (100,000,000) - -
Cash paid for acquisition of fixed assets (22,218,872,910) (20,231,596,361) (22,215,564,123) (20,151,032,348)
Cash paid for intangible assets (525,376,162) (455,609,398) (524,148,662) (453,130,576)
Cash received from transferring down
payment of aircraft and aircraft spare parts 357,816,407 2,065,589,465 357,816,407 2,065,589,465
Cash received from sales of assets 1,306,091,660 5,521,806,216 1,306,091,660 5,521,726,259
Investments decrease (increase) 211,339,798 129,369,337 (2,955,527) (5,491,445)
Cash received from current investments-
available-for-sale securities (26,660,000) - - -
Net cash used in investing activities (20,895,661,207) (13,070,440,741) (21,078,760,245) (13,022,338,645)
Cash flows from financing activities
Cash received from short-term loans 21,798,454,814 5,512,267,800 21,798,454,814 5,512,267,800
Cash received from long-term loans 19,127,297,087 1,259,525,538 19,127,297,087 1,259,525,538
Cash received from issuing ordinary shares 48,000 72,000 48,000 72,000
Cash received from premium on ordinary shares (3,770,922) (3,930,323) (3,770,922) (3,930,323)
Cash paid for repayment of short-term loans (15,231,608,114) - (15,231,608,114) -
Cash paid for repayment of long-term loans (17,129,728,094) (13,701,821,877) (17,129,728,094) (13,701,821,877)
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 (2,845,390,044) (2,567,247,267) (2,798,140,044) (2,542,947,267)
Net cash from (used in) financing activities 4,665,302,727 (10,551,134,129) 4,712,552,727 (10,526,834,129)
Increase (decrease) in cash and cash equivalents 11,293,949,705 (816,282,959) 11,188,594,458 (713,243,396)
Increase in the effect from changing in exchange rate
on cash and cash equivalents 114,680,706 61,549,377 114,680,706 61,549,377
Cash and cash equivalents at the beginning of the periods 9,175,267,322 9,930,000,904 8,937,827,934 9,589,521,953
Cash and cash equivalents at the end of the periods 20,583,897,733 9,175,267,322 20,241,103,098 8,937,827,934
Supplementary cash flows information :
Cash paid during the year for
Interest expenses 4,079,123,039 4,327,541,483 4,079,123,039 4,327,541,483
Corporate income tax 3,698,277,864 4,115,660,767 3,651,208,222 4,055,682,939
Non - cash item
Assets under financial lease 5,795,831,779 16,975,783,568 5,795,831,779 16,975,783,568
The accompanying notes are an integral part of these financial statements.
Units : Baht
CONSOLIDATED THE COMPANY
2007 2006 2007 2006
(restated)
(Signed) Flg.Off. Apinan Sumanaseni (Signed) Ngamnit Sombutpibool(Apinan Sumanaseni) (Ngamnit Sombutpibool)President Executive Vice President
Finance and Accounting
128 Annual Report 2007128 Annual Report 2007
129Thai Airways International Public Company Limited
Notes to the Financial StatementsThai Airways International Public Company Limited and Its Subsidiary
For the years ended September 30, 2007 and 2006
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, consisting of aircraft spare parts, fuel and oil for aircraft,
cabin supplies, goods for sales as well as stationery and office supplies, 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.
129Thai Airways International Public Company Limited
130 Annual Report 2007
2.3 Investments
2.3.1 Investments in subsidiary and associated companies are stated by the equity method in the
consolidated financial statement but by cost method in the Company’s financial statement.
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
2.4.1.1 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.
2.4.1.2 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.
2.4.1.3 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.
2.4.2 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.
2.4.3 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.
2.4.4 Leasehold buildings are amortised as expense over a lease term of 10-30 years.
2.4.5 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.
131Thai Airways International Public Company Limited
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:
2.9.1.1 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.
2.9.1.2 Unused tickets and service orders are recognised as revenue after 2 years.
132 Annual Report 2007
2.9.1.3 Deferred revenues for war risk insurance and fuel surcharges are recognised as
revenues when the outstanding balances are over 3 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 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 program 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.
2.9.3.1 Unredeemed awards are recognised as revenue after 3 years.
2.9.3.2 Redemptions with Star Alliance partners involve interline billing arrangements and
costs per mile specified in partner agreements. Revenues are recognised when transportation is provided.
2.9.3.3 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.
133Thai Airways International Public Company Limited
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
The Company’s tax expenses is calculated in accordance with the Revenue Code of Thailand.
The deferred income tax is calculated from temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
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 Instruments
The Company uses derivative financial instruments 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 at maturity according to the
contract. The different gain or loss will be recorded as interest income or expenses in an 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.
134 Annual Report 2007
3. THE EFFECT OF CHANGE IN ACCOUNTING POLICY
In fiscal year 2007, the Company has changed its accounting policy according to the Notification of
the Federation of Accounting Professions No. 26/2006 and No. 32/2006 regarding the change in accounting
for the investments in subsidiary and associated companies in the Company’s financial statements which
formerly recorded by equity method to cost method.
The Company restated its 2006 financial statement as though the Company had consistently
followed the new policy by using cost method in the Company’s financial statement. From the change in
this policy caused the book value of the investments in subsidiary and associated companies in the
Company’s financial statement as at September 30, 2007 was THB 926.77 million, a decrease of THB 908.40
million. As a result, the “Cumulative effect of change in accounting policy for an investment by cost method”
presented in the Company’s statement of change in shareholders’ equity as at October 1, 2006 and 2005
decreased by THB 916.83 and 760.26 million, respectively. Also, net profit for the year ended September
30, 2007 and 2006 of the Company’s financial statement increased by THB 8.43 million and decreased by
156.10 million, respectively.
4. ACCOUNTING PRESENTATION IN FINANCIAL STATEMENT
The Company has reclassified the accounting item regarding outsource wages and salaries, formerly
presented in flight operation expenses, to present in other operating expenses in the financial statement for
the year ended September 30, 2006 to conform with the current fiscal year which has no impact to net profit
or shareholders’ equity.
135Thai Airways International Public Company Limited
5. SUPPLEMENTARY INFORMATION
5.1 Cash and Cash Equivalents
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Cash - Domestic 15.10 18.13 15.10 18.13
Cash - Abroad 29.53 18.91 29.53 18.91
Bank Deposits - Domestic 4,024.43 2,486.93 3,681.63 2,249.49
Bank Deposits - Abroad 16,514.84 6,651.30 16,514.84 6,651.30
Total 20,583.90 9,175.27 20,241.10 8,937.83
5.2 Trade Account Receivables - Net
Trade account receivables are classified according to their stages of delinquency, as expressed in
the schedule below.
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Period of overdue
Not over 6 months 17,925.45 16,522.50 17,888.69 16,488.21
Over : 6 months to 1 year 63.24 109.19 63.24 107.50
Over : 1 year to 2 years 113.46 146.57 111.76 139.42
Over : 2 years 1,245.98 1,141.78 1,218.80 1,121.66
19,348.13 17,920.04 19,282.49 17,856.79
Less Allowance for doubtful accounts (1,362.70) (1,306.30) (1,334.24) (1,279.97)
Trade account receivables - net 17,985.43 16,613.74 17,948.25 16,576.82
136 Annual Report 2007
5.3 Inventories and Supplies - Net
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Aircraft spare parts 4,345.85 4,192.54 4,345.85 4,192.54
Less Provision for obsolescence
(10% of the year-end balance) (434.58) (419.25) (434.58) (419.25)
Aircraft spare parts - Net 3,911.27 3,773.29 3,911.27 3,773.29
Vehicle spare parts and ground
support equipment 232.54 210.76 232.54 210.76
Slow moving aircraft spare parts and
spare parts for sale 1,841.70 1,896.35 1,841.70 1,896.35
Less Provision for obsolescence
(33.33% of incurred balance during the period) (1,799.66) (1,828.08) (1,799.66) (1,828.08)
Slow moving aircraft spare parts and
spare parts for sale - Net 42.04 68.27 42.04 68.27
Fuel and oil for aircraft 1,062.07 485.15 1,062.07 485.15
Goods for sales 205.75 206.37 205.75 206.37
Cabin supplies 285.77 293.62 285.77 293.62
Supplies and other consumables 26.49 26.53 26.49 26.53
Stationery and office supplies 113.20 113.38 113.20 113.38
Inventories and spare parts in transit 118.75 77.98 118.75 77.98
Total inventories and supplies 1,812.03 1,203.03 1,812.03 1,203.03
Obsolete and damaged inventories for disposal 12.98 14.05 12.98 14.05
Less Provision for obsolescence (100%) (12.98) (14.05) (12.98) (14.05)
Obsolete and damaged inventories for
disposal - Net - - - -Total inventories and supplies - Net 5,997.88 5,255.35 5,997.88 5,255.35
Total inventories and supplies at year-end 8,245.10 7,516.73 8,245.10 7,516.73
Less Total provision for obsolete inventories
and supplies (2,247.22) (2,261.38) (2,247.22) (2,261.38)
Total inventories and supplies - Net 5,997.88 5,255.35 5,997.88 5,255.35
5.4 Other Current Assets
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Prepaid expenses and deposits 5,198.51 4,366.85 5,192.83 4,361.21
Tax refund 1,519.77 2,738.62 1,519.77 2,738.62
Cash and fixed deposits of pension fund 4,659.21 4,270.00 4,659.21 4,270.00
Others 3,422.53 3,180.60 3,384.28 3,154.45
Total 14,800.02 14,556.07 14,756.09 14,524.28
137Thai Airways International Public Company Limited
5.5 Investments
Consolidated
Units : Million Baht
Percentage of Investments Income on
Name of Company Shareholding Cost method Equity method investments
2007 2006 2007 2006 2007 2006 2007 2006
5.5.1 Investments using the equity method
Royal Orchid Hotel (Thailand)
Public Co., Ltd. 24 24 225.00 225.00 290.23 313.81 35.37 76.01
(Market value for the year 2007 amount
of THB 832.50 million and the year
2006 amount of THB 810.00 million)
Donmuang International Airport
Hotel Company Limited 40 40 48.00 48.00 194.47 219.97 (8.70) 63.48
Bangkok Aviation Fuel Services
Public Company Limited 22.6 22.6 115.19 95.99 514.03 469.13 89.06 98.96
(Market value for the year 2007 amount
of THB 1,244.01 million and the year
2006 amount of THB 1,084.67 million)
Phuket Air Catering Company Limited 30 30 30.00 30.00 53.82 44.81 15.01 4.86
Suvarnabhumi Airport Hotel
Company Limited 30 30 305.33 305.33 232.88 278.40 (45.52) (19.36)
Nok Airlines Company Limited 39 39 195.00 195.00 234.46 196.89 37.57 32.28
Total investments using the equity method 1,519.89 1,523.01 122.79 256.23
5.5.2 Other long-term investments
stated at cost
Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -
Aeronautical Radio of Thailand Limited 2.6 2.8 16.89 18.27 - -
SITA Investment Certificate - - 30.77 29.32 - -
Trade Siam Company Limited 3.5 3.5 1.75 1.75 - -
(paid 25% of authorized share capital)
SITA Information Networking Computing - - 31.22 34.24 - -
Other Shares - - 2.97 2.95 0.77 1.75
Investment in private fund - - 20.58 105.32 - -
Less Allowance for impairment of
Fuel Pipeline Transportation Limited (133.00) (133.00) - -
Total other long-term investments 104.18 191.85 0.77 1.75
138 Annual Report 2007
The Company
Units : Million Baht
Percentage of Investments
Name of Company Shareholding Cost method Dividend Income
2007 2006 2007 2006 2007 2006
5.5.1 Investments using the cost method
Subsidiary Company
Thai-Amadeus Southeast Asia Company Limited 55 55 8.25 8.25 57.75 29.70
Associated Companies
Royal Orchid Hotel (Thailand) Public Co., Ltd. 24 24 225.00 225.00 58.95 56.93
(Market value for the year 2007 amount of
THB 832.50 million and the year 2006 amount
of THB 810.00 million)
Donmuang International Airport Hotel
Company Limited 40 40 48.00 48.00 16.80 19.20
Bangkok Aviation Fuel Services Public Company Limited 22.6 22.6 115.19 95.99 63.35 54.71
(Market value for the year 2007 amount of
THB 1,244.01 million and the year 2006
amount of THB 1,084.67 million)
Phuket Air Catering Company Limited 30 30 30.00 30.00 6.00 4.50
Suvarnabhumi Airport Hotel Company Limited 30 30 305.33 305.33 - -
Nok Airlines Company Limited 39 39 195.00 195.00 - -
Total 918.52 899.32 145.10 135.34
Total investments using the cost method 926.77 907.57 202.85 165.04
5.5.2 Other long-term investments
stated at cost
Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -
Aeronautical Radio of Thailand Limited 2.6 2.8 16.89 18.27 - -
SITA Investment Certificate - - 30.77 29.32 - -
Trade Siam Company Limited 3.5 3.5 1.75 1.75 - -
(paid 25% of authorized share capital)
SITA Information Networking Computing - - 31.22 34.24 - -
Other Shares - - 2.97 2.95 0.77 1.75
Less Allowance for impairment of
Fuel Pipeline Transportation Limited (133.00) (133.00) - -
Total other long-term investments 83.60 86.53 0.77 1.75
139Thai Airways International Public Company Limited
5.5.3 Financial Data Summary of Subsidiary and Associated Companies
Units : Million Baht
Name of Company Assets Liabilities Income Gains (Losses)
Subsidiary Company
Thai-Amadeus Southeast Asia Company Limited 656.63 83.39 382.03 130.25
Associated Companies
Royal Orchid Hotel (Thailand) Public Co., Ltd. 1,427.94 218.65 586.91 96.44
Donmuang International Airport Hotel
Company Limited 524.68 38.52 86.01 (12.79)
Bangkok Aviation Fuel Services Public
Company Limited 5,558.24 3,180.78 826.94 227.09
Phuket Air Catering Company Limited 186.51 7.11 102.89 41.85
Suvarnabhumi Airport Hotel Company Limited 2,631.33 1,855.07 520.87 (54.88)
Nok Airlines Company Limited 1,053.94 452.76 1,791.65 51.88
The Company used financial statements of associated companies as at June 30, 2007 to record
the investment by equity method in the consolidated financial statement and by cost method in the
Company’s financial statement due to a different reporting period in financial statements except for
Suvarnabhumi Airport Hotel Company Ltd., which has the same accounting period as the Company but
cannot summit its financial statement to the Company in time for accounting closing.
5.6 Related Parties The Company
5.6.1 Major shareholders
Units : Million Baht
2007 2006
Ministry of Finance
Guaranteed loans - 150.00
Foreign loans via the Ministry of Finance 16,195.68 17,873.32
140 Annual Report 2007
5.6.2 Subsidiary Company
Units : Million Baht
2007 2006
Name of Company Sales Account Purchase Account Sales Account Purchase Account
Receivables Payables Receivables Payables
Thai - Amadeus Southeast Asia
Company Limited 30.29 3.00 - - 49.12 10.63 - -
5.6.3 Associated Companies
Units : Million Baht
2007 2006
Name of Company Sales Account Purchase Account Sales Account Purchase Account
Receivables Payables Receivables Payables
Royal Orchid Hotel (Thailand)
Public Co., Ltd. 0.05 0.05 21.24 - 0.03 0.01 21.77 0.83
Donmuang International Airport
Hotel Company Limited - - 14.76 - - - 56.00 0.80
Bangkok Aviation Fuel Services
Public Company Limited 0.03 0.01 405.26 32.95 0.22 0.01 295.30 25.64
Phuket Air Catering Company Limited 6.20 1.01 3.73 0.75 5.67 0.29 3.84 0.45
Suvarnabhumi Airport Hotel
Company Limited - - 44.00 0.55 - - - -
Nok Airlines Company Limited 1,806.23 116.22 - - 1,694.07 143.90 - -
The Company purchases goods and services at a market price from related parties on normal
commercial term as unrelated parties.
141Thai Airways International Public Company Limited
5.7 Property, Plant and Equipment - Net
Consolidated
Units : Million Baht
Aircraft Aircraft Aircraft Land Other Total
under spare parts buildings plant and
financial and equipment
leases development
Cost
As at October 1, 2006 154,518.30 108,895.50 28,238.39 17,018.88 27,960.26 336,631.33
- Adjust/Transfer (14,876.19) 13,140.13 (1,594.83) (147.46) (4,475.36) (7,953.71)
- Increased asset 8,254.67 15,147.71 2,439.48 2,110.17 5,030.07 32,982.10
- Sold (5,493.62) (42.70) (1,371.72) (132.40) (518.97) (7,559.41)
As at September 30, 2007 142,403.16 137,140.64 27,711.32 18,849.19 27,996.00 354,100.31
Accumulated depreciation
As at October 1, 2006 79,511.41 19,205.06 16,989.67 8,125.01 16,769.63 140,600.78
- Depreciation 6,837.49 6,189.10 1,916.33 798.01 1,920.39 17,661.32
- Adjust/Transfer 253.25 (1,976.54) (904.95) - - (2,628.24)
- Sold (4,924.87) (42.70) (638.90) (125.34) (516.31) (6,248.12)
As at September 30, 2007 81,677.28 23,374.92 17,362.15 8,797.68 18,173.71 149,385.74
Net book value
As at September 30, 2006 75,006.89 89,690.44 11,248.72 8,893.87 11,190.63 196,030.55
As at September 30, 2007 60,725.88 113,765.72 10,349.17 10,051.51 9,822.29 204,714.57
142 Annual Report 2007
The Company
Units : Million Baht
Aircraft Aircraft Aircraft Land Other Total
under spare parts buildings plant and
financial and equipment
leases development
Cost
As at October 1, 2006 154,518.30 108,895.50 28,238.39 17,018.88 27,713.08 336,384.15
- Adjust/Transfer (14,876.19) 13,140.13 (1,594.83) (147.46) (4,459.23) (7,937.58)
- Increased asset 8,254.67 15,147.71 2,439.48 2,110.17 5,010.87 32,962.90
- Sold (5,493.62) (42.70) (1,371.72) (132.40) (518.97) (7,559.41)
As at September 30, 2007 142,403.16 137,140.64 27,711.32 18,849.19 27,745.75 353,850.06
Accumulated depreciation
As at October 1, 2006 79,511.41 19,205.06 16,989.67 8,125.01 16,615.42 140,446.57
- Depreciation 6,837.49 6,189.10 1,916.33 798.01 1,885.89 17,626.82
- Adjust/Transfer 253.25 (1,976.54) (904.95) - - (2,628.24)
- Sold (4,924.87) (42.70) (638.90) (125.34) (516.32) (6,248.13)
As at September 30, 2007 81,677.28 23,374.92 17,362.15 8,797.68 17,984.99 149,197.02
Net book value
As at September 30, 2006 75,006.89 89,690.44 11,248.72 8,893.87 11,097.66 195,937.58
As at September 30, 2007 60,725.88 113,765.72 10,349.17 10,051.51 9,760.76 204,653.04
In this fiscal year, there are 90 aircraft in the Company’s fleet consisting of 53 own aircraft which
5 aircraft are leased by other company, 25 aircraft under financial leases and 12 aircraft under operating
leases. Two Airbus A300-600 and one Boeing 747-300 aircraft are sold in this fiscal year amount of THB
1,085.81 million with a total book value of THB 644.06 million including labor and maintenance supplies.
So, the Company has gain on sales of aircraft amount of THB 441.75 million.
Aircraft spare parts consist of aircraft engines and other aircraft spare parts.
Other plants and equipment-net amount of THB 9,822.29 million (consolidated) and THB
9,760.76 million (the Company) have already included the work in progress of Suvarnabhumi project amount
of THB 336.78 million consisting of building, facilities, equipment and information technology which support
to the services in Suvarnabhumi.
143Thai Airways International Public Company Limited
The Company uses buildings and equipment purchased at THB 36,699.71 million that are now
fully depreciated.
5.8 Intangible Assets-net
Units : Million Baht
Consolidated The Company
Cost
As at October 1, 2006 455.61 453.13
- Assets increase 525.64 524.15
As at September 30,2007 981.25 977.28
Accumulated depreciation
As at October 1, 2006 34.40 34.35
- Depreciation 90.03 89.66
As at September 30, 2007 124.43 124.01
Net book value
As at September 30, 2006 421.21 418.78
As at September 30, 2007 856.82 853.27
5.9 Deferred Income Taxes
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Contribution to staff pension fund 1,179.21 1,162.87 1,179.21 1,162.87
Allowance for obsolete inventories 674.17 678.41 674.17 678.41
Allowance for doubtful accounts 465.00 481.68 456.46 473.78
Allowance impairment in value of assets 354.88 172.77 354.88 172.77
Estimated accrual expenses 450.45 353.57 450.45 353.57
Frequent flyer program (ROP) 446.89 313.97 446.89 313.97
Deferred loss on foreign currency exchange 313.66 853.34 313.66 853.34
Others 17.28 3.71 13.63 -
Total 3,901.54 4,020.32 3,889.35 4,008.71
144 Annual Report 2007
5.10 Other Non-Current Assets Consolidated and the Company
Units : Million Baht
2007 2006
Deferred charges 1,431.09 1,144.79
Others 59.01 -
Total 1,490.10 1,144.79
Deferred charges consisted of aircraft overhaul costs (D-check) for aircraft under operating
lease which are amortized 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 amortized as expenses over the period of due
payment loans in each accounting period.
5.11 Short-term Loans Consolidated and the Company
Currency Loan Currency Baht Equivalent (Million)
2007 2006 2007 2006
EUR 100,000,000 117,000,000 4,883.01 5,606.42
USD 132,000,000 - 4,538.83 -
JPY 9,000,000,000 - 2,699.22 -
Short-term loans 12,121.06 5,606.42
At the end of fiscal year 2007, the short-term loans of the Company loaned from the Ministry
of Finance in the form of European Commercial Paper (ECP) amounted to THB 12,121.06 million at the interest
rate ranging from 0.60 - 5.20% per annum.
5.12 Long-term Loans Consolidated and the Company
Currency Loan Currency Baht Equivalent (Million)
2007 2006 2007 2006
JPY 9,000,000,000 18,000,000,000 2,699.22 5,775.30
USD 40,000,000 172,477,817 1,375.40 6,491.59
THB - 150,000,000 - 150.00
Total Long-term loans 4,074.62 12,416.89
Less Current portion of long-term loans - 8,023.75
Net Long-term loans 4,074.62 4,393.14
145Thai Airways International Public Company Limited
At the end of fiscal year 2007, the outstanding of long-term loans for acquisition of 7 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 4,074.62 million at the interest rates ranging from
1.70% - 7.07% per annum.
5.13 Liabilities Under Financial Leases Consolidated and the Company
Currency Loan Currency Baht Equivalent (Million)
2007 2006 2007 2006
JPY 49,496,724,849 61,334,337,659 14,844.71 19,679.12
USD 216,775,736 268,091,820 7,453.85 10,090.25
EUR 1,121,003,637 668,446,068 54,738.72 32,030.67
Total Financial lease 77,037.28 61,800.04
Less Current portion of financial leases 8,667.64 8,314.39
Net Liabilities under financial leases 68,369.64 53,485.65
For certain of its aircraft, the Company has financial leases with buyout options. The Company
had financial leases with 7 foreign financial institutions. The accounting policy for recording aircraft under
financial leases is described in Note 2.8. In fiscal year 2007, the Company has outstanding obligations
totalling THB 91,692.51 million under financial leases for 25 aircraft with maturities ranging from 2007 to
2019. After deducting interest due amount of THB 14,655.23 million, the principal balance of obligations
under the Company’s financial leases is THB 77,037.28 million.
The Company has entered into a long-term loan contract in the form of Asset-Based Financing for
Boeing 777-200ER No. 1 - 4 for an aggregate of EUR 361.38 million or approximately THB 17,173.32 million
arranged by BNP Paribas and guaranteed by the US Ex - Im Bank.
On April 11, 2007, the Company has entered into a long-term loan contract in the form of
Asset - Based Financing for Airbus A340-500 No. 4 for an aggregate of EUR 79.14 million or approximately
THB 3,735.90 million arranged by the HSBC.
On September 24, 2007, the Company has entered into a financial lease contract with foreign
financial institutions for 12 years. This financial lease was arranged by the HSH Nordbank AIG Singapore
Branch for Boeing 777-200ER No. 5 amount of EUR 82.64 million or approximately THB 4,013.89 million.
146 Annual Report 2007
5.14 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 4,200.00 million and the amount of THB 1,050.00 million was repaid
during the period, leaving a balance of THB 3,150.00 million (THB 1,950.00 million from the Government
Saving Bank guaranteed by the Ministry of Finance and THB 1,200.00 million from THAI Employees’ Saving
& Credit Coops Ltd.,). As at September 30, 2007, 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
2,100.00 million.
5.15 Debenture Bonds
According to the Resolution of Extraordinary Shareholders’ Meeting No. 1/2003 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. As at September 30, 2007, the amount of THB 6,000 million was transferred to
a current portion of long-term loans, leaving a balance as long-term loans amount of THB 34 billion. The
details are as follows:
Tenor Interest Rate Amount
(Year) Pay every 6 months (MTHB) Maturity date
(%)
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, 2007 40,000
147Thai Airways International Public Company Limited
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.
5.16 Current Liabilities - Others
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Airport fees 1,176.61 2,348.38 1,176.61 2,348.38
Deferred income 1.31 3.68 1.04 2.83
Taxes payable 387.59 372.90 385.52 370.90
Fringe benefits-field office staff 422.22 447.95 422.22 447.95
Other account payables 648.51 1,454.36 630.01 1,435.67
Total 2,636.24 4,627.27 2,615.40 4,605.73
5.17 Dividends Payment the Company
According to the Annual General Shareholders’ Meeting for the year 2006 held on December 27,
2006 approved the Company to pay the dividends for the year 2006 operation at THB 1.65 per share for an
aggregate of THB 2,803.18 million.
5.18 Share Capital
As at September 30, 2007, 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 16,989.01 million.
The Company determined the last exercise date for type-one and type-two warrants to purchase
ordinary shares on April 2, 2007. If the warrant holders do not exercise their warrants by the last exercise date,
the Company will deem such warrants expired and warrant holders can no longer exercise such warrants. There
are 3,350 and 5,450 units of type-one and type-two warrants which have not been exercised, respectively.
5.19 Legal Reserve
At the end of fiscal year 2006, 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.
148 Annual Report 2007
5.20 Other Incomes - Others
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Compensation revenues from
insurance companies (asset) 14.88 566.60 14.88 566.60
Gains on sales of assets 571.34 1,611.50 571.34 1,611.50
Revenue from investments 0.77 1.75 0.77 1.75
Dividend from subsidiary and
associated companies - - 202.85 165.04
Other incomes 794.80 1,208.40 784.18 1,203.00
Total 1,381.79 3,388.25 1,574.02 3,547.89
5.21 Other Expenses - Others
Units : Million Baht
Consolidated The Company
2007 2006 2007 2006
Bad and doubtful debts 101.11 109.29 98.98 101.38
Credit card fees 522.48 429.60 522.39 429.60
Compensation to customers for Damages 156.49 130.35 156.49 130.35
Impairment loss of assets 1,307.38 442.91 1,307.38 442.91
Other expenses 69.50 42.44 69.50 42.19
Total 2,156.96 1,154.59 2,154.74 1,146.43
5.22 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.
149Thai Airways International Public Company Limited
Consolidated
For the years ended September 30, 2007 and 2006
Gains No. of Shares Earnings per share
2007 2006 2007 2006 2007 2006
Million Million Million Million
Baht Baht Shares Shares Baht Baht
Basic earnings per share
Net Profits attributable to ordinary
shareholders 6,342.07 8,991.60 1,698.90 1,698.89 3.73 5.29
Effects of dilutive potential
ordinary shares
Warrants to purchase ordinary shares not
exercising the rights - - - 0.01
Diluted earnings per share
Net Profits attributable to ordinary
shareholders under conversion
assumption to ordinary shares 6,342.07 8,991.60 1,698.90 1,698.90 3.73 5.29
The Company
For the years ended September 30, 2007 and 2006
Gains No. of Shares Earnings per share
2007 2006 2007 2006 2007 2006
Million Million Million Million
Baht Baht Shares Shares Baht Baht
Basic earnings per share
Net Profits attributable to ordinary
shareholders 6,350.50 8,835.50 1,698.90 1,698.89 3.74 5.20
Effects of dilutive potential
ordinary shares
Warrants to purchase ordinary shares not
exercising the rights - - - 0.01
Diluted earnings per share
Net Profits attributable to ordinary
shareholders under conversion
assumption to ordinary shares 6,350.50 8,835.50 1,698.90 1,698.90 3.74 5.20
150 Annual Report 2007
5.23 Financial Information by Segment Consolidated
5.23.1 Business Segments
Statements of Income
For the years ended September 30, 2007 and 2006
Units : Million Baht
Inter - Segment
Revenues Revenues Total Revenues Segment Results
2007 2006 2007 2006 2007 2006 2007 2006
Air transportation 182,987.88 170,087.04 - - 182,987.88 170,087.04 12,122.77 6,239.21
Business Units 7,869.25 7,387.96 15,923.86 13,472.24 23,793.11 20,860.20 530.55 1,886.13
Other activities 1,179.88 1,131.88 400.23 369.46 1,580.11 1,501.34 134.77 238.86
Eliminations - - (16,324.09) (13,841.70) - - - -
Operating profits 12,788.09 8,364.20
Share of net profit
from subsidiary and
associated companies 122.79 256.23
Interest expenses-net (4,077.80) (4,134.11)
Gains on foreign
currency exchange 1,184.80 6,178.10
Other revenues
(expense) (877.28) 2,157.73
Minority interests (58.61) (53.11)
Income taxes (2,739.92) (3,777.44)
Net profits 6,342.07 8,991.60
151Thai Airways International Public Company Limited
Assets and Liabilities
As At September 30, 2007 and 2006
Units : Million Baht
Current Assets Non-Current Assets Total Assets
2007 2006 2007 2006 2007 2006
Air transportation 56,311.59 42,633.50 200,678.66 196,444.79 256,990.25 239,078.29
Business Units 492.04 487.28 11,810.60 6,674.61 12,302.64 7,161.89
Other activities 558.78 419.02 97.85 212.32 656.63 631.34
Non-allocated assets 2,136.68 2,162.88 - - 2,136.68 2,162.88
Total 59,499.09 45,702.68 212,587.11 203,331.72 272,086.20 249,034.40
Units : Million Baht
Current Liabilities Non-Current Liabilities Total Liabilities
2007 2006 2007 2006 2007 2006
Air transportation 87,324.01 77,224.84 113,284.02 105,469.87 200,608.03 182,694.71
Business Units 1,810.62 248.04 32.13 54.74 1,842.75 302.78
Other activities 83.39 83.35 - - 83.39 83.35
Non-allocated liabilities 324.34 272.38 - - 324.34 272.38
Total 89,542.36 77,828.61 113,316.15 105,524.61 202,858.51 183,353.22
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.
152 Annual Report 2007
5.23.2 Geographical Segments
Units : Million Baht
2007 2006
Domestic Revenues
Transportation 11,319.06 10,782.97
Business units 7,869.25 7,387.96
Other activities 1,179.89 1,131.88
Total domestic revenues 20,368.20 19,302.81
Foreign Transportation Revenues
Regional Asia 69,678.17 71,172.75
Europe 49,888.46 47,275.32
North Pacific 6,653.66 4,699.40
Australia & New Zealand 16,667.90 12,498.45
Africa 1,184.65 -
Total foreign transportation revenues 144,072.84 135,645.92
Charter revenues and others 7,126.43 6,335.74
Insurance surcharge from passengers 2,387.32 2,501.60
Fuel surcharge from passengers 18,082.23 14,820.81
Total 192,037.02 178,606.88
5.24 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, liabilities and balance 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:
Units : Million Baht
2007 2006
Current assets 4,757.13 4,485.25
Others 37.99 45.79
Total 4,795.12 4,531.04
Other current liabilities 23.24 35.22
Pension fund 4,771.88 4,495.82
Total 4,795.12 4,531.04
153Thai Airways International Public Company Limited
As at September 30, 2007, the fund balance was THB 4,771.88 million, equal to the Company’s
obligation to its staff under the fund. The total Company contribution to the fund in this fiscal year was
THB 345.78 million, consisting of contributions at a rate equivalent to 10% of employee salaries in the amount
of THB 247.86 million and additional amounts to match the Company’s obligation of THB 97.92 million.
5.25 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 1,052.49 million in fiscal year 2007.
The Company’s provident fund is managed by TISCO Asset Management Company Limited
and Krungthai Asset Management Public Company Limited which are permitted by the Securities and
Exchange Commission, Thailand (SEC).
5.26 Contingent Liabilities
The Company has contingent liabilities, not presented in the financial statements, as follows:
Units : Million Baht
2007 2006
Letters of guarantee issued by banks 2.95 6.07
The Company as defendant in
Labour dispute cases 548.55 515.70
Damage claims cases 1,311.96 290.63
Total 1,863.46 812.40
On February 26, 2007, the Company has been filed a lawsuit by 35 airfreight customers
before United States District Court Eastern District of New York. The lawsuit alleges that the Company and
other 38 air carriers have conspired to fix prices of surcharge such as fuel, war risk, etc. which were claimed
to be in violation of Sherman Act/Antitrust Law and EU Law and caused damages to them. The airfreight
customers have brought this action before the court to recover treble damages from the air carriers. At the
time of filing, the actual damage amounts have not been determined by each plaintiff, but will be raised to
the court later. However, the Company has retained the antitrust lawyer and has joined defense with other
26 defendant air carriers. On July 18, 2007, the joined defendants’ motion to dismiss the case has been filed
with the court contending that the court dose not have jurisdiction and plaintiffs do not have standing.
154 Annual Report 2007
5.27 Disclosure of Financial Instruments The Company
5.27.1 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.
Units : Million Baht
2007
Weighted Floating Interest Rates Fixed Interest Rates
Financial Liabilities Average Less than Over Less than Over Total
Interest Rate 1 year 1 year 1 year 1 year
USD 6.28 773.56 2,786.72 5,645.37 4,162.44 13,368.09
JPY 0.97 2,290.60 12,554.11 2,699.22 2,699.22 20,243.15
EUR 4.15 3,129.36 36,385.89 6,250.60 13,855.88 59,621.73
THB 4.47 1,050.00 2,100.00 6,000.00 34,000.00 43,150.00
Units : Million Baht
2006
Weighted Floating Interest Rates Fixed Interest Rates
Financial Liabilities Average Less than Over Less than Over Total
Interest Rate 1 year 1 year 1 year 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
For Interest Rate Risk Management, The Company applies a derivative financial instrument,
Interest Rate Swap (IRS), to swap the floating interest rates which show high tendency to increase to fixed.
At the end of fiscal year 2007, the portion of the Company’s debt after swap with floating to fixed interest rate is
31.6 : 68.4, including obligation under operating lease.
155Thai Airways International Public Company Limited
5.27.2 Foreign Currency Exchange Rate Risk
The Company generates revenues in more than 40 currencies, mainly in EUR and THB
while incurring liabilities and expenses mainly in 4 major currencies : USD, JPY, EUR and THB. Fluctuations
in exchange rates affect on long-term liabilities and operating expenses denominated in foreign currencies.
Therefore, The Company has adopted “Natural Hedge” strategy to mange these risk by increasing the
matching of currency between the revenue and expenses and the currency mix between its debts and net
cash flow from operation. In addition, The Company has a policy to enter into Cross Currency Swap (CCS) when
the financial market benefits to the Company. At the end of fiscal year 2007, the proportion of the Company’s
debts after swap in each currency i.e. USD : EUR : YEN : THB is 12.4 : 50 : 14 : 23.6 including obligation under
operating lease.
Units : Million Baht
Foreign Currency Liabilities
2007 2006
Currency Maturity within Maturity over Maturity within Maturity over
1 year 1 year 1 year 1 year
USD 6,418.93 6,949.16 6,917.50 9,664.35
JPY 4,989.82 15,253.33 6,685.75 18,768.67
EUR 9,379.96 50,241.77 8,191.32 29,445.77
5.27.3 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 22.51% per annum.
156 Annual Report 2007
5.27.4 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, 2007 and 2006.
Units : Million Baht
The Company
2007 2006
Balance Fair Value Balance Fair Value
(restated) (restated)
Financial Assets
Cash and cash equivalents 20,241.10 20,241.10 8,937.83 8,937.83
Investments in related companies 926.77 2,663.09 907.57 2,481.25
Other investments 83.60 83.60 86.53 86.53
Trade account receivables 17,948.25 17,948.25 16,576.82 16,576.82
Financial Liabilities
Trade account payables 7,942.17 7,942.17 9,411.60 9,411.60
Loans 136,382.97 136,382.97 124,023.36 124,023.36
Accrued expenses 20,528.69 20,528.69 16,456.08 16,456.08
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.
Investments in related companies are stated at a closed market price of the Stock Exchange
of Thailand.
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.
157Thai Airways International Public Company Limited
5.28 Contractual Obligations
5.28.1 Obligation to Purchase Aircraft
The Company has a payment obligation to purchase aircraft amount of THB 46,305.00
million.
5.28.2 Leases and Obligations of aircraft
5.28.2.1 The Company has entered into operating leases amount of USD 229.23 million or
approximately THB 7,882.16 million (exchange rate USD 1 : THB 34.3851).
5.28.2.2 The Company sent the notification to exercise the purchase option for four
aircraft after expiry date of operating leases. These consisted of two Boeing 747-400 which the lease will be
expired on April 28 and November 12, 2008 at the price of USD 38.91 and 38.83 million or approximately
THB 1,337.76 and 1,335.31 million, respectively, as well as two Boeing 777-200 which the leases will be expired
on October 31, 2008 and January 9, 2009 at the price of USD 33.30 and 33.38 million or approximately
THB 1,145.11 and 1,147.82 million, respectively, due to the need to utilize of such aircraft and no plan to
remove those aircraft from the Company’s fleet. Moreover, the exercise prices of the aircraft are still lower
than the appraised value and the Company already modified these four aircraft.
5.29 Events After the Balance Sheet Date
5.29.1 On November 12, 2007, the Securities and Exchange Commission (SEC) permitted the
Company issuing the first offering Baht debentures to the public for an aggregate of THB 7,500 million during
November 15 - 21, 2007. These debentures are offered into two tranches. The first tranch amounted to THB
3,000 million with 3 - year maturity at fixed coupon rate of 4.51% per annum and the second tranch
amounted to THB 4,500.00 million with 5 - year maturity at fixed coupon rate of 5.04% per annum.
5.29.2 On October 11, 2007, the Company sold one Boeing 747-300 aircraft with a gain on sales
of THB 118.01 million.
5.29.3 On October 29, 2007, the Company took a delivery of one Boeing 777-200ER under
financial lease at a total cost of THB 5,300.56 million.
5.30 Approval of Financial Statements
These financial statements were approved by the Audit Committee, the Authorized Board of
Directors, on November 20, 2007.
158 Annual Report 2007
General Information
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, 66 (0) 2695-1000
Ordinary SharesAs of April 11, 2007 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: 1,698,900,950 shares with a par value of 10 baht per share or a total of
16,989,009,500 baht
Affiliated companies in which the Company’s shareholding exceeds 10%
Paid-upAuthorized Shares
(million baht)
Thai-Amadeus Southeast Asia Company Limited Online 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, Don Muang,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,Amphur 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, Bangrak,Bangrak, Bangkok 10500Tel. 66 (0) 2266-0123 Fax. 66 (0) 2236-6656
Bangkok Aviation Fuel Services Public Company Limited Aviation Fuel Services, Ordinary 425.00 22.6171/2 Moo 10, Vibhavadi Rangsit Road, Aviation Depot andSikan, Don Muang, Bangkok 10210 Aircraft Refueling ServiceTel. 66 (0) 2565-3811-8 Fax. 66 (0) 2565-3825
Suvarnabhumi Airport Hotel Company Limited Hotel and Restaurant Ordinary 1,017.78 30.0999 Suvarnabhumi Airport Hotel BuildingMoo 1, Nongprue, Bang Phli, Samutprakarn 10540Tel. 66 (0) 2131-1111 Fax. 66 (0) 2131-1188
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 Names Business Type Share Type
158 Annual Report 2007
159Thai Airways International Public Company Limited
References
Securities Registrar THAILAND SECURITIES DEPOSITORY CO., LTD.
62 Ratchadapisek Road, Khlong Toei, Bangkok 10110
Tel. 66 (0) 2229-2800, 66 (0) 2229-2888, 66 (0) 2654-5599
Fax. 66 (0) 2359-1262-3
Debenture Holders’ Representative 1/2546 KASIKORNBANK PLC.
Securities Service Department
Fl.20, 1 Soi Kasikornthai, Ratburana Road
Ratburana, 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
Fl.20, 1 Soi Kasikornthai, Ratburana Road
Ratburana, Bangkok 10140
Tel. 66 (0) 2470-1981-3 Fax. 66 (0) 2470-1998
Debenture Holders’ Representative 1/2547 NATIONAL FINANCE PLC.
900 Tonson Tower, Ploenchit Road, Lumpini,
Pathumwan, Bangkok 10330
Tel. 66 (0) 2665-9129 Fax. 66 (0) 2655-9001
Debenture Registrar 1/2547 SIAM COMMERCIAL BANK PLC.
Corporate Trust Operations Division
Building 2, Fl.3, 1060 Phetchaburi Tat Mai Road,
Mukkasun, Ratchatawee Bangkok 10400
Tel. 66 (0) 2256-2323-27 Fax. 66 (0) 2256-2405
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) 2230-5575, 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
159Thai Airways International Public Company Limited
160 Annual Report 2007
ACM Chalit PukbhasukChairmanEducation- 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 Headquarters- Deputy Chairman,
Council for National SecurityActing for Chairman
Mr. Suparut Kawatkul1St Vice 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 LimitedPresent Positions- Permanent Secretary for Finance, Ministry of Finance- Chairman of the Board of Directors, Government Pension Fund- Chairman of the Board of Directors,
Krung Thai Bank Public Company Limited
Mr. Chaisawasd Kittipornpaiboon2nd Vice ChairmanEducation- Bachelor of Civil Engineering, Chulalongkorn UniversityExperience- Director-General, The Department of Highways- Director, Bureau of Field Highway 11- Director, Office of Inter-City MotorwayPresent Positions- Permanent Secretary, Ministry of Transport
Board of Directors
160 Annual Report 2007
161Thai Airways International Public Company Limited
∫«√»—°¥‘Ï
Mr. Chaisak Saeng-XutoDirectorEducation- Master of Engineering,
University of California, Berkeley, California, U.S.A.Experience- Advisor to the Board, Siam Cement Public Company Limited- Audit Committee Member,
The Siam Commercial Samaggi Insurance Public Company LimitedPresent Position- Independent Director, KASIKORNBANK Public Company Limited
Mr. Chartsiri SophonpanichDirectorEducation- Master’s Degree, Chemical Engineering,
Massachusetts Institute of Technology (MIT), U.S.A.Experience- Chairman, The Thai Bankers’ Association- Director, Thai Asset Management CorporationPresent Positions- President, Bangkok Bank Public Company Limited- Director, The Post Publishing Public Company Limited
Mr. Borwornsak UwannoDirectorEducation- Docteur de 3 e cycle (Droit Public Général) (mention trés bien)
Université de Paris X (Nanterr)Experience- Dean, the Faculty of Law, Chulalongkorn University- Secretary-General to the Cabinet, The Secretariat of the Cabinet- Chairman of the Audit Committee, Ministry of JusticePresent Positions- Secretary-General, King Prajadhipok’s Institute- Chairman of Princess Maha Chakri Sirindhorn
Anthropology Centre- Director, Bank of Thailand
Khun Pornthip JalaDirectorEducation- Master of Laws (LL.M) University of Michigan, U.S.A.Experience- Committee Member, Financial Institution Development Fund,
Bank of Thailand- Director, Government Pension FundPresent Positions- Secretary-General, Office of the Council of State,
Office of the Prime Minister- Director, Bank of Thailand- Independent Director, PTT Public Company Limited
161Thai Airways International Public Company Limited
162 Annual Report 2007
Mr. Pichai ChunhavajiraDirectorEducation- Master of Business Administration (Finance),
Indiana University of Pennsylvania, U.S.A.Experience- Acting President, The Bangchak Petroleum Public Company Limited- Deputy Governor, Finance, Petroleum Authority of ThailandPresent Positions- Senior Executive Vice President, Corporate Finance and Accounting,
PTT Public Company Limited- Director, PTT Exploration and Production Public Company Limited- Director, Thaioil Public Company Limited
Mr. Wisudhi SrisuphanDirectorEducation- M.A.A. Business Economics, Thammasat UniversityExperience- Director-General, The Excise Department, Ministry of Finance- Director-General, The Treasury Department, Ministry of Finance- Director, PTT Exploration and Production Public Company LimitedPresent Positions- Director-General, The Customs Department, Ministry of Finance- Chairman, Government Savings Bank, Ministry of Finance- The Fifth Committee of the Councillor of State,
Office of the Council of State
Gen. Ruengroj MahasaranondDirectorEducation- Bachelor of Science, Chulachomklao Royal Military AcademyExperience- Supreme Commander, Office of Supreme Commander- President of Advisory Group, Office of Supreme Commander- Commanding General, Armed Forces Development CommandPresent Positions- Director, General Prem Tinsulanonda Statesman Foundation- Director, Rakmuangthai Foundation
Gen. Pairoj PanichsamaiDirectorEducation- Master’s Degree in Social Development, National Institute of
Development AdministrationExperience- Deputy Supreme Commander,
Office of Supreme Commander- President of Advisory Group, Royal Thai Army Headquarters- Commanding General, Weapon Production Center, Royal Thai Army
HeadquartersPresent Position- Audit Committee, RS Public Company Limited
163Thai Airways International Public Company Limited
Mr. Sivaporn DardaranandaDirectorEducation- MBA in International Business and Finance,
Wharton Graduate Division, Philadelphia, Pennsylvania, U.S.A.Experience- Managing Director, TISCO- Advisor for Governor of Bank of Thailand- Director at Counseling Committee for Reforming Financial Institution SystemPresent Positions- Secretary-General, Elephant Reintroduction Foundation- Independent Director and Audit Committee Member,
The Siam Commercial Samaggi Insurance Public Company Limited- Director, The Union Mosaic Industry Public Company Limited
Mr. Wichit Na-RanongDirectorEducation- Master of Public Administration,
University of Southern California, U.S.A.Experience- President, Tourism Council of Thailand- President, Thai Hotels Association- Committee Member, ASEAN Tourism Association (ASEANTA)Present Positions- Managing Director, Pearl Group Company- Honorable Committee, Prince of Songkla University- Member, Advisory Board of Sasin Graduate Institute of
Business Administration of Chulalongkorn University
Mr. Aviruth WongbuddhapitakDirectorEducation- Master of Business Administration, New York University, U.S.A.Experience- President, Cementhai Property (2001) Public Company Limited- Vice President & Chief of Financial Officer,
The Siam Cement Public Company Limited- President, TileCera Inc., U.S.A.Present Positions- Assistant & Director General, the Crown Property Bureau- Chairman of the Executive Committee,
The Deves Insurance Public Company Limited- Member of the Executive Committee,
Thai Plastic and Chemicals Public Company Limited
Flg. Off. Apinan SumanaseniDirectorEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Executive Vice President, Operations Department- Vice President, Flight Operations Department- Deputy Vice President, Flight Operations Department
Thai Airways International Public Company LimitedPresent Positions- President, Thai Airways International Public Company Limited- CEB, Star Alliance Services GmbH
164 Annual Report 2007
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
ACM Narongsak SangapongExecutive Vice President,Corporate Secretariat DepartmentEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Executive Vice President, Special Project Department
Management Team
164 Annual Report 2007
Wg. Cdr. Supachai LimpisvastiSpecial Activities Advisor, Technical,Senior Executive Vice President levelEducation- Doctor of Engineering (Structure Engineering and Mechanics),
Asian Institute of TechnologyExperience- 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
165Thai Airways International Public Company Limited
Mr. Wallop BhukkanasutExecutive Vice President,Commercial DepartmentEducation- Bachelor of Arts, The University of Hawaii, U.S.A.Experience- Vice President, Sales & Distribution Department- Vice President, Marketing Planning Department- Vice President, Alliance 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 and Management 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 Development Department- Director, Pilot Administration Department
165Thai Airways International Public Company Limited
Flt. Lt. Pisal ChayakulaExecutive Vice President,Corporate Planning andInformation Technology Services DepartmentEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Executive Vice President, Corporate Support Department- Vice President, Aviation Personnel Development Department- Deputy Vice President,
Aviation Personnel Development Department
166 Annual Report 2007
Flg. Off. Norahuch PloyyaiExecutive Vice President,Standards Assurance and Risk Management DepartmentEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Vice President, Special Project Department- Director,
Operations Appraisal and Coordination Department- Deputy Director,
Crew General Administration Department
Mr. Tummasak ChutiwongManaging Director, Technical Department,Executive Vice President levelEducation- Master of Engineering, Lamar University, U.S.A.Experience- Executive Vice President,
Corporate Secretariat Department- Executive Vice President,
Human Resources Development and Management Department- Vice President, Corporate Strategic Department
Mr. Chanchai SingtorojExecutive Vice President,Human Resources Development andManagement DepartmentEducation- Master of Arts in Political Science, Thammasat UniversityExperience- Managing Director, Cargo & Mail Commercial Department- Vice President, Marketing Planning Department- Vice President, Sales and Distribution Department
Flg. Off. Chinawut NaressaeneeExecutive Vice President,Corporate General Administration DepartmentEducation- Master of Arts (Political Science),
Public Administration, Thammasat UniversityExperience- Executive Vice President,
Standards and General Administration Department- Senior Vice President,
Standards and Safety Assurance Department- Vice President, Special Project Department
167Thai Airways International Public Company Limited
Mr. Kaweepan RaungpakaExecutive Vice President,Office of the PresidentEducation- Master of Business Administration,
Central Missouri State University, U.S.A.Experience- Executive Vice President,
Human Resources Development and Management Department- Executive Vice President,
Finance and Accounting Department- Vice President, Corporate Finance Department
168 Annual Report 2007
THAI On-line Offices
ATHENS, GREECE32 ELEFTHERIOU VENIZELOU STR. e-mail : [email protected] 75 GLYFADA TKT/RSVN : (30-210) 969-2020ATHENS, GREECE FAX : (30-210) 960-2686
AUCKLAND, NEW ZEALANDLEVEL 8, 23 CUSTOMS STREET EAST e-mail : [email protected] CENTRE, PO BOX 4559 TKT/RSVN : (64-9) 377-3886AUCKLAND, NEW ZEALAND FAX : (64-9) 379-8598
(64-9) 306-6315 (GROUPS)
BRUNEI DARUSSALAMSUITE 401-404, KOMPLEKS JALAN SULTAN e-mail : [email protected] JALAN SULTAN TKT/RSVN : (673) 224-2991-3BANDAR SERI BEGAWAN BS 8811 FAX : (673) 224-2871BRUNEI 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. TKT/RSVN : (86) 8515-0088DONG CHENG DISTRICT, BEIJING 100738 FAX : (86) 8515-1134PEOPLE’S REPUBLIC OF CHINA
BRISBANE, AUSTRALIA145 EAGLE STREET, BRISBANE e-mail : [email protected] 4000, AUSTRALIA TKT/RSVN : (61-7) 3215-4777
FAX : (61-7) 3215-4737
BANGALORE, REPUBLIC OF INDIAANCHORAGE, 100/1, GROUND FLOOR e-mail : [email protected] ROAD, KARNATAKA, TKT/RSVN : (91-80) 411-24343BANGALORE 560 025, REPUBLIC OF INDIA FAX : (91-80) 411-24888
BUSAN, REPUBLIC OF KOREA88-7, 4Ga 11 FLR, KYOBO BUILDING e-mail : [email protected], JUNG-GU TKT/RSVN : (82) 051-463-8181BUSAN 600-737, REPUBLIC OF KOREA FAX : (82) 051-463-8564
BODHGAYA, REPUBLIC OF INDIAINPAC TRAVELS (INDIA) PVT LTD.C/O MR CB SINGHGF, HOTEL THE ROYAL RESIDENCYDUMUHAN ROAD, BODHGAYADISTT GAYA, BIHAR, REPUBLIC OF INDIA
CHENNAI, REPUBLIC OF INDIA31 HADDOWS ROAD, NUNGAMBAKKAM e-mail : [email protected] 600006, REPUBLIC OF INDIA TKT/RSVN : (91-44) 4217-3311
FAX : (91-44) 4217-3388
CHENGDU, PEOPLE’S REPUBLIC OF CHINAROOM 2309, 23rd FLOOR e-mail : [email protected] BUILDING, 35 ZONGFU ROAD : [email protected], SICHUAN TKT : (86-28) 8678-1336PEOPLE’S REPUBLIC OF CHINA RSVN : (86-28) 8675-7755
FAX : (86-28) 8678-1048
CHITTAGONG, BANGLADESHFINLAY HOUSE, AGRABAD, CHITTAGONG e-mail : [email protected] : [email protected]
TKT/RSVN : (880-31) 713-435-36FAX : (880-31) 713-436
COLOMBO, SRI LANKAAPT. 505/506, HILTON COLOMBO RESIDENCE e-mail : [email protected], UNION PLACE TKT/RSVN : (94-11) 230-7100-8COLOMBO 2, SRI LANKA (94-11) 230-7110
FAX : (94-11) 230-7109
COPENHAGEN, DENMARKRAADHUSPLADSEN 16 e-mail : [email protected], COPENHAGEN V TKT/RSVN : (45-33) 750-120DENMARK FAX : (45-33) 750-121
DELHI, REPUBLIC OF INDIAHOTEL INTERCONTINENTAL EROS, NEHRU PLACE e-mail : [email protected] DELHI 110019, REPUBLIC OF INDIA TKT/RSVN : (91-11) 4149-7777
FAX : (91-11) 4149-7788
DENPASAR, REPUBLIC OF INDONESIAINNA GRAND BALI BEACH HOTEL e-mail : [email protected]. HANG TUAH, SANUR - BALI 80227 TKT/RSVN : (62-361) 288-141REPUBLIC OF INDONESIA FAX : (62-361) 288-063
DHAKA, BANGLADESHDHAKA SHERATON HOTEL, MINTO ROAD e-mail : [email protected] 1000, BANGLADESH TKT/RSVN : (880-2) 831-4711-18
FAX : (880-2) 832-2353
DUBAI, U.A.E.NO.1 BU HALEEBA PLAZA e-mail : [email protected] ROAD, DEIRA P.O. BOX 13142 TKT/RSVN : (971-4) 268-1701DUBAI, U.A.E. FAX : (971-4) 266-5498
FRANKFURT, GERMANYZEIL 127 e-mail : [email protected] FRANKFURT, GERMANY TKT/RSVN : (49-69) 92874-129
FAX : (49-69) 92874-222
FUKUOKA, JAPANHINODE FUKUOKA BUILDING e-mail : [email protected], 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 TKT/RSVN : (86-20) 8365-2333PEOPLE’S REPUBLIC OF CHINA FAX : (86-20) 8365-2488
HANOI, SOCIALIST REPUBLIC OF VIETNAM44B LY THUONG KIET STREET e-mail : [email protected], SOCIALIST REPUBLIC OF VIETNAM TKT/RSVN : (84-4) 826-7921/22
FAX : (84-4) 826-7394
HOCHIMINH CITY, SOCIALIST REPUBLIC OF VIETNAMUNITE 102, SAIGON TOWER OFFICE BUILDING e-mail : [email protected] LE DUAN BOULEVARD, DISTRICT 1 TKT/RSVN : (84-8) 822-3365HOCHIMINH CITY, SOCIALIST REPUBLIC OF VIETNAM FAX : (84-8) 822-3465
HONG KONG24 A, UNITED CENTRE e-mail : [email protected] QUEENSWAY, HONG KONG TKT : (852) 2179-7700
(852) 2179-7777FAX : (852) 2179-7600
(852) 2179-7661
HYDERABAD, REPUBLIC OF INDIAALCAZAR PLAZA AND TOWER e-mail : [email protected] FLOOR, 6-3-249/6 ROAD NO. 1 TKT/RSVN : (91-40) 2333-3030BANJARA HILLS, HYDERABAD - 500034, FAX : (91-40) 2333-3003REPUBLIC OF INDIA
ISLAMABAD, ISLAMIC REPUBLIC OF PAKISTANOFFICE NO 3, e-mail : [email protected] HOLIDAY INN ISLAMABAD HOTEL RSVN : (92-51) 227-2140ISLAMABAD, PAKISTAN (92-51) 227-2141
FAX : (92-51) 282-3735
JAKARTA, REPUBLIC OF INDONESIABDN TOWER, 19th FLOOR e-mail : [email protected]. THAMRIN NO. 5 TKT/RSVN : (62-21) 230-3041JAKARTA PUSAT 10340 FAX : (62-21) 319-30792REPUBLIC OF INDONESIA
JOHANNESBURG, REPUBLIC OF SOUTH AFRICATWO COMMERCE SQUARE e-mail : [email protected] RIVONIA ROAD, SANDHURST, SANDTON TKT/RSVN : (27-11) 783-5262JOHANNESBURG, REPUBLIC OF SOUTH AFRICA FAX : (27-11) 783-5289
KARACHI, ISLAMIC REPUBLIC OF PAKISTANAPT NO. A, C110 e-mail : [email protected] LEGACY, BLOCK 2 TKT/RSVN : (92-21) 279-2294CLIFTON, KARACHI, FAX : (92-21) 279-1934ISLAMIC REPUBLIC OF PAKISTAN
KATHMANDU, NEPALANNAPURNA ARCADE e-mail : [email protected] MARG, KATHMANDU, NEPAL TKT/RSVN : (977-1) 422-3565
FAX : (977-1) 422-5084
KOLKATA, REPUBLIC OF INDIA229, A. J. C. BOSE ROAD, “CRESCENT TOWERS” e-mail : [email protected] FLOOR, KOLKATA - 700020 TKT/RSVN : (91-33) 2283-8865/68REPUBLIC OF INDIA FAX : (91-33) 3982-7197
KUALA LUMPUR, MALAYSIAWISMA GOLDHILL e-mail : [email protected] JALAN RAJA CHULAN TKT/RSVN : (60-3) 2031-190050200 KUALA LUMPUR, MALAYSIA FAX : (60-3) 2032-5805
KUNMING, PEOPLE’S REPUBLIC OF CHINA2nd FL, ATTACHED BLDG. e-mail : [email protected] KUNMING JINJIANG HOTEL TKT/RSVN : (86-871) 351-151598 BEIJING ROAD, KUNMING 650011 FAX : (86-871) 316-7351PEOPLE’S REPUBLIC OF CHINA
KUWAITDAWLIAH COMMERCIAL CENTER e-mail : [email protected]. BOX 26775, SAFAT 13128, KUWAIT TKT/RSVN : (965) 242-1444
FAX : (965) 245-3702
LAHORE, ISLAMIC REPUBLIC OF PAKISTAN9-A, DAVIS ROAD, GRAND HOTEL & TOWER e-mail : [email protected], ISLAMIC REPUBLIC OF PAKISTAN : [email protected]
TKT/RSVN : (92-42) 630-9791-4FAX : (92-42) 636-8690
LONDON, GREAT BRITAIN AND IRELAND41 ALBEMARLE STREET e-mail : [email protected], W1S 4BF TKT/RSVN : (44-870) 606-0911GREAT BRITAIN FAX : (44-207) 409-1463
LOS ANGELES, U.S.A.222 NORTH SEPULVEDA BLVD., SUITE 100 e-mail : [email protected] SEGUNDO, CA 90245, U.S.A. TKT/RSVN : (1-310) 640-0097 ext. 747
FAX : (1-310) 322-8728
MADRID, SPAINPRINCIPE DE VERGARA 185 e-mail : [email protected] MADRID, SPAIN TKT : (34-91) 782-0523-24
RSVN : (34-91) 782-0520-22FAX : (34-91) 564-5620
MANILA, PHILIPPINESCOUNTRY SPACE 2 BUILDING e-mail : [email protected]. GIL J. PUYAT AVENUE TKT/RSVN : (63-2) 812-4412MAKATI CITY, PHILIPPINES FAX : (63-2) 817-4044
MELBOURNE, AUSTRALIALEVEL 3, 250 COLLINS STREET e-mail : [email protected], VICTORIA 3000, AUSTRALIA TKT/RSVN : (61-3) 8662-2200
FAX : (61-3) 9650-7003
MILAN, REPUBLIC OF ITALY15 VIA AMEDEI 20123 MILAN e-mail : [email protected] OF ITALY TKT/RSVN : (39) 02-890-0351
FAX : (39) 02-8645-1711
168 Annual Report 2007
50-09-026_inside COVER _V.ai 12/12/07 1:07:51 PM50-09-026_inside COVER _V.ai 12/12/07 1:07:51 PM
50-09-026_COVER_V.ai 12/12/07 1:09:14 PM50-09-026_COVER_V.ai 12/12/07 1:09:14 PM