THAI : Annual Report 2008

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CONTENTSAudit Fee and Related Expenses 99

Other Factors That May Affect Investment Decision 99

Related Parties 102

Management’s Discussion and Analysis 108

THAI’s Operating Strategy 116

Five - Year Review 118

Board of Directors’ Duties on Financial Disclosure 119

Audit Committee’s Report 120

Auditor’s Report 123

Financial Statements 124

Notes to the Financial Statements 132

General Information 158

Board of Directors 160

Management Team 164

Message from the Chairman 2

Message from the President 4

Achievements in 2008 6

Financial Highlights 10

Operations of the Company and its Subsidiaries -

The Policies of Associated Companies 11

Revenue Structure 15

The Company’s Operating Results 17

Subsidiaries and Affiliated Companies 49

Compliance with the Official

Information Act, B.E. 2540 52

Competition and Airline Industry Outlook 54

Risk Factors 58

Shareholder and Management Structure 61

Good Corporate Governance Committee Report 77

Good Corporate Governance 78

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2 ANNUAL REPORT 2008

The commercial airline industry faced another year of turbulence causing

disruption to normal operations and thus adversely impacting financial performance of

all airlines around the world. A number of private sector airlines have had to shutdown

their operations, reduce their work force or implement a number of other measures to

mitigate the impact to keep flying. Despite also being adversely affected, Thai Airways

International Plc. has not had to take drastic steps to sustain its operations. However,

the Company has taken immediate actions internally and externally to adjust its operations

to suit the operating environment. A review of its overall strategic plan is ongoing with

emphasis placed on revenue enhancement while rationalizing expense across the

organization. The Company’s investment plans are being reviewed with priority placed

on worthwhile projects contributing to the Company’s overall financial performance.

Various management tools are being utilized to enhance overall operating efficiency

while adjustments have been made to risk management measures to preempt and

mitigate the potential severity of impact from the various risk factors and ensuring

uninterrupted operations.

MESSAGE FROM THE CHAIRMAN

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THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED 3

Through ongoing close cooperation and commitment of all relevant parties, it is

with confidence that THAI will be able to weather through the various challenges being

faced today and that which may present itself in the future. But more importantly, it is the

trust bestowed upon the Company by it customers, shareholders and stakeholders that

the Company seeks to uphold through maintaining the highest standard of operations,

providing unsurpassed quality service and maintaining the highest level of safety

standards while ensuring enhanced management efficiency as per the guidelines of Good

Corporate Governance.

As Chairman and on behalf of the Company’s Board of Directors, I would like to take

this opportunity to express my gratitude for the unwavering support and cooperation

given to the Company by its shareholders, customers and business partners. The Board of

Directors would also like to reemphasize its commitment to upholding principles of

Good Corporate Governance and transparency to maximize shareholder value while

enhancing overall competitiveness to ensure sustainable growth for the Company.

Surachai Tansitpong

Chairman of the Board of Directors

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Over this past year, Thai Airways International Plc. continued its quest to uphold

its vision as the “First Choice Carrier with Touches of Thai” bearing in mind the objective

of achieving the highest level of customer satisfaction through product enhancement

and delivering unsurpassed quality service. The key underlying factor to attaining this

achievement is THAI’s customer oriented culture, which has led to its numerous

awards especially its number 1 ranking in First and Business Class Airport Services from

Skytrax’ survey, a well reputed services ranking specialist. The Company also received the

“Best Southeast Asian Regional Airline” award from Global Traveler magazine and was

ranked 3rd by Travel & Leisure magazine at “The World’s Best Awards 2008 Top International

Airlines.”

The above recognitions were obtained amidst the most difficult of operating

conditions for both the commercial airline and tourism industries. Uncertainties resulting

from fluctuation in currency exchange rates and the rapid broad swing in fuel price (rising

from USD 90 per barrel from the beginning of 2008 to USD 147 per barrel by mid-year)

resulted in many airlines around the world posting negative operating results for 2008

because of the rapid rise in operating cost. Ensuing was the faltering of the U.S. economy

that sent shockwaves throughout economies around the world combined with the political

unrest on the home front deterred many from traveling to Thailand - reflected in the

decrease in number of passenger arrivals to the Kingdom. THAI was quick to respond

to these challenges and to better reflect the then demand by reducing its production.

MESSAGE FROM THE PRESIDENT

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Further complicating the already delicate situation was the closure of Suvarnabhumi

and Don Muang airports in the latter part of November to early December 2008. The

amalgamated effect is reflected in THAI missing its passenger and cargo revenue targets

and thus causing its financial performance and cash flow to be askew.

Looking ahead, THAI’s management anticipates undertaking a business improvement

plan with measures to address the immediate liquidity requirement followed by

improvement in revenue generation and revenue quality partially through broadening

ticket distribution especially through the internet channel. Cost rationalization across the

organization is necessary with key measures to control fuel expense by controlling

consumption through improved fuel management along with postponing of staff

recruitment. Going hand in hand with an expected 5% operating cost reduction is

the enhancement of staff efficiency and productivity. To maximize revenue and reduce

cost, improving fleet deployment, changing route network through service suspensions

or reduction of flight frequency to non-profitable and demand affected destinations

(especially long haul flights) while regional flight concentration could be increased to

destinations with strong financial contribution along with changes to flight schedules may

be required. In conjunction with the review of all investments with priority given to

worthwhile projects, the Company’s long-term plan may entail a revamp of its business

model to meet the challenges of the new operating environment.

Management believes that ongoing cooperation and commitment on the part of

the Company’s Board of Directors, management and employees along with the ongoing

support from the Thai Government and the Company’s shareholders that THAI will be

able to successfully navigate through the many challenges that the Company faces and

return to profitability stronger and healthier. On behalf of the Company’s Management,

I would like to take this opportunity to express my gratitude to all of THAI’s shareholders,

customers and business partners for their trust and steadfast support and especially to

THAI’s employees for their commitment, spirit and sacrifice during the most critical hours

in THAI’s history of operations.

Air Chief Marshal Narongsak Sangapong

Senior Executive Vice President,

Corporate Secretariat,

Acting President

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ACHIEVEMENT IN 2008

Commenced direct flights to Samui Island in the province of Surat Thani on February 15, 2008.

THAI’s catering was the first in Thailand to receive OHSAS 18001 certification for food production safety

standards from the Bureau Viritas Quality International (BVQI) covering all aspects of THAI’s catering

products, preparation of meals and desserts for in-flight and ground service, beverage, bakery including

THAI’s Puff & Pie Bakery chain.

AWARDS AND HONORS RECEIVED

Received the Best Intercontinental Airline award for the 4th consecutive year at the Norwegian Grand

Travel Award 2008 from the Norwegian travel industry.

Received 3rd ranking among the Top 10 Airlines : Worldwide for the 2nd consecutive year while THAI’s business

class was ranked 3rd among the Top 10 Airlines. THAI was ranked 2nd among the Top 10 Airlines for cabin

service from a consumer survey by Smart Travel Asia, a travel related internet-based web site.

THAI was ranked 3rd by Travel and Leisure magazine for outstanding ground service, convenience and comfort

received during travel and for in-flight meals at The World’s Best Award 2008 Top 10 International Airlines.

THAI was ranked 3rd among the best airlines in the world for the 2nd consecutive year at the 5th Go Asia Award

from votes received from readers of Consumer Travel and Reise & Preise magazines which are German based

travel magazines.

THAI was ranked 1st for its first class passenger and check-in lounge and was ranked 2nd overall and 3rd for

cabin service in Far East Asia by Skytrax Award 2008.

THAI was chosen among 5 for best first and business class ranking by Australia based Luxury Travel

Magazine’s Gold List 2008 and was ranked 2nd among airlines for a repeat business.

Received 2 awards at the 22nd Aseanta Awards for Excellence in Tourism 2008 (The Asean Tourism

Association) - First being the “Best Asian Airline Programme” for THAI’s “Family Getaways” campaign from

Eurng Luang Tours. The second award being for THAI’s poster picture for Krabi.

Received 3 awards from the Ministry of Energy at the Thailand Energy Award 2008 for energy conservation -

Staff Award : Controller of Operations Control Building; Award for Operations Control Building : Head Office;

and Award for Energy Saving Building (New Building) : Operations Center Building.

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Received a runner up award at the Asean Energy Awards 2008 for New and Existing Buildings in Singapore.

Received Suriyasasithorn award for outstanding hanging calendar in the area of enhancement of the

society and environment and a runner up award for THAI’s desk calendar for the same area for 2008 from the

Thai National Association of Public Relations.

Received an award for best facilities geared towards accommodating handicapped persons for 2008

from National Office for Empowerment of Persons with Disabilities (NEP).

ACTIVITIES IN DEFERENCE TO THE ROYAL FAMILY

On the auspicious occasions of His Majesty’s 60th year in ascension to the throne and His Majesty’s

80 Birthday on December 5, 2007 the Company sponsored the construction of “Sao Asoke” Jedi Bodhgaya in

honor of HM located on top of Bodhisattva Hill at the Watpa Siriwattanawisuth temple in the province of

Nakhorn Sawan. Her Royal Highness Princess Galyani Vadhana Krom Luang Naradhiwas Rajanagarindra

presided over the construction of Jedi Sribodhgaya Chalemprakiat in honor of HM the King.

On the auspicious occasion of His Majesty the King’s birthday on December 5, 2008 THAI in cooperation

with the various Royal Projects under Royal patronage held a 3 day exhibition from December 2 - 4, 2008

at the Company’s head office. The exhibition encompassed demonstration in growing organic vegetables

to the selling of goods and products produced by the various Royal Projects. During December 4 - 6, 2008

passengers were treated to special in-flight meals prepared especially on the occasion of His Majesty’s

Birthday along with the on-ground sale of gift items for Father’s Day. On December 4, 2008, the Company’s

management and employees paid homage to His Majesty the King and provided alms to 99 of THAI’s

employees who became monks in training on the auspicious occasion of His Majesty’s Birthday.

The Company participated in the walk/run rally in honor of His Majesty the King which was part of events

held under the umbrella of “From Mother’s Day to Father’s Day - 116 days of building unity.”

On September 12, 2008 on the auspicious occasion of Her Majesty the Queen’s Birthday, THAI took part in

an event to meet with women in the Central Detention facility to lend effort to providing these women

support in their will to becoming good citizens.

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On July 28, 2008, the Company received permission by His Royal Highness Prince Mahavajiralongkorn on the

auspicious occasion of the Prince’s Birthday to publish a media copy of “Prince of the Sky,” reflecting the

Prince’s tireless journey towards becoming a licensed commercial pilot for Thai Airways International Plc.

The Company was given the Royal honor in being a host during Her Royal Highness Princess Galyani Vadhana

Krom Lung Naradhiwas Rajanagarinda’s Buddhist funeral rights at the Dusit Palace with over 500 of the

Company’s senior management and employees attending the event.

ACTIVITIES BENEFITING SOCIETY

THAI was given the honor in delivering 1,000 tents provided by Her Royal Highness Princess Sirinthorn to the

Chinese Government for helping those that have been devastated by the earthquake in eastern Szechuan

via TG 618.

For the second year, 450 of THAI’s employees participated in a reforestation program following

His Majesty the King’s Royal Decree and is also part of the Company’s strategy to help reduce global warming.

The first round of the program was held on May 24, 2008 and the second took place June 14, 2008.

A krathin Buddhist religious ceremony was performed in the name of His Majesty the King for which the

Company undertakes on an annual basis. In 2008, the Company performed the krathin for Buddhist monks

who have remained within the monastery during the Buddhist Lent at Wat Yai Swannaram in Petchburi

province in Thailand along with Wat Thai Kusinar in India. The image of Pra Buddha Patima Suvarnbhumi

Sirichoke Por Por Ror was enshrined in the temple of Wat Thai Lumphini in Nepal.

“English for the Blind by THAI” project where the Company supported those that are blind to learn,

enhance their technical capabilities and improve their English communications. As such THAI’s employees

had the opportunity to give back to the community the most invaluable gift of knowledge while also

strengthening their leadership qualities.

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The “THAI - Smart Use of Energy” event held in 2008 for the 3rd consecutive year has been to raise

awareness amongst its employees on the issues of global warming, promote responsible use of energy and

energy conservation for Company and non-Company purposes. In 2008, the 3-day “THAI - Unity for His

Majesty” event held from 2-4 December 2008 at the Company’s head office put on display the many awards

in which the Company has earned for activities undertaken to conserve energy consumption. Related

government entities were also present to provide information and assist in their capacities while products

related to environmental and energy conservation were also available for purchase.

Designated points accepting donations of food and other sustenance items were set at the Company’s head

office and THAI’s Operations Center to help people whose lives have been devastated by natural disasters

both here at home and abroad. Donations were made through charities such as the Military Housewives’

Association, various government organizations and via THAI’s overseas offices.

Booth rental fees received from employees participating in the Company’s market bizarre held monthly at

the Company’s head office and the Company’s Operations Center at Suvarnabhumi Airport from April to

December 2008 was donated to Rama Hospital as contribution to building recovery rooms for patients.

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FINANCIAL HIGHLIGHTS

Consolidated

Statements of Income

Total Revenue (Million Baht)

Total Expense (Million Baht)

Profit(Loss) before Finance Costs and Income Tax Expense (Million Baht)

Net Profit(Loss) (Million Baht)

Balance Sheets

Total Assets (Million Baht)

Total Liabilities (Million Baht)

Shareholders’ Equity (Million Baht)

Shares

Issued and Paid-up Share Capital (Million Shares)

Par Value (Baht)

Earnings Per Share (Baht)

Dividend Per Share (Baht)

Financial Ratios

Net Profit to Total Revenues (%)

Return on Total Assets (%)

Return on Equity (%)

Total Debt to Equity (Times)

202,606 199,921 182,312

*220,720 188,656 165,039

(18,114) 11,265 17,273

(21,379) 4,368 8,992

259,534 280,275 249,034

213,652 212,250 183,353

45,882 68,025 65,681

1,698.90 1,698.90 1,698.90

10.00 10.00 10.00

(12.58) 2.57 5.29

- 1.80 1.65

(10.6) 2.2 4.9

(7.9) 1.7 3.7

(37.5) 6.5 14.4

4.7 3.1 2.8

* Including reserved damages arising from Antitrust and Competition Law as well as an impairment loss on aircraft in the amount ofTHB 4,290 million and THB 4,426 million, respectively.

2008(Jan - Dec)

2007(Jan - Dec)

2006(Oct 05 - Sep 06)

Note : Due to the change in the accounting period to a calendar year (January 1 - December 31), the Company restated the financial statement for the year2007 in order to compare with the change in accounting period, beginning on or after 2008.

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OPERATIONS OF THE COMPANY AND ITS SUBSIDIARIES -

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 Aviation Business and

Business Units related to air transport form the Company’s core business.

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 needs to be managed systematically to ensure timely departures

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

Company. The Company’s business units include :

Ground Customer Services

- Passenger services include curbside assistance upon passengers arriving at the passenger terminal,

check-in counter, travel documents validation, departure formalities, passenger boarding check,

passenger transit and arrival service, as well as, providing special assistance to passengers

- Baggage services include scanning, weighing, tagging baggage, tracking lost baggage, repairing

damaged baggage, as well as, delivering delayed baggage to passenger’s residence

- Transportation control services include weight calculation planning, loading and unloading

of passenger baggage, including cargo and mail

- Providing First and Business Class passengers and Gold Card Members with access to First and

Business Class Lounges, while First and Business Class passengers have access to THAI’s Royal

Orchid Spa.

- Special passenger and baggage check-in for domestic travel from Don Muang Airport at the THAI

City Air Terminal, MRT Lad Phrao Station, including transportation services to and from the airport

- Providing service for passengers of customer airlines in terms of transport control, baggage

handling and other special services as required by the customer airlines

THE POLICIES OF ASSOCIATED COMPANIES

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Ground Support Equipment Services

1. 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

2. 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 and ground power services from the Air Condition and Ground Power Services

mobile truck

- Hot air engine starter service from the Air Starter Service mobile truck

- Conveyor belt passenger baggage handling service

- Cargo transfer service between warehouse and aircraft, and transfer of containers to and

from aircraft

3. 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 condition check, sorting and weighing service, transfer, loading and unloading

- 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

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- 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

- Express Service Center

Catering Services

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

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

- “Yellow Orchid” restaurant operation at the Operation Center (OPC) building, Suvarnabhumi, and

“Puff & Pie Cafeteria” at Rak Khun Tow Fai Building, Don Muang Airport

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

31 locations (of which 28 locations are in Bangkok and three located upcountry), state institutions

and government agencies, including 9 at other privately owned locations

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

- Meal box service for special occasions - religious ceremonies, meetings, and sporting events

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

Operation Center (OPC) building at Suvarnabhumi Airport

- Cooking and bakery courses for the general public

- Food and beverage services at special catering events, such as the World Expo 2010 in Shanghai,

China, and 50,000 take home meal boxes for Wat Pratamakai

- Preparation of fresh and frozen bakery for Gate Gourmet in Japan

- Utilizing Rak Khun Tow Fai building, Don Muang Airport for generating additional income-Frozen

Meal, Retort Pouch and Pre-Cut/Pre-Cooked Vegetables

- Preparation and delivery of bakery for THAI franchises - “Puff & Pie Supreme Bakery Delight”

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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 which are manufactured by

Aerospatiale, France

- 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 fight

safety, including take-off and landing for THAI flights, and that of our customer airlines

In 2008, the Company arranged with King Power Marketing and Management Co., Ltd. to have Duty

Free goods for Sales on Board

The Company opened five THAI Shops to sell souvenir products at the THAI’s Head Office, Larn Luang

Office, Silom Office, Chiang Mai Office, Operation Center OPC, Suvarnabhumi

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REVENUE STRUCTURE

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

16,080 7.94 13,434 6.72 12,030 6.59

376 0.18 392 0.19 397 0.22

3 - - - 8 -

7,976 3.94 8,156 4.08 7,388 4.05

692 0.34 787 0.39 772 0.42

25,127 12.40 22,769 11.38 20,595 11.28

148,238 73.19 147,124 73.55 131,372 71.96

25,464 12.57 25,665 12.83 25,252 13.83

911 0.45 978 0.49 1,028 0.56

174,613 86.21 173,767 86.87 157,652 86.35

378 0.19 373 0.19 360 0.20

200,118 98.80 196,909 98.44 178,607 97.83

(65) (0.03) 101 0.05 256 0.14

493 0.24 745 0.37 317 0.17

1,994 0.99 2,267 1.14 3,388 1.86

2,422 1.20 3,113 1.56 3,961 2.17

202,540 100.00 200,022 100.00 182,568 100.00

MTHB % MTHB % MTHB %

Revenue from domestic transportation

Passengers and excess baggage

Freight

Mail

Revenue from other activities - domestic

Business Units

Supporting

Total operating revenue - domestic

Revenue from international transportation

Passengers and excess baggage

Freight

Mail

Total operating revenue - international

Revenue from subsidiary

Thai-Amadeus Southeast Asia Co., Ltd.

Total operating revenue

Other income

Share of profit from associated companies

Interest income

Others

Total other income

Total revenue

2008(Jan - Dec)

2007(Jan - Dec)

2006(Oct 05 - Sep 06)

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THE COMPANY’SOPERATING RESULTS

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THE COMPANY’S OPERATING RESULTS

To meet the challenges of the operating environment where

fuel cost rose to its highest level ever in a very short time period

during the first half of the year, THAI has remained proactive in its

management to cope with the higher cost of operations. During the

second half of the year, the Company faced challenges brought on by

the meltdown of the U.S. stock market causing a domino effect

leading to a global economic slowdown. On the home front, the political

unrest leading to the closure of both Suvarnabhumi and Don Muang

Airports impacted the confidence of travelers to Thailand and adversely

impacting the Thai tourism industry.

Immediate corrective actions were taken to mitigate the

adverse impact from the above events by revising the flight network

by reducing flights to destination where profitability has been impacted

most. Additional frequencies on long-haul flights were postponed as

fuel cost was a major deterrent. Instead, concentration went towards

developing THAI’s regional routes to countries whose economy

has been the least impacted and where fuel constitutes a smaller

percentage of operating cost while providing the highest yields for

the Company. Flight frequency has also been adjusted to the various

destinations to better control cost and better reflect demand for travel

while making better use of twin engine aircraft to improve cost.

Aircraft downsizing has also been implemented to destinations where

demand has fallen to pare down cost while THAI is also reviewing

its aircraft purchasing plan in relation to decommissioning its older

aircraft.

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Aircraft Type

CORE BUSINESS OPERATIONSAircraft Fleet

Number of Aircraft

As at Dec. 2008 As at Dec. 2007

Boeing 747-400 18 18

Boeing 777-300 6 6

Boeing 777-200 8 8

Boeing 777-200ER 6 6

Boeing 737-400 10 10

Airbus A340-600 6 5

Airbus A340-500 4 4

Airbus A330-300 12 12

Airbus A300-600 17 19

ATR 72 2 2

Total(1) 89 90

Note : (1) Includes aircraft that THAI leases to Nok Air Co., Ltd. - As of December 2008, 3 Boeing 737-400 aircraft were on lease to Nok Air

THAI’s fleet as of December 31, 2008 totaled 89 aircraft with the latest A340-600 aircraft joining the fleet

in October 2008 designated to serve European destinations during the winter schedule 2008/2009. In 2008,

2 A300-600 aircraft were retired while another 3 Boeing 737-400 aircraft were on lease to Nok Air, leaving 86

aircraft being operated by THAI.

Currently undergoing refurbishment are 6 Boeing 777-300 aircraft to increase comfort and modernize

the cabin interior. The first of such refurbishment was completed in May of 2008 and work on the 2nd

aircraft commenced in December 2008 and is expected to be completed early 2009. Work on the remaining

4 aircraft is expected to be completed by year-end 2009.

To replace some of the outgoing capacity in 2009, 6 new A330-300HGW aircraft will join the fleet

beginning April while a plan is in place to sell the 4 A340-500 aircraft which was used for the Bangkok-

New York and Bangkok-Los Angeles routes. Upon stoppage of the Bangkok-New York flight, direct flights

to Los Angeles has also been reduced from daily to 5 weekly flights beginning July 1, 2008. A two - stop flight is

planned using Boeing 777-200ER aircraft to fly to Los Angeles via Osaka.

ROUTE AND DESTINATION DEVELOPMENTKey determinants of decision making regarding route and destination development which encompasses

the launch or closure of destinations and flight frequency include the number and type of aircraft that is in

THAI’s fleet, demand expectations for the various markets, profitability outlook on each sector, the expected

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contribution to be made to THAI’s existing route network and all of which must be in line with the Commercial

Department’s strategy. Each manager based in the respective countries provide indicative feedback for the

strategy working group including representatives from the Commercial Department, the Finance and

Accounting Department and the Maintenance Department along with representatives from the Strategy

group for which research and analysis is undertaken prior to reaching a final plan for the Company. The plan is

then submitted for management review and approval prior to submitting for Board review and approval.

Among the key objectives of the Company is to develop Thailand into a regional hub serving as gateway

to the various regional destinations in South Asia, Indochina, the Kong River basin and Southern China for

which the Company provides direct service to and from Bangkok with sufficient demand for air

travel within this region. THAI is therefore actively managing its flight schedules to enable ease of connectivity

from the various points of departure within the region to connect with Europe, North America and Australia.

For points of origination with strong demand or high growth potential, THAI stands ready to put additional

frequency and/or seat capacity to support such demand growth.

The Company sets its flight schedules into 2 seasons as per IATA’s guidelines with 6 month intervals

with the summer schedule starting on the last Sunday of March through the last Saturday of October and

the winter schedule starting the last Sunday of October and going through the last Saturday of March.

Despite having fixed flight frequency, aircraft type and timetables for each term, minor adjustments are made

during operations to better suit the demand at any given time.

For the first 6 months of the 2008, the Company proactively managed its points of service to better

compete in a highly competitive industry. THAI launched services to new destinations with strong potential and

increasing flight frequency on intercontinental and regional flights to cover a broader spectrum

of key business cities and tourist hot spots around the world. Flight schedules, frequency and times have

been adjusted to better suit passenger demand of and through better connectivity with Star Alliance flights to

increase flexibility for passengers to choose flights and destinations.

As of December 31, 2008 the Company’s route network spans 62 international flights to 35 countries

around the world and serves 12 domestic points of interest and has plans to increase its network to cover

70 international flights to 36 countries. New additions will include Sendai and Saporo in Japan; China;

Manchester in Great Britain; Berlin in Germany; Abu Dhabi in United Arab Emirates; Aman in Jordan and Degu

in South Korea by the year 2012 while increasing flight frequency to destinations of strong potential. The

expansion plan is to promote Thailand as the hub and gateway to Asia.

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DOMESTIC FLIGHTSPost September 28, 2003 when THAI moved to change its domestic ticket pricing structure and

concentrated mostly on providing service to major points of tourism within the country, THAI’s performance

on domestic operations has since approved dramatically. For secondary and less populated destinations

within the country, THAI continues to cooperate with other local airlines to ensure convenience for its

passengers to commute while retaining its market share.

Since March 25, 2007, THAI has been serving domestic destinations from Don Muang Airport to alleviate

congestion experienced at Suvarnabhumi Airport. All domestic operations were moved to Don Muang except for

flights connecting to major tourist destinations such as Chiang Mai, Chiang Rai, Phuket and Krabi

where from Suvarnabhumi THAI facilitate transits to these major points of interest. In the first quarter of

2008, THAI added 14 weekly flights to Samui Island from Suvarnabhumi Airport. As of December 31, 2008 THAI

has 331 weekly flights serving the various regions of Thailand. To the north, THAI serves Chiang Mai, Chiang Rai,

Mae Hong Son and Phitsonulok. To the southeastern part, THAI serves Udorn Thani, Ubol Rachathani and

Kon Kaen. To the south, THAI serves Phuket, Krabi, Surat Thani and Samui. THAI also operates direct flights

between Chiang Mai and Phuket, Chiang Mai and Mae Hong Son along with Chiang Mai and Udorn Thani.

THAI also code shares with PB Air for flights to 6 other destinations - Lampang, Nan, Sakonnakhon, Nakhon

Phanom, Roi-Et and Buri Ram enabling THAI to serve its passengers from abroad conveniently and comprehen-

sively to all major cities within Thailand.

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INTERNATIONAL FLIGHTS

THAI flies 553 international flights per week with 420 to destinations within the region spanning 43

destinations within 20 countries while THAI flies 133 intercontinental flights serving 43 destinations in 14

countries. These destinations include :

Regional Routes - Asia

THAI has developed its regional network to support Thailand as the hub to Asia spanning 43 points of

service by adjusting flight times and flight frequencies especially to India and the Middle East where demand for

air transport has seen rapid growth. Cooperation with members of Star Alliance is also ongoing to enhance travel

in and around the region.

Regional Asia is split into 5 zones - Northern, Southern, Indochina, Southwest and the Middle East.

Northern Routes

Passenger traffic in the northern routes continues to be heavy and has contributed significantly to the

Company’s revenue spanning 15 destinations - Hong Kong, Osaka, Nagoya, Fukuoka, Taipei, Seoul, Manila, Pusan,

Shianghai, Guangzhou, Kunming, Shiamen and Chengdu. In 2008, total flights serving the northern route

was reduced by 13 to 176 weekly flights for 2008/2009 winter schedule as compared to the 189 weekly flights

in 2007/2008 schedule. The reduction was mainly due to the impact of the natural disaster that befell Chengdu

and Kunming in July and August of 2008, causing demand for air travel to drop and was compounded by the

weakening global economy since August. Adjusting to the short-term impact of air travel demand, THAI reduced

its flights to Chengdu, Kunming, Shianghai, Peking and Guangzhou since July 2008.

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22 ANNUAL REPORT 200822 √“¬ß“πª√–®”ªï 2551

Southern Routes

With competition from low cost airlines being the highest for the southern routes with Thai Air Asia, Jet

Star and Tiger Air serving the region, THAI although continuing to keeping to its flight schedule, has changed its

aircraft type to better suit the demand and better compete with low cost airlines. The 5 destinations currently

being served by THAI include Singapore, Kuala Lumpur, Penang, Denpasar and Jakarta with 66 weekly flights for

the 2008/2009 winter flight schedule. Due to the drop in demand for air travel from the global economic

slowdown, THAI has temporarily suspended some flights to Singapore, Kuala Lumpur and Penang since

July 2008.

Routes in Indochina

Destinations served by THAI in Indochina has experienced dramatic growth in air travel and provides

good potential for generating strong returns for THAI but the attractiveness of the region is limited by the

rights given to THAI for flying to these destinations. Vietnam currently only allows THAI to add one weekly

flight each year and only on the Bangkok to Ho Chi Min sector. To counter the limiting effects, THAI cooperates

with regional airlines to further Thailand’s position as the regional hub whereby these regional airlines can

use THAI to extend their reach and add value to their service. In 2008, THAI served 4 destinations - Ho Chi Min,

Hanoi, Phnom Phen and Vientienne with 60 weekly flights which was only 1 more than the previous year

on the Bangkok - Ho Chi Min sector.

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Western Routes

As of 2008, contributing to the growth in travel on the western route is India. THAI currently serves

6 countries to the west with 14 destinations including Delhi, Kalkota, Mumbai, Bangalore, Daka, Kathmandu,

Columbo, Yangoon, Chitagong, Chenai, Hyderabad, Karachi, Islamabad and Lahore. The rapidly growing

demand has enabled THAI to add 3 additional weekly flights to Chenai beginning April 1, 2008, 4 additional

flights between Bangkok and Delhi beginning May 16, 2008 and an additional 3 flights between Bangkok and

Mumbai beginning December 1, 2008. With these additions, total flights to the west reached 91 weekly as per the

Company’s winter schedule 2008/2009.

Middle Eastern Routes

To the Middle East, THAI serves 3 major destinations - Muscat, Dubai and Kuwait with 14 weekly flights.

As the political uncertainty in Pakistan along with the weakening global economy has impacted demand

for travel on these routes, THAI combined its Bangkok - Karachi flight with the Bangkok - Muscat flight into

Bangkok - Karachi - Muscat (both ways).

INTERCONTINENTAL ROUTES

North American Routes

Since the North American market is one that is the largest and has a strong field of competition, it is

important that connectivity to points beyond in the U.S.A and Canada be readily accessible to have a

competitive footing in this market. THAI currently serves Los Angeles 5 times weekly, which is a reduction

from the previous daily flights while service to New York has been suspended beginning July 1, 2008 because

of losses resulting from extremely high fuel cost. THAI is also looking to change its service to Los Angeles

via Osaka beginning February 1, 2009 utilizing the Boeing 777-200ER aircraft to conserve fuel.

Star Alliance partners assisting THAI to the U.S.A. include United Airlines and Lufthansa where code

sharing has enabled THAI to span its reach to another 9 major cities - Chicago, San Francisco, New York, Dallas,

Washington D.C., Atlanta, Miami, Denver and Seattle. Via the Pacific route, THAI code shares with United

Airlines from Los Angeles serving Chicago, San Francisco, New York, Denver and Seattle and Washington D.C.

For flights to the U.S.A. via the Atlantic, THAI code shares with Lufthansa from Frankfurt to New York, Dallas,

Atlanta, Miami, Chicago and Washington D.C. Connectivity to Canada is in cooperation with Air Canada to

3 major destinations - Toronto, Montreal and Vancouver. The cooperation amongst Star Alliance members

enables THAI to extend its reach into North America from Asia and Europe.

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EUROPEAN ROUTESTHAI currently serves Europe with 81 weekly flights to 12 destinations in 10 countries that include

Rome, Copenhagen, Frankfurt, London, Stockholm, Zurich, Munich, Athens, Milan, Madrid, Paris and Moscow

for the winter schedule 2008/2009. Service to Moscow was increased to 4 weekly flights from 3 and Athens

down from 4 to 3 weekly flights in reflection of demand.

THAI relies on its Star Alliance partners in Europe to help serve its transit passengers to destinations in

and around Europe with Lufthansa from Frankfurt and Munich; British Midlands from London; and Austrian

Airlines from Vienna. This network enables THAI to reach a total of 54 destinations in 19 countries with

THAI actually serving only 12 and using code share to enable passengers to reach 42 other destinations.

These major destinations in Europe include Oslo, Helsinki, Gothenburg, Kiev, Amsterdam, Geneva, Vienna,

Brussels, Barcelona, Lisbon, Budapest, Prague and Warsaw. Major cities in Germany for which THAI and its Star

partner can serve include Nuremberg, Dusseldorf, Berlin, Stuttgart, Hamburg and Hanover. For Austria THAI’s

reach encompasses Graz, Inssbruck, Klagenfurt, Linz and Salzburg. For Great Britain, THAI’s reach encompasses

Ireland and Scotland - Dublin, Glasgow, Edinburgh, Belfast, Lidst, Manchester and Tees Side.

Despite the European economies being hard hit by the spill over from the meltdown in the U.S. financial

system, demand for travel remains strong. As such, no changes were made to flight frequency serving Europe.

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Australia and New Zealand Routes

The 5 major destinations served by THAI in Australia and New Zealand include Sydney, Auckland,

Melbourne, Brisbane and Perth with 44 weekly flights. But for the winter schedule 2008/2009, service to

Auckland was reduced to 4 from previously 5 weekly flights.

For code share flights with members of Star Alliance, THAI code shares with Air New Zealand to serve

THAI’s passengers to points beyond within New Zealand. On the reverse side, Air New Zealand coordinates to

channel their passengers via THAI’s flight to Bangkok from New Zealand. Air New Zealand passengers are

flown on a code share flights to Thailand and are then able to connect to Europe and other major cities in Asia

on THAI.

African Route

THAI flys 3 direct flights to Johannesburg in South Africa weekly with cooperation with South

African Airways in assisting THAI to serve its customers to Cape Town and other points beyond within Africa.

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AIRLINE ALLIANCESAs competition within the commercial airline industry increases, cooperation among Star Alliance

members have become ever more important in developing a competitive edge. The Alliance currently has 21

member airlines with 3 operating within their respective regions. Total network for the group spans 975 airports

around the world in 162 countries with 18,110 daily flights and of which 17,020 are code share flights. By having

each member airline slightly adjust their flight times to better enable passenger connectivity, the outcome is a

greater volume of passenger traffic put through the network and thus further strengthens the Alliance.

Close ongoing cooperation is given to working with Star members to develop standard procedures and

undertake actions that are mutually beneficial while sharing knowledge and experience, leading to the ability to

increase revenue while reducing costs for its members. New products and services are constantly being

introduced to modernize and facilitate passenger comfort and convenience while taking to heart the potential

environmental impact. Examples of THAI’s various projects with Star Alliance include:

A major success comes from the sales and marketing side where THAI, in cooperation with members of

Star Alliance, offered Corporate Plus Programs and signed contracts with 24 multi-national corporations. This is

in addition to among others cooperative activities such as the Circle Fare and Airpass initiatives.

A major Star Alliance joint initiative at major airports around the world such as Suvarnabhumi Airport,

Narita, Shianghai, Peking and Korea is the move under one roof (MUOR) concept of having all Star member

airlines under one terminal to facilitate contact and communication while enabling the common use of

check-in counters, transfer areas and baggage facilities to lower cost. By having all the member airlines

operating under one roof, passenger transits can be facilitated much more easily enabling passengers a more

relaxed and seamless travel experience but more so enabling all member airlines to benefit from cost effective

sharing of common facilities. The initiative launched by Star Alliance is one that bears significant benefits for all

members in terms of increasing revenue and at the same time to reduce redundant cost. To further increase

benefit to member airlines, the initiative will be carried out at other major airports beginning with Heathrow

Airport in London.

To facilitate baggage handling for members of Star Alliance, THAI established a Star Connection

Center (SCC) at Suvarnabhumi Airport. The service is especially for flights with short interconnecting time where

the risk of not reaching the designated destination is highest. Similar centers have been established at Frankfurt,

Munich and Los Angeles airports. The benchmark of success has been passengers’ satisfaction and the ability to

control cost related to missing baggage for member airlines.

A key testament to Star’s success is the numerous accolades received from various prestigious travel

magazines around the world. For 2003, 2005 and 2007, Star Alliance was awarded the Best Airline Alliance by

Sky Trax while the Business Traveler Magazine gave Star the same ratings for 2003, 2006 and 2007. In 2008, the

Air Transport World magazine gave Star Alliance the Market Leadership Award.

By providing code share service with 14 members of Star Alliance, 18 other non-Star member airlines and

2 domestic airlines, the Company is able to extend its network reach and is able to increase its revenue with

minimum increase in cost. The code share total of 34 airlines around the world provides 560 daily flights for

which THAI and its code share partners are able to extend their physical reach.

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COMMERCIAL DEPARTMENT

In an industry that is ever increasingly becoming more competitive and is subject to various external

factors for which the Company has no physical control, the global economic uncertainty, fluctuation in global oil

price and political uncertainty at home were the most challenging factors THAI had to overcome. To meet the

above challenges, THAI proactively undertook marketing actions to increase revenue and gain on overall market

share. The key to increasing overall revenue has been to retain the Company’s existing customer base while

seeking and acquiring new clients with emphasis placed on premium customers, corporate clients and increas-

ing the number of passengers in the economy class.

In addition to modernizing the aircraft fleet, increasing seat capacity and flight frequency to

destinations of strong potential, the Company places importance on generating sales through its own extensive

network as a full network airline and through the network of its Star Alliance partners, other partner airlines and

its extensive agency network around the world.

Working with other business alliances, THAI has continuously launched promotion packages catering

to the different needs of THAI’s various customer groups with special emphasis placed on attracting first

and business class travelers. The desired effect is to increase overall revenue while broadening its customer

base, to stimulate demand for travel in a period of weak demand and to retain and increase its share of

customers in spite of tight competition from low cost and other full service airlines.

Value added products and services have been part of the Company’s strategy to stimulate travel abroad by

offering a broader range of Royal Orchid Holidays : ROH packages to meet the varying needs and interests of its

customers. For 2008, the Company offered 800 different Royal Orchid Holidays packages with travel options to

128 different destinations spanning 35 countries.

To enhance its sales reach, the Company is looking to develop its e-Commerce capability by increasing

sales via its Royal e-Booking channel which has been the most popular to increase convenience to passengers

in making reservation. Ticket prices can be obtained electronically while ticket purchases can also be completed

via the Company’s website at any time providing added competitiveness. An additional channel provided to

facilitate fare payment is through ATMs and the Company has provided customers with a high level security

channel for credit card payments. The Company’s website has also been revamped to better serve

passengers with useful and attractive travel related information. The e-channel complements, enhances and

facilitates the effectiveness of the Company’s overall sales strategy.

A Centralized Intelligent Fares System (CIF) and CIF On-Line Fare Filling system have been utilized to

distribute ticket fares quickly in a highly competitive market to enable and assist sales agents around the world

in their sales efforts.

The Company is looking to improve the proportion for which ticket sales will be derived from Direct

Channels through the use of technology in internet sales, through mobile phones and through ticketing kiosks.

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CUSTOMER SERVICE

THAI understands its customers to be the heart of the Company’s success, especially in an environment

where competition within the airline industry is very high and demand for travel has been adversely impacted

by the various crises. To achieve its goals and strategies, THAI is proactively and continuously improving

the quality of its products and services. Ongoing changes are being made to meet the new challenges of the

industry and transforming the culture within to be customer oriented. The “Service from the Heart” campaign

emphasizes providing service from the heart with touches of “Thai” at every touch point of the “Magic

Service Ring” to ensure service excellence and consistency. The goal is to provide expedited, comfortable and

convenient service that satisfies customers’ needs which creates a sense of difference in using THAI’s service

at every touch point. Ultimately, the bottom line is customer satisfaction for a repeat business and achieving that

means achieving the Company’s vision of being the “First Choice Carrier With Touches of Thai.”

There is ongoing improvement and development in the range of food and beverage served in-flight

including special delicacies on flights to various countries, halal meals and Thai meals where THAI has

painstakingly chosen the best of raw material and ensure the highest quality and hygiene in the preparation

process with international standards of safety.

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In being competitive in the industry, THAI understands that even minor details can make a difference

therefore, items such as cabin ambience, airplane seats and in-flight communications and entertainment

systems are still being improved. In 2008 and through till August 2009, 6 of THAI’s Boeing 777-300 aircraft are to

undergo modifications and upgrades with all the latest in design and comfort in line with the new corporate

identity. New wider and more comfortable seats along with personal televisions : PTV have also been installed

for each seat. The entertainment system is interactive enabling passengers to pick and choose from a

variety of movies, music, games and documentaries to relax and enjoy flying with THAI. Much of the changes

have been derived from the THAI Customer Satisfaction Survey for which state enterprises have agreed to as

part of the means by which the Government assesses the Company’s performance. An independent party, as

agreed to by both the Ministry of Finance and the Company, is tasked to assess customer satisfaction at every

point of contact - pre-flight, during flight and post flight. The review also compares THAI’s results to that of its

peers and serves as an assessment to improve and enhance of the Company’s products and services.

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Customer relationship management : CRM is a very important part of THAI’s service regiment to not only

develop ongoing relationships of trust and service but also to enable direct customer service to THAI’s

customers.

The THAI Contact Center is a phone based service which has been established to provide assistance

with the objective of expedited service that meets customers’ needs. A Customer Feedback Management

System : CFMS has been put in place to track customer complaints whether it be here in Thailand or abroad.

FLIGHT OPERATIONS

The single most important responsibility of the Company is to provide convenient, timely and safe

transport of passengers, cargo and mail to its designated destination while observing the Department of Civil

Aviation : DCA safety guidelines, that of the International Civil Aviation Organization : ICAO, that of the Joint

Aviation Authorities : JAA of Europe and that of the Federal Aviation Administration : FAA of the United States of

America. In addition to adhering to the safety guidelines of the various organizations overseeing safety

standards, THAI’s safety procedures are subject to review by the International Air Transport Association

Operational Safety Audit : IOSA. To ensure that THAI passes this safety audit, THAI has in place a rigorous

regiment of selecting its pilots that encompasses not only physical and mental health but also the level of

knowledge, skill and behavior all form part of the screening process. The services of a third party expert

from Sweden has been sought to perform aptitude and aviation psychology assessment for all cockpit crew

candidates to ensure that THAI’s cockpit crew are among the best.

THAI is well equipped to provide training for its cockpit crew and that of other airlines as the Company

has the latest in flight simulator of all aircraft types in THAI’s fleet used to simulate and develop necessary skills

to handle various critical situations. The cockpit crew is subject to a refresher course every 6 months undergoing

simulation to resolve on the spot problems in different weather conditions, technical difficulties, engine

problems, fires and emergency landings.

To ensure the highest level of safety training and the most efficient and rapid response to emergencies,

joint training sessions between cockpit and cabin crews are held regularly to enhance in-flight cooperation

and ensure the highest level of safety for THAI’s passengers. Utilizing the Flight Operational Trend Analysis :

FOTA, detailed digital recorded data of actual flights are used for safety analysis generating the Voyage Report,

Air Safety Report (ASR) and Safety Index Report to find ways to prevent potential accidents or difficult situations.

THAI coordinates and regularly participates in domestic and international functions held by the International

Civil Aviation Organization : ICAO, the Association of Asia Pacific Airlines : AAPA, the International Aviation

Transportation Association : IATA, the Aeronautical Radio of Thailand : AEROTHAI and the Airports of Thailand

Public Company Limited : AOT to enhance and further develop standards of safety standards on a regular basis.

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THAI is currently in the process of developing its Line Operation Safety Audit : LOSA to increase

overall safety through the use of information technology to assist in reviewing and analyzing actual operating

information to determine obstacles and means to improve on operating procedures. The Risk Reduction

Program is used to efficiently and effectively find ways to resolve problems for cases stored in its knowledge

management system. The operating procedure handbook for each fleet is updated on a regular basis to

ensure the highest level of safety.

To enhance the effectiveness of training programs and refresher courses, THAI placed its course material

onto the internet to enable e-Learning on demand by its employees. Some of the course material

that are currently available on-line include the Airline Transition Training Program : ATT Program, the Flight

Instructor Training Program : FIT Program and material for aircraft Conversion Training.

Additional training and preferred skills include Flight Management Skills along with cooperative team

work to better achieve objectives. The Knowledge Management system is used to supplement cockpit crew

training with explicit and tacit knowledge. The training room has been modernized with all the latest in facilities

and technology enabling the flexibility of direct training or training through the computer based training

work station. All of which is geared towards providing THAI’s passengers with the peace of mind knowing

that the Company has taken all precautionary steps to ensure the highest level of safety and security for

all those traveling with the Company.

In addition to emphasizing operational safety, providing quality service and Smooth as Silk travel

experience are also at the top of the Company’s priorities. This is achieved through the rigorous

professional training provided to its cabin crew in theory and in practice to foster the spirit of service. Such

safety training starts on day one of becoming a member of the cabin crew and continues throughout

their service career. Such ongoing training is to provide passengers with a high level of confidence in safety while

being treated to an unforgettable in-flight service.

SECURITY AND OPERATIONS SAFETY

As the National flag carrier, a key part of its responsibility is to incessantly improve and strengthen its

security and operations safety to meet the changing operating environment and to be at par with international

standards to augment confidence that our passengers, staff and related persons will receive the greatest level

of security at all touch points. The standard upheld complies with all applicable standards and legal guidelines

related to the Company’s operations. Succinct policies and goals have been established to achieve the level

of safety desired through having an appropriate operational structure, having clear job processes, having

clear standard of operations, providing appropriate and adequate training, having a comprehensive

communication structure including a robust review process that is measurable and encompassing all aspects of

the Company’s operations.

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The ongoing certification received from IATA Operational Safety Audit : IOSA, the safety standard as

stipulated by the International Air Transport Association : IATA, in 2008 is a testament to THAI’s achievement

in continuing to meet international standards of security and operations safety. Such certification

provides a high level of confidence that THAI observes and has in place robust security and operation

safety procedures that observes the latest in safety management processes and utilizes the latest in safety tools

to provide the highest level of safety for THAI’s passengers.

A Company Safety Committee : CSC has also been established to handle safety issues within the

Company along with the Aviation Security Committee : ASC overseeing security related to aviation. The ASC is

made up of representatives from the various operating units within the Company meeting on a monthly basis

to take up, review relevant issues and assess the effectiveness of THAI’s safety and security measures.

Resolutions reached on the issues of safety and security during the CSC and ASC meetings were implemented

to improve and enhance the effectiveness of THAI’s safety and security measures. THAI’s Safety Management

System : SMS is regularly updated managing risk in regards to flight operations, ground operations and mainte-

nance to heighten the Company’s level of operating safety.

The Company launched the Corporate Safety Information System : CSIS in the middle of 2006 with

ongoing training of its personnel on the system to enhance the effectiveness of the Company’s SMS and

enhancing the effectiveness in preventing accidents.

Emphasis of safety has been put on Aviation Security where the Company has followed new

developments, developed new operating processes and procedures, enhanced security standards in relation to

aviation security on a consistent basis. Such standards serves as operating benchmarks for periods of normalcy

and for periods requiring heightened safety measures in the area of aviation security while also meeting the

legal requirements, guidelines and policies of international standards and that of the respective countries in

which THAI provides service. Contingency plans have been drafted to ensure uninterrupted operations in case of

unforeseen events. The contingency plans approved by the Department of Air Transport are a testament to

THAI’s commitment to providing safety and security to its passengers. Understanding that the underlying success

of aviation security lies in the cooperation of the Company’s staff, the Company is nurturing a culture that

observes aviation security by providing information and technical training along with arranging activities

promoting aviation security awareness on an ongoing basis.

A system has been developed to proactively measure, aggregate information, process and assess relevant

risk in relation to aviation security for each of the destinations served by THAI. The outcome of each concern

has led to new, proactive and appropriate operating procedures and guidelines to effectively handle

unforeseen events. Further enhancing the effectiveness of THAI’s own procedures and guidelines, THAI

consistently holds training exercises with respective government units.

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INFORMATION TECHNOLOGY

Ongoing information technology development is part of the Company’s overall emphasis with proactive

impetus for all units within the Company to maximize utilization of IT tools to enhance service quality and

launch new products and services to provide quick solutions and prompt response to customer needs. At the

heart of using IT is to reduce formalities and processes to enhance overall customer satisfaction. In addition to

the concern for operating efficiency, personnel development and cost control to maximize benefit for the

Company, a plan is in place to review and enhance the process in developing the IT master plan.

A comprehensive approach is being taken to review the IT infrastructure, investments and IT research and

development along with hardware and software requirements enabling common platforms to achieve the

Company’s strategy in IT competitiveness and meet the challenges of the airline industry.

In 2008, a proliferation of e-services was geared towards enhancing services to our clients but also to

better meet the changing needs of our customers by increasing ease, flexibility and accessibility. Among the

services launched was the e-Payment system enabling on-line credit card payment of air fares in multiple cur-

rencies; enabling Royal Orchid Plus members using outstanding points for seat upgrade via the Company’s

www.thaiairways.com website; providing information via SMS (reservation code for passengers making

reservations at THAI’s Contact Center); providing automated notification of seat confirmation for passengers on

wait-list; providing warning of outstanding Royal Orchid Plus miles that are to expire within the given year; and

providing electronic notification of payment code for fare payments via the ATM. Electronic ticketing is now

issued to all passengers traveling with THAI while the Cargo e-Booking system enables clients to make reservation

for cargo space, check flight times while the Company’s Cargo Appointed Agents around the world are able to

track the location of their cargo via the www.thaicargo.com website.

Systems implemented in support of the Company’s main operations and support functions include:

The Electronic Publishing System - generates all the necessary documents to be used for travel

purposes and manages flight information to better support flight crew in speed and accuracy of

information.

The Network Management System - assists management in making network decisions based on

scenario analysis.

The Ground Operations Control System - supports the coordination and decision making process

related to ground operations at the Company’s Operations Center at Suvarnabhumi Airport to

maximize efficiency.

The Mobile Information and Communication System - supports ground staff in providing unsurpassed

quality service to passengers by using Personal Digital Assistants (PDAs) to search and make necessary

information changes at the point of contact. Information access from and limited information

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modifications can be made in the reservation system, departure control system, ground operations

control center, resource system and the lounge access system. Information such as passenger travel

status, baggage location, flight information and status of ground operations for each flight are some of

the functions for which the PDA can facilitate service to customers.

To enhance management of IT operations, basic infrastructure and to enhance the quality of service

provided by the IT Department in general, the Business Service Management system was put into place enabling

users to check and follow-up on the efficiency of response to tasks for which services are being rendered on an

end-to-end performance check. Problem identification can easily be determined and can then be used to

improve overall quality management and make adjustments to the Service Level Agreements with the various

end users. The IT Service Management system was also implemented to expedite task execution, problem solving

and monitor results and ensure the greatest level of operational efficiency. Current major ongoing projects

include development of basic infrastructure to support projects including:

Moving its second site to a new location to serve as the Company’s data back-up and recovery center in

case of damage caused to the main system from disasters or unforeseen events to ensure continuous

and uninterrupted operations or at least minimize overall disruption to the Company’s operations or

limit disruption to the shortest time period.

The development of the Project Portfolio Management system to assist in the planning and

management of IT projects within the Company. The system provides status updates on ongoing

projects being undertaken by the IT Department for management to keep track while users can be kept

abreast of developments and progress on projects related to them. The ultimate benefit of this system

is that it enables effective use of manpower and improves cost management.

The launch of the e-Document and e-Learning systems were to assist in storing documents and

enhancing training on demand where employees can readily access course or refresher material to

maximize learning experience.

IT security is among the most important concerns that the Company has as it serves as the backbone to

providing huge volumes of transactions and as the volume of information flow within and outside of the

Company has and will continue to grow at a very rapid rate. To abide by the Computer-Related Crime Act,

B.E. 2550 the Company established a working team on IT safety and security to ensure adherence to the rules

and guidelines as stipulated by the Royal Decree and other related legal guidelines. The benefit of setting new

policies and processes in maintaining IT safety and security and establishing standards in developing the

IT framework with safety and security standards at par with international standards is to provide confidence

in the integrity of using the Company’s communication network and in the safety and security of making

transactions via the Company’s electronic channels.

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HUMAN RESOURCE AND DEVELOPMENT AND MANAGEMENTRecognizing that human resource lies at the heart of THAI’s success and achieving its goal of being a

leading airline providing unsurpassed service quality with Thai Touch while maximizing customer satisfaction,

the Company continues to emphasize development of management and leadership skills with professionalism

and teamwork to enhance overall efficiency in performing tasks. Underlying the ability to achieve the above goal

is the commitment of THAI employees which is derived from the Company’s transparent and ethical policy of

human resource management. The selection process for candidates to be considered for promotion is derived

from the Company’s information system in conjunction with a robust and transparent screening process.

An appropriate and comparable remuneration and benefits package form part of the incentive system for the

high service quality expected and rendered by each employee. Activities related to good corporate governance,

social responsibility, environmental concerns and general public charity were undertaken by the Company to

instill principles of good corporate citizenship.

An organization restructuring and man power review was undertaken in conjunction with a job value

assessment was done for each position with respect to being in alignment with the Company’s vision and goals.

An assessment of the performance review process was undertaken to improve evaluation and thus remuneration

for work performed. Ongoing career path planning for employees is based on each individualís capabilities to

prepare personnel for future business expansion and succession planning. Moral and ethics form the core

emphasis for the Company with honesty, responsibility and upholding the Company’s benefits being the key

attributes for THAI’s management and employees to uphold.

The THAI Spirit has become the core culture for human resource development where team work, healthy

body and mind, awareness, eagerness and motivation are the key underlying factors. A cultural change is being

enacted to meet tougher challenges in the airline industry through emphasis on unsurpassed customer service

at every customer touch point, giving THAI the competitive edge.

General knowledge enhancement has been part of the human resource development regime where

courses on commercial airline industry and other related courses have been made available to THAI’s employees.

Emphasis has been placed on the quality of course material that meets international standards that leads

to enabling THAI’s employees to execute their duties and achieving the Company’s vision of “First Choice Airline

with Touches of Thai.”

Seminars and training related to the commercial airline business with specific concentration on

Functional Competency including marketing and commercial, station management, air cargo services, ground

equipment services including hygiene and safety to ensure that operationally, THAI’s employees are able to

perform their functions in compliance to the relevant legal requirements and guidelines. Language and cultural

understanding are also important areas of emphasis providing employees with the necessary exposure and

experience to better assist customers and to achieve the highest level of customer satisfaction.

General Management training courses have been offered to ensure that its employees have the necessary

skills, the right attitude, THAI’s values and to perform duties aligned with the Company’s culture to achieve the

Company’s overall vision and strategy.

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Utilization of the latest in electronic media and network multimedia in support of training to broaden

reach and allow depth of training as content can be reviewed on demand as part of the e-learning program.

There is ongoing cooperation with educational institutions and other external parties in support of training of

the Company’s employees. THAI also provides training for other airlines and other organizations as an additional

source of income.

GROUND CUSTOMER SERVICESWith a vision to achieve unsurpassed quality service, THAI Ground Customer Services’ goal is to provide its

passengers with comprehensive, convenient, speedy and quality service beyond customers’ expectations through

utilization of new and modern tools and equipment and amenities that meet international quality standard

combined with Thai touch service delight provided by our staff.

Among services available to our passengers at Suvarnabhumi Airport is our Curbside Service where our

First and Royal Silk Class passengers are greeted by our curbside staff and are then shown to the designated

check-in lounges - Royal First and Royal Silk. Upon completion of check-in, our premium class passengers are

then able to pass immigrations through the fast track service conveniently provided close to the premium class

check-in counters. Further ticketing arrangements, acquiring travel related information or making special travel

arrangements for children, the elderly or those traveling for the first time can also be done at THAI’s designated

one stop service.

Upon passing through immigrations, our premium class passengers including our gold card members are

then treated to an A-La-Carte Restaurant Concept meal in THAI’s Royal First and Royal Silk Class lounges.

Our Royal First passengers have the private luxury of slumber rooms while family rooms are available for group

travel and a kids’ room provides an area for kids to relax and have fun. Our steam rooms and sauna facilities are

also available in the Royal Orchid Spa. For 2008, THAI was awarded the 2nd Best First Class Airline Lounge

Award by Skytrax.

To achieve the Company’s key service objectives under the magic service ring, the latest in total IT solution

has been brought to bear to provide seamless service for THAI’s passengers at Suvarnabhumi Airport. Personal

digital assistance (PDAs) is part of the Company’s mobile information communication system that has been

implemented to enhance mobile communication to facilitate providing service to passengers at any point

within the airport. The iCheck-in enables passengers to check-in via the internet while automated self-check-in

stations are available for passengers who prefer the flexibility.

To facilitate full check-in service for domestic passengers, the THAI City Air Terminal located at the Lad

Phrao subway station is able to provide advance individual and group passenger and baggage check-in with free

transport to and from Don Mueang Airport.

The Ground Operations Control Center (GOCC) was established as the central nerve system to facilitate

communication and monitor ground service operations to enhance overall operating efficiency to improve

on-time flight performance, aircraft rotation, improve timeliness and minimize errors on transfer of passenger

and baggage on transit flights, improve management of irregular situations and to reduce the Company’s overall

operating cost.

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The incessant effort towards improving on operating processes, development of new products and

services for passengers and ongoing development of ground service staff have been key factors enabling the

Company to be successful in achieving its goal of providing unsurpassed quality service which is to lead to

the vision of being the first choice airline and to continue to be at the forefront internationally in ground service.

From ranking released by Skytrax for 2008, THAI was awarded 1st in ground service at Suvarnabhumi

Airport (Airport Service Ranking) for Royal First and Royal Silk Class passenger service and was ranked 2nd

in ground service for economy class passengers.

GROUND SUPPORT SERVICES

In the Company’s effort to be the first choice ground support service, the Company has put emphasis in 3

areas. First is to ensure that international quality standard service is provided with attention paid to every detail

and process. Second is to ensure the highest level of safety standard giving customers the highest level of

confidence. Third is to ensure timeliness of service on each and every flight. Achievement of such high service

standard can only be accomplished with the skills and experience of THAI’s ground support crew and their

dexterity in operating the latest in equipment and tools. The Company’s market share for ground support

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service of over 71% speaks for itself as having won the confidence of over 80 airlines, serving more than

200,000 flights annually. THAI’s ground support service has the flexibility to provide services to all parts of

Suvarnabhumi Airport.

The Ground Support Service Department provides direct service to the air transport business in tandem

with other departments such as the Ground Services Department, Cargo and Mail Department, the Maintenance

Department and the Catering Department. With such comprehensive services, THAI has the competitive

advantage as a one-stop-service at Suvarnabhumi Airport, Don Muang Airport and other domestic airports

where THAI serves.

In the past year, cost rationalization has been a key focus for the Ground Support Services Department to

increase overall profitability for the Company as a whole by focusing on rationalizing fuel consumption for

vehicles used for ground support services. In addition to the ongoing rationalization of operating expense, the

Company has put effort in seeking new clients to render ground support services while maintaining its existing

accounts. Regular meetings are held with existing clients to foster confidence. Advertisements were directed

towards target client groups along with the Company’s participation in international fairs and conventions and

advertisement on www.thaigse.com website are geared towards reaching the desired customer groups.

Ongoing is the enhancement of procedures and processes in facilitating service to clients with the use of

the latest in information technology at the Company’s Ground Operation Control Center : GOCC to provide

efficient service and maximizing customer satisfaction. This is to provide customer airlines that for each and

every flight there is the highest level of coordination to complete tasks with oversight by experienced personnel

able to effectively make sound decisions to rectify problems on site and provide the customer airline with

confidence that each and every task will be completed with quality, safety and on time service.

The Company continuously seeks to improve its readiness to support further business expansion in

rendering of ground support services to a larger client base at Suvarnabhumi Airport while enhancing its

competitive capabilities based on the Company’s business plan based on the ISO 9001 : 2000 international

standards. In preparing to provide the highest level of service and safety in serving client airlines, THAI

constantly reviews its manpower sufficiency to support any expansion in business and has enhanced its safety

processes to encompass all areas in which THAI provides ground support service. All services rendered to client

airlines meets the International Air Transport Association : IATA standards under the Ground Damage Prevention

Program : GDPP providing a concerted effort in safety awareness leading to the highest level of effectiveness

safety rendered to customer airlines. Furthering maintenance of safety standards, THAI employs the IATA

Operational Safety Audit : IOSA process on an ongoing basis in reviewing its services rendered to its client airlines.

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CARGO AND MAIL

THAI is putting every effort into developing and enhancing its products and services with attention paid

to every step of operations to maximize customer satisfaction and ultimately achieving the Company’s goal of

being a leader in the air cargo and mail services.

Activities of the Cargo and Mail Department

THAI’s cargo and mail is mainly carried mainly in the belly space of the Company’s passenger aircraft

while additional capacity required can be acquired through blocking of cargo space on aircraft of alliance

partners.

Advertising and press releases were means used to assist in targeting cargo customers in relation to

reminding and letting them know of the Company’s service standards at the various brand contact points -

participating in various exhibitions and events at home and abroad and providing sales promotions for cargo

customers on a regular basis. The greater use of information technology has been to improve overall customer

experience for importers, exporters, freight forwarders and others that want general shipping information

and those that need to track the location of their package through THAI Cargo’s web site www.thaicargo.com.

The system not only enables THAI’s customers to track their shipments any time day or night but also to

make reservations for cargo space (e-Reservation) on-line. To grow the cargo business, THAI is currently looking

to appoint General Sales Agents : GSA for countries in which THAI does not serve (off-line stations) but has

tremendous potential for the cargo business.

Improvement in products and services are ongoing with emphasis put on transporting higher valued or

premium cargo with perishables through TGFresh and expedited cargo shipments through TGForce guaranteed

timely delivery while THAI’s door to door delivery service is via Thai Express Cargo (TEC), which is in cooperation

with freight forwarders within Thailand. Last of the premium valued cargo are small shipments. Going forward,

THAI will be opening additional expedited shipping centers around the world.

Additional cargo space is being sought from other alliance partner airlines under a special prorate

agreement : SPA; blocked space agreements : BSA and just space bought as needed for cargo. Chartered cargo

flights can also be arranged for large shipments of cargo with a specified shipment deadline. THAI’s strong

relationship with global forwarding agents serves to increase cargo volume on every flight sector and for

Thailand to be a major cargo hub.

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The Cargo Business

In planning for the move to the new Suvarnabhumi Airport, THAI envisioned a cargo facility that would be

able to support the growing air freight business and enabling THAI the ability to compete effectively under ISO

9001:2000 quality standards. THAI has 18,000 square meters of space dedicated for domestic air cargo services

that is able to handle around 88,500 tons of cargo per annum. Another 87,000 square meters of space is

dedicated for international cargo with a handling capacity of around 1,226,000 tons per annum. Of the 87,000

square meters of space, 36,000 square meters is dedicated for THAI’s own cargo services and that of Star Alliance

members. Another 34,000 square meters is dedicated for THAI’s customer airlines while 7,000 square meters

serves those who require expedited cargo services and the balance of 10,000 square meters is dedicated as the

perishables area. To enhance overall space management, an area of 1,116 square meters has been dedicated

for huge cargo storage while the “conventional rack” and “heavy rack” mobiles are used to enhance vertical

storage management. The shelf rack is currently being extended higher to enable storing a larger volume of

cargo packaged in skids. An empty plot of land of 6,540 square meters juxtaposed to the current cargo facility is

still available for capacity expansion while the Company still leases space in Airports of Thailand Public Company

Limited’s number 4 storage facility for which THAI currently serves 82 customer airlines and others that may

choose Thailand as their future destination.

The Express Cargo Center was established to facilitate customs formalities for target group customers

through Customs EDI Service requiring an expedited customs processing but this service is only available to

exporters and freight forwarders who have registered with the Customs Department.

To ensure customers the highest level of quality and safety of fresh produce, an area has been set to

provide full time climate controlled environment that can be set to the specific needs of clients’ various products

to ensure maximum freshness. The “cool chain” begins where goods and products are received, movement of

such goods and products within the facility and to the removal of such goods and products from the cargo facility

is all under climate control. Medicine and pharmaceuticals are handled with extra care and meets all stipulated

requirements by the customer to ensure quality of product from beginning to delivery.

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The Excellent Cargo Care Project was launched to facilitate importers and target customers in their

customs formalities through the use of e-paperless by sending the necessary information electronically to be

processed by the Customs Department.

Additional services planned by the Cargo Department to increase revenue is to help freight forwarders

who do not have the capability to operate in the duty free zone in preparing products for shipment (Build-up)

provides customers with greater levels of satisfaction.

CATERING

Operating standards and capability enhancements to support business expansion has been at the

core of THAI Catering’s push to be among the leaders in the commercial airline industry. Outstanding quality and

service were the key drivers for the Catering Department in 2008 with “Answering Your Needs With Integrity”

campaign guaranteeing the highest standards of quality service while ensuring the highest level of hygiene

and safety.

Food and beverage preparation for in-flight service and other on-ground products and services such as

operating airport restaurants and snack bars, operating Puff & Pie bakeries, on and off-site catering, preparation

and sale of special foods for special occasions and preparation and sale of box lunches along with running the

Company’s staff canteen form THAI Catering’s core operations.

THAI’s new catering facility at Suvarnabhumi Airport mainly serves catering for international flights

while the facility at Don Muang Airport provides catering for mostly domestic flights. Total combined meal

production capacity at both facilities total 80,924 meals per day with the current output at 56,616 from

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Suvarnabhumi Airport and another 24,308 from Don Muang. Other than THAI’s own flights, THAI Catering

serves 51 other airlines and another 8 airlines that are chartered flights. In addition to operating restaurants

and snack bars at Suvarnabhumi Airport, THAI’s presence is also at major airports in and around the country.

THAI’s on and off-site catering service is a household name and THAI’s “Puff & Pie” bakery brand (31 outlets

with 9 specialty outlets) along with 40 Puff & Pie Supreme Bakery Delight (wholesale) are testaments to the

confidence in THAI’s products but also the strength and efficiency of catering employees of all levels.

In ensuring the highest level of customer satisfaction, THAI’s Catering has employed the Quality Hygiene

and Safety : QHS standards which includes the standards of ISO 9001, Good Manufacturing Practice (GMP)

and Hazard Analysis and Critical Control Point (HACCP), which are accepted by the International Travel

Catering Association (ITCA) and the World Health Organization (WHO). These standards have stringently been

applied to control quality and the production process. Furthering THAI’s capability, THAI Catering in cooperation

with the Halal Science Center of Chulalongkorn University established a Halal Kitchen where the Company

was the first in Thailand to receive the Halal-GMP/HACCP (Hal-Q) certification for the Suvarnabhumi Airport

catering facility on 7 February 2008 from the Chairperson of the Islamic Community of Samut Prakan Province.

A booklet detailing the use of the Halal emblem was given to the Company as operating guideline from the

Central Islamic Committee of Thailand. Assistance has also been given to the Company on an ongoing basis for

the past 6 years from Kasetsart University in improving the quality of agricultural raw material under Good

Agricultural Practice : GAP. The fruit of this cooperation in addition to preparing food that is clean and safe based

on international standards, THAI has been able to source new raw material domestically providing the Company

with added flexibility in sourcing raw material, while meeting the needs of its customers.

THAI is proud to have received the OHSAS 18001 : 2007 hygiene and safety certification on 4 September

2008 for both its Suvarnabhumi and Don Muang Airport facilities. The certification reflects the Company’s

commitment to the welfare of its employees and stakeholders by employing international management

standards with due consideration given to all applicable legal guidelines, customer airlines’ requirements

and other related guidelines.

Understanding its role as a good corporate citizen, the THAI Catering Department has put in place an

environmental management policy that covers the area within the building and the surrounding area that

meets international standards on good environmental management. To this end, the Catering Department has

sought ISO 14001 certification and expects to be awarded such certification by September 2008. Converting

waste material into combustible fuel used as partial substitute along with converting of waste into fertilizer

mix for agricultural farming have been means to be environmentally responsible and also a means to reduce

operating cost.

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TECHNICAL DEPARTMENT

Ensuring safety of aircraft is at the heart of the Technical Department’s responsibility while capability

enhancement is being developed on an ongoing basis to provide the highest quality of service. Technical

safety observed must meet the guidelines of the various regulatory agencies around the world such as the

Federal Aviation Administration : FAA of the United States of America, the European Aviation Safety Agency :

EASA of the European Union and the guidelines of the respective client’s countries. To provide its customers with

the highest level of confidence in THAI’s safety standards, THAI has attained ISO 9001:2000 certification and for

its environmental management, THAI has also received ISO 14001:2004 certification. For 2008, 50 customer

airlines bestowed their trust for THAI to provide maintenance services.

Maintenance work can be undertaken at THAI’s various facilities at Suvarnabhumi, Don Muang

and Utapao Airports. The maintenance facility at Suvarnabhumi Airport is able to simultaneously support

line and light maintenance service for 3 A380 aircraft. THAI’s facilities at both Don Muang and Utapao Airports

are able to support up to heavy maintenance capability where the Don Muang facility has 5 hangars and

6 bays while the Utapao facility has 2 hangars and 3 bays.

For 2008, the Technical Department provided 40,562 line and light maintenance services with

26,332 being THAI’s own aircraft and another 14,230 for customer airlines. Of the 497 A-checks performed, 461

were for THAI’s own aircraft while the balance of 36 A-checks were for customer airlines. C and D-checks

performed at the Don Muang and Utapao facilities totaled 53 with 44 of those being for THAI’s own aircraft and

9 were for customer airlines. Maintenance service was rendered on CF6-80C2 engines 26 times for THAI and

another 8 were for customer airlines while maintenance service was rendered 13 times for the RR Trent 800

series engines.

Work also began on refurbishing the interior livery of 6 Boeing 777-300 aircraft in 2008 and is expected

to be completed by August or 2009 for which ground time has been timed to expedite the completion of

the 6 aircraft.

Through concentration of key 3 key success factors - quality of work done, timely turnaround time and

appropriate service fee, the Company has been entrusted with providing maintenance service for various leading

airlines for over 10 years. With trusted expertise, quality and value for money service leading airlines from Japan

and Europe have consistently sought heavy maintenance service from THAI. Upon moving the operating base to

Suvarnabhumi Airport, maintenance facilities at the Don Muang Airport have been freed up to take on

additional work for customer airlines.

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In line with the Company’s strategy of increasing revenue, the Technical Department’s facilities at

Don Muang and Utapao Airport have been upgraded with the latest equipment such as the ATEC Series 6 used

to test electronics of the latest generation aircraft. A plan is in place to enhance the Department’s capability

to undertake Boeing 747-400 freighter conversion and Retrofit VIP Configuration at the Utapao facility. There is

also plan to enhance THAI’s capability to provide maintenance service for hydro/mechanical aircraft equipment

such as the Universal IDG/CSD/Gen Starter/Gen Test Stand. The ability to undertake such broad range of services

will lead to reduction in equipment transport cost. The Increase Maintenance Capacity : IMC project at

Don Muang Airport will increase its bay capacity to 2 for performing C-check services for Boeing 747-400 and

Airbus A300-600 aircraft.

THAI launched it logistics support project to improve efficiency in storage and transfer of spare

parts, equipment and tools including cooperation with manufacturers in reducing cost through improved

management of inventory and increasing the speed in fulfilling parts requisitions. The Aircraft Washing and

Polishing program was implemented as a green project to reduce carbon dioxide emissions and reduce

consumption and expense.

In enhancing effective use of assets under the Bangkok Hangar Utilization project, C1 and C2-checks for

A330/A340 and Boeing 777 aircraft have been partially moved to Suvarnabhumi Airport to maximize utilization

of available hangar space beginning with the A340 series aircraft followed by the Boeing 777 and A330 series

aircraft. The Logistics Support project improves the efficiency and effectiveness in transporting equipment to

support maintenance service at the 3 maintenance facilities.

Operating efficiency is being enhanced by the introduction and implementation of the System

Application and Data Processing : SAP project in enhancing the ability to manage maintenance service.

Emphasis is also being placed on moving towards a customer oriented culture, increasing the sense of

responsibility and ownership, fostering teamwork, information sharing, adjusting with the changing

environment, maintaining integrity, upholding ethics, increasing effectiveness in management through using

the Balanced Scorecard and utilizing the Six Sigma guidelines to improve work processes on an ongoing

basis. The Company is also using the ISO 9001:2000 standards to drive its management of quality.

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ENVIRONMENTAL FRIENDLY MEASURES

THAI has and continues to place great importance on preservation of the environment with clear

strategies and plans in regards to managing environmental impact in accordance with international standards

as certified by Bureau Veritas under the guidelines of ISO 14001 Environmental Management System. The

Company has received ISO 14001 certification for its various operating facilities. In 2008, certification was

received for THAI’s Ground Customer Service Department at Suvarnabhumi Airport. The ongoing certification

is part of the Company’s plan to attain certification for all of THAI’s facilities at the new airport in its effort in

environmental preservation and responsibility towards communities that may be impacted by the Company’s

operations. THAI also strictly adheres to all legal guidelines with respect to environmental issues and follows all

new developments in regards to such legal and/or environmental guidelines. The global trend is for stricter

measures to be called for to cope with and reduce the various types of pollution. Whether in regards to noise

pollution during aircraft take-off or landing or enhancing efficiency in fuel consumption, actions taken by the

Company include the following.

1. Managing Pollution

1.1 Noise Pollution

Engine noise of THAI’s aircraft fleet is within the limits as prescribed by the International Civil

Aviation Organization (ICAO) in Annex 16 Chapters 3 and 4. To further mitigate noise pollution, THAI closely

adheres to the guidelines as specified by the different airports around the world served by THAI.

1.2 Carbon Dioxide (CO2)

The following measures were taken by the Company to curb carbon dioxide emission as part of

the Company’s conscientious effort to reduce impact on global warming:

Acquiring technologically advanced aircraft with fuel efficient engines to reduce fuel burn and

thus CO2 emission

Enhance management of fuel consumption by taking into consideration various factors

bearing direct impact on fuel demand. Rationalizing aircraft weight by reducing unnecessary

weight carried and managing on-ground taxi time and in-air holding time.

With the looming Emission Trading Scheme that Europe is to be enacting in 2012 as a means to

curb emissions, it is likely to increase the Company’s operating cost with likely charges to be levied against all

airlines flying into Europe for carbon dioxide emission. The Company has commenced studies in advance to

develop a plan based on clean development mechanism for mitigating the impact.

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2. The Design and Construction of the Company’s New Environmentally Friendly Facilities at

Suvarnabhumi Airport

In addition to in-flight passenger service, THAI also provides on-ground services to 70 other

customer airlines, the Company has had to make investments in assets and facilities to accommodate

customers’ requirements while enabling the ease and comfort in facilitating the transport of customer

airlines’ passengers and cargo. As with every action taken, there may have been inadvertent impact on the

environment with the consumption of sizeable amounts of energy for climate control at the Company’s various

facilities at Suvarnabhumi Airport. It was with great emphasis that the new buildings at the new airport

be designed to conserve energy, to be as environmentally friendly as possible and to also meet ISO 14001

environmental management standards for which the Company will be seeking certification.

The Company has cooperated with the Co-Generation Co., Ltd. in utilizing their excess steam in the

laundry and utensil cleansing processes in THAI’s Catering Department. Furthermore, THAI’s office buildings at

Suvarnabhumi Airport are run by a building automation system to maximize efficiency in climate control.

In managing residual waste, a process has been devised to separate used oil and chemicals to either

be eliminated or treated appropriately. THAI Catering Department’s water treatment facility removes fatty

waste to minimize water pollution.

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3. Maintaining ISO 14001 Certification

Great importance is placed on maintainting the ISO 14001 certification which is the international

standard for environmental management. As such, THAI is proud to announce that for the Company’s head

office, Laksi office, Larn Luang office, the Operations Center at Suvarnabhumi Airport along with the

maintenance facilities at Don Muang and Utapao airports have consistently achieved ISO 14001 certification.

Since achieving ISO 14001 certification in 1996 with ISO 14001:1996, the Company has been able to meet the

latest in environmental management standards as per the ISO 14001:2004 guidelines.

On 17 September 2008, the Company succeeded in extending its ISO 14001:2004 certification to

include its Ground Customer Service at Suvarnabhumi Airport which is an indication of the Company’s

commitment to deliver the highest standards of service to our customers while being aware of environmental

concerns and having in place mearuses to mitigate impact. This achievement in 2008 is in line with the

Company’s overall strategy in 2009 to achieve ISO 14001:2004 certification for the Company’s many operations

at Suvarnabhumi Airport with THAI’s Catering Department to be next to achieve such certification this

coming year.

4. Waste Recycling

Internally, the Company has in place a waste recycling process where waste is separated as hazardous,

recyclable or reusable material to maximize the benefit of recycling.

An annual Big Cleaning Week raises awareness of recycling of all Company employees while

emphasizing the importance of responsibility to the environment.

5. Reduction in CFC and Halon Usage to Mitigate Ozone Impact

Action has been taken based on the Company’s master plan to replace or to phase out all vehicles

and equipment utilizing ozone damaging CFC and Halon. The FM-2000 based fire extinguishers will replace

all fire extinguishers using Halon 1301 while all chemicals with CFC content used in cleaning electronic

devices and for all large cooling systems are also being phased out.

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SUBSIDIARIES AND AFFILIATEDCOMPANIES

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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 is party to the joint venture

launching 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 the company’s paid-up capital totaling

THB 8.25 million.

Net Profit earned for the year ending December 31, 2008 by

Thai-Amadeus Southeast Asia Co.,Ltd. totaled THB 144.59 million.

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 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 THB 937.50 million. THAI has a shareholding of 24%

in this company’s paid-up capital totaling THB 225 million. The amount

of investment by THAI via equity method is THB 300.25 million.

Net profit earned for the year ending December 31, 2008 by

Royal Orchid Hotel (Thailand) Plc. totaled THB 237.97 million.

SUBSIDIARIES AND AFFILIATED COMPANIES

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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

THB 120 million. THAI has a shareholding of 40% in this company’s paid-up capital totaling THB 48 million.

The amount of investment by THAI via equity method is THB 189.84 million. THAI jointly invested in the hotel

venture with the purpose of providing passengers the convenience of using the hotel as a transit point and as the

designated hotel in case of delays or any flight irregularities. Since moving to Suvarnabhumi Airport, the hotel

has changed its strategy by focusing more in hosting group events, banquet and seminars.

Net loss for the year ending December 31, 2008 earned by Don Muang International Airport Hotel

Co., Ltd. totaled THB 17.20 million.

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 THB 510 million. THAI has a shareholding of 22.59% in this company’s

paid-up capital totaling THB 115.19 million. The amount of investment by THAI via equity method is

THB 582.71 million.

BAFS earned THB 543.34 million in net profit for the year ending December 31, 2008.

PHUKET AIR CATERING COMPANY LIMITED

Phuket Air Catering Co., Ltd. provides in-flight meal catering for various airlines on international

flights from Phuket International 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 THB 100 million. THAI has a shareholding of

30% in this company’s paid-up capital totaling THB 30 million. The amount of investment by THAI via equity

method is THB 71.35 million.

Phuket Air Catering Co., Ltd. earned a net profit totaling THB 65.48 million for the year ending

December 31, 2008.

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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 THB 1,017.78 million. THAI has

a shareholding of 30% in this company’s paid-up capital totaling THB 305.33 million. The amount of investment

by THAI via equity method is THB 192.95 million.

As a recent start-up, the hotel is still incurring a slight loss of THB 91.41 million for the year ending

September 30, 2007.

NOK AIRLINES 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 domestic and regional markets share especially with the liberalization of

the Thai aviation industry. The lower cost structure of Nok Air and through its competitive pricing appeals to

a larger customer base, growing the overall demand for air travel. The company has issued and paid-up

share capital of THB 500 million. THAI has a shareholding of 39% in this company’s paid-up capital totaling

THB 195 million.

As of the year ending December 31, 2008, Nok Air earned a net loss of THB 251.32 million.

Other than the above investments in subsidiaries and affiliates, other investments for which THAI holds

less than 10% shareholding in 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 various airports in Thailand THAI holds a 2.72% shareholding of issued and paid up capital

totaling THB 660 million as at September 30, 2008.

- Fuel Pipeline Transportation Limited stores and transports aviation fuel via underground pipes for which

THAI holds a 8.35% of issued and paid-up capital totaling THB 1,592 million.

- TradeSiam Company Limited runs an Electronic Data Interchange Center with THAI holding 3.5% of the

company’s issued and paid-up capital totaling THB 50 million.

- 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 THB 140 million.

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Understanding the importance of the role that information plays in the present day and to comply with

the legal guidelines of the Official Information Act, B.E. 2540 entitling the general public to access information

in regards to companies’ operating information, THAI’s Information Center was established on November 16,

1998 to facilitate information access by the general public. THAI was selected by the Ministry of Transport on

December 29, 1998 as the model for others in providing a channel for information access by the general public

as per the guidelines of the Official Information Act, B.E. 2540.

In 2008, the Company undertook the following activities in support of the Official Information Act,

B.E. 2540 :

PROVIDING NEWS AND INFORMATION TO THE GENERAL PUBLIC

During 2008, 1,040 persons visited the Company’s information center, which was a 36.80 percent increase

over the previous year. Survey results from those having used the Company’s information center yielded a “very

high” level of satisfaction in terms of information sufficiency, employee knowledge of information needed and

the facility provided to contact for information access. As compared to the previous year, the satisfaction level

rose by 5.96%, indicating that the outcome has been appreciated by the improvements made in terms of infor-

mation access at the facility.

Statistics indicate that information access by the general public has been to a greater extent through

the Company’s website www.thaiairways.com followed by telephone, fax, e-mail and direct contact at the

information room located at the Company’s head office. Information most frequently sought were the

Company’s history and background, names of the Company’s management, the Company’s organization

structure, information regarding the Commercial Department, Corporate press releases, human resource

information and other general information.

PROVIDING ELECTRONIC NEWS AND INFORMATION SERVICE

Information access by the general public was mostly into the “about THAI” section in the

www.thaiairways.com website. Search was mostly in the area of THAI’s investments, flight destinations and

general airline industry information. On average, there were approximately 133,444 monthly hits to THAI’s

website in 2008.

The Company has also put up all its procurement orders in electronic form and has in filing the sor kor

ro. 1 forms which are results of the various procurements and complies with Section 9 of the Official Information

Act, B.E. 2540. All documentation has been filed at the THAI Information Center and is readily accessible by the

general public.

COMPLIANCE WITH THE OFFICIAL INFORMATION ACT, B.E. 2540

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COOPERATION WITH THE GOVERNMENT SECTOR

Participation by the Company with the Government Sector in 2008

Participated in the 10th anniversary celebrations of the Official Information Act, at the Santi Mitree

Building at the Parliament.

Contributed to the re-drafting process of the Official Information Act sponsored by the Office of the

Permanent Secretary

Participated in the 2nd seminar sponsored by the Ministry of Technology and Communications on the

issue of information security, safety and privacy of user information.

Participated in a contest to test state employees’ understanding in regards to the rules and guidelines

of the Official Information Act.

UPDATING COMPANY EMPLOYEES ON THE OFFICIAL INFORMATION ACT, B.E. 2540

THAI’s web site has been updated to better provide its employees with a broader range of information to

include the Official Information Act, B.E. 2540’s policies, resolutions to various issues on information disclosure,

news updates, legal guidelines along with issues of interest in regards to the Official Information Act, B.E. 2540

and also information regarding the Company’s various activities related to information disclosure.

VISITATIONS TO THAI’S INFORMATION CENTER

The following public entities visited THAI’s Information Center in 2008 :

Thoughts and ideas were exchanged with officials from the Baan Mor Hospital Sara Buri Province upon

their visit to the Company’s Information Center to enhance capability for information to be used in

business operations, management, assessment purposes and means to better achieve objectives of

the 2006 Thai Constitution.

Level 6 government officials from the central and provincial areas visited THAI’s Information Center

to be used as reference in executing their duties in providing service to the general public.

THAI briefed officials from the Office of the Public Sector Development Commission on how its

Information Center operates.

Upon visiting THAI’s Information Center, officials from the Ministry of Industry exchanged thoughts

and comments regarding how to improve effectiveness in using information for business and

management purposes.

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Operations in 2008 for the commercial airline industry was faced with many difficult challenges

because of rapidly rising fuel cost that peaked at its highest ever during the first half of the year causing

operating cost to also rise dramatically in tandem. Most affected were the long haul flights requiring tremendous

fuel burn and for which fuel cost constituted greater than 50% of the flight’s operating expense. A measure

implemented to mitigate the dramatic rise in fuel cost was the implementation of fuel surcharge while fuel

hedging undertaken was also a means to mitigate fuel cost impact. Unnecessary operating expenses related to

flight operations was reigned in, implemented reduction in capacity on loss making flights, rationalized the use

of appropriate aircraft type to support actual demand and took into consideration the rate of fuel burn by each

aircraft type to determine the appropriate type to be used for each flight sector.

The global economy was dramatically affected by the impact of the U.S. financial sector meltdown in

the second half of 2008 triggering a global economic slowdown, job uncertainty and lay-offs led to reduced

consumption and thus reduction in production capacity which in turn led to more lay-offs. The reduction in

global demand has not only adversely impacted the air freight business it has also caused demand for passenger

air travel to decline despite fuel costs having come down as fast as it went up after July 2008.

In addition to the global economic slowdown, Thailand faced another difficult challenge on the home

front with the spillover from the political unrest that led to the closure of airports beginning with Phuket and

Hat Yai at the beginning of September 2008 and the ensuing closure of both Suvarnabhumi and Don Muang

Airports from November 26 - December 3, 2008. The closure caused disruption to the confidence in the

country’s stability which was reflected in the reduction in number of travelers to Thailand post the re-opening of

the airports. THAI had to adjust its flight capacity and flight frequency in the short-term. However, additional

capacity and frequency have slowly been added since mid-December 2008 for European routes where demand

remained strong during their Holiday Season and Thailand remains the favorite holiday destination. Despite

the recovering demand and capacity increase, capacity during the latter part of 2008 was approximately

12.5% lower than the year before.

OUTLOOK FOR PASSENGER TRANSPORT

From January - November 2008, the global passenger air transport industry saw a 2.2% growth as

compared to 2007 with the regions of Latin America and the Middle East experiencing the fastest rate of growth

at 11.2% and 7.1%, respectively. On the other hand, the passenger air transport industry declined by 0.8% for

regional Asia.

For 2008, IATA forecast global passenger travel to grow by an average of 4.9% with regional Asia growing

the fastest at 9.1%, which is a reflection of ongoing strong economic growth expected for the region. With the

COMPETITION AND AIRLINE INDUSTRY OUTLOOK

52-02-012_048-057 new25_V 3/26/09, 1:49 PM54


rapid economic growth, the various airlines of this region also rapidly expanded their aircraft fleet and

extended services to new regional destinations. Growth for the Asia Pacific region is expected to be 5.8% in 2008.

Growth in global passenger travel for 2009 is expected to be 4.7% but growth in the Asia Pacific region is expected

to be greater at 5.2% (without having taken into account the impact of the financial sector meltdown).

For Thailand, international air travel has declined by 1.6% in the number of travelers to 29.5 million

through November of 2008 as compared to the previous year, reflecting the impact of high fuel cost and the

impact of the global economic slowdown on peoples’ travel behavior around the world. The Company closely

tracks aviation fuel price and fuel surcharge is adjusted in accordance such movement in market fuel price.

With the rapid drop in fuel price during the latter part of 2008, THAI reduced its fuel surcharge at intervals

beginning October 2008. The last round of fuel surcharge reduction was implemented in December 2008 as a

means to entice and stimulate demand for domestic and international air travel for which the objective

was achieved.

OUTLOOK FOR CARGO AND MAIL

For the 9 months ending November 2008, the volume of international air cargo transport increased

2.2% compared to the previous year where the Middle East saw the fastest rate of growth of 7.8% while the

Asia Pacific region saw a 4.7% decline in air cargo volume.

IATA forecasts the global air transport volume to increase by 4.3% for 2008 with the Middle East leading

the charge by 5.7%. Following suit is the Asia Pacific region and Africa with growth rates of 4.7% and 4.5%,

respectively. For 2009 the global air cargo transport industry is expected to grow by 4.5% with the Asia Pacific

region seeing a slightly higher growth of 4.8% (without having taken into account the impact of the financial

sector meltdown).

Air cargo transport for Thailand during the first 9 months of 2008 saw negative growth with outbound

shipment volume dropping 1.1% to 638,959 tons compared to the previous year. Inbound air cargo transport

volume, on the other hand, saw a 1.5% increase over the previous year to 428,494 tons. For the same period,

THAI carried a total of 268,491 tons of outbound air cargo which was an increase of 0.5% and for the bound side,

THAI carried a total of 223,608 tons, rising by 3.6% over the same period the previous year. Countries handling

the largest air cargo transport volumes in regional Asia include Japan, Hong Kong, Taiwan, China and Korea.

Across continents, countries handling the largest volume of air cargo include Australia, Germany, Netherlands,

France and Great Britain.

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COMPETITION WITHIN THE DOMESTIC AIR TRAVEL INDUSTRY

There are a total of 28 airports within Thailand for which is being used for air travel purposes with 6 airline

operators providing scheduled flight services including Thai Airways, Bangkok Airways, PB Air and 3 low cost

operators - Nok Air, Thai Air Asia and One-to-Go. Currently Bangkok Airways, Thai Air Asia and PB

Air operate out of Suvarnabhumi Airport while Nok Air and One-to-Go operate from Don Muang Airport. THAI

Airways operates out of both airports with most of the domestic flights originating out of Don Muang Airport to

Chiang Mai, Hat Yai, Phuket, Kon Kaen, Phitsanulok, Ubon Ratchathani, Udorn Thani and Surat Thani. However,

to facilitate international passengers on connecting flights to Chiang Mai, Chiang Rai, Phuket, Krabi and Samui

Island, these destinations are also being served from Suvarnabhumi Airport.

The majority of passengers traveling in and out of Bangkok travel through Suvarnabhumi Airport (64.7%)

while the balance of 35.3% travel via Don Muang Airport. The breakdown of THAI’s domestic passengers

is 52.8% and 47.2% being served through Suvarnabhumi and Don Muang Airports, respectively.

Since there are only a handful of airlines serving the domestic market there is still room for competition.

But THAI goes out of its way to support private airlines in operating to secondary airports with THAI assisting in

the sale of tickets and/or code shares with such airline to allow THAI’s passengers to conveniently connect to

destinations other than the ones served by THAI but competition on the trunk routes is alive and well.

The extremely high cost of fuel during the first half of 2008 severely impacted the financial performance

of low cost carriers causing them to reduce flight frequencies thus causing a natural flow back of passengers to

THAI. For the 9 months up to November 2008, a total of 14.4 million passengers traveled around the country,

which is a 4.3% reduction compared to the previous year. Of the total number of domestic passengers,

5.5 million passengers were carried on THAI flights which was a 7.6% increase over the previous year constituting

a 38.6% domestic market share.

52-02-012_048-057 new25_V 3/26/09, 2:17 PM56


COMPETITION IN INTERNATIONAL AIR TRANSPORT

In the interest of boosting trade and tourism to Thailand, the open skies policy launched by the

Government has enabled many new airlines to commence flight operations to Thailand - while existing airlines

increased their flight frequency. The Company has had to face stiffer competition from not only newcomers but

also of low cost carriers along with that of other network airlines. Competition is now coming from airlines from

the Middle East, China and India. Among these new airlines are Thai Air Asia, Tiger Air, Jetstar International and

Jet Airways. There is also a sizeable portfolio of chartered flights during certain times of the year bearing impact

on the Company’s market share.

As of the 9 months ending November 2008 there were 92 airlines providing scheduled flights in and out

of Thailand serving 29.5 million passengers during the same period, which was a 1.6% reduction in passengers

as compared to the previous year. THAI carried 11.2 million passengers in 2008, a 6.9% reduction caused by

competition and the impact of the various negative factors but THAI has been able to retain its 38% market

share. Following at a distant 2nd is Thai Air Asia followed by Cathay Pacific Airways and Singapore Airlines with

respective market shares of 5.3%, 3.9% and 3.5%. Market shares for low cost carriers serving Thai cities are 2.0%,

1.1%, 0.6% and 0.5% for Thai Air Asia, Tiger Airways and Jet Star Airways and Jet Star International respectively.

To enhance THAI’s competitive strength in the face of ever increasing field of competition, THAI has been

proactively upgrading its service quality through in-cabin enhancement of seats along with tools and equipment

providing convenience and comfort. Through improved product and quality service, quality revenue derived

from repeat service can be achieved.

52-02-012_048-057_V 3/24/09, 1:51 PM57


RISK FACTORS

With risks brought on by the high level of competition at both the regional and global level, the slowing

global economy, the slowing of tourism to Thailand because of the global financial meltdown, the political

instability within along with the fluctuations in fuel cost and currency exchange rate, THAI has taken steps to

mitigate their potential impact on its operations.

To this end, the Company takes to heart risk issues that are of internal concern and that which are caused

by external factors to ensure a higher level of confidence for stakeholders of THAI’s strength and stability.

Risk factors are identified and ranked according to the degree of importance along with devising effective

measures that meet international standards to cope with the various identified risks and having in place a

robust review process to evaluate and prevent such risks. As risk remains the core concorn, all departments

are required to use risk management as a tool in managing daily operations. In turn, the utilization of risk

management to control operations reflects a culture in which transparency, ethics, good corporate governance

yields maximum benefit for all.

In an effort to ensure the most effective risk management encompassing every aspect of business

operations, the Risk Management Committee is responsible for oversight in setting strategies and guidelines in

managing the Company’s risks. At the operational level, the responsibility rests on the shoulders of senior man-

agement to observe and enforce risk management along with putting in place measures to prevent or mitigate

the impact of risks at the corporate and at departmental levels for units under management to be within

acceptable levels or the potential adverse impact will be minimal. The Company’s Executive Management

Board, Business Unit Executive Board, Risk Management Committee and the Company’s Board of Directors

are regularly updated on corporate risks bearing significant impact along with actions taken to mitigate those

risks. The risk management process enablies close and effective monitoring while ensuring achievement of es-

tablished purpose and goals.

1. RISK RELATED TO THE THAI TOURISM INDUSTRY

THAI’s business is closely related to the health of Thailand’s tourism industry where tourists to Thailand

constitute the largest proportion of passengers for THAI. With this close correlation, THAI’s growth is to an extent

dependent on the growth of the Thai tourism industry. As the impact of the U.S. financial sector meltdown

spread to Europe and Asia, the respective economies have seen slowing economic growth which is likely to

spillover to the tourism industry as confidence in peoples’ jobs have been affected. At home, the political

uncertainty, the slowing economy, the unrest in the 3 southern provinces, the natural disasters, exchange rate

fluctuation to the closure of the 2 main airports Suvarnabhumi and Don Muang from 25 November - 3 December

2008 caused negative sentiment towards Thailand and in turn impacted travel demand to Thailand. THAI is

following the various risk factors closely and have developed measures to cope with tangible risks. In

52-02-012_058-061 new25_V 3/26/09, 5:22 PM58


conjunction with the Tourism Authority of Thailand, international press and media have been asked to assess

the situation here in Thailand and help to strengthen confidence in Thailand’s stability through positive press.

Attractive packages for domestic travel have been launched in combination with the invitation of international

press and media to visit Thailand and assess first-hand the situation on the ground and to build confidence in

Thailand’s political stability and experience the friendly Thai culture. The first hand experience of these visitors

in helping spread the message and reaffirming confidence of Thailand’s stability is important to rebuilding the

confidence of travelers to Thailand.

2. RISK FROM FUEL PRICE FLUCTUATION

With the cost of fuel being the largest proportion of operating expense that saw a dramatic increase

during the first half of 2008, the Company was negatively impacted by the record level fuel price which pushed

the proportion of fuel expense to total operating cost up to 43.54%. This is in spite of the Company having

undertaken jet fuel price hedging to mitigate the impact of the rising fuel cost. The Company’s policy enables

fuel hedging up to 50% of full year demand with average hedging exposure of around 3-5% on a monthly basis

and each contract lasts between 3-6 months. To further reduce fuel expense, the Company either suspended or

reduced long-haul flights where fuel consumption is high especially direct flights to the United States of America.

The Bangkok-New York flight was discontinued while the frequency of service to Los Angeles was reduced with

plans to make these flights into indirect flights. Fuel management enhancement strategies were put in place

while fuel surcharge was levied to partially cover the record level fuel cost for which coverage was at 87%.

3. RISK FROM CURRENCY EXCHANGE FLUCTUATION

The Company earns revenue in over 40 different currencies which constitutes around 62% of the

Company’s total revenue. Grouped into 4 major currencies, THAI derives most of its revenue from Thai Baht and

US Dollars while its debt and expenses are mostly in US Dollars, Thai Baht, Euros and Japanese Yen. To mitigate

the fluctuation in exchange rate, THAI manages its foreign currency exposure using natural hedging through a

process of optimizing the matching of revenue and expense in each currency’s net exposure. Natural hedging is

done by borrowing funds in the respective currencies to balance the net operating cash flow while ensuring that

foreign borrowings are not excessive with a target proportion of baht debt at around 50% of outstanding

borrowings. Financial tools such as the cross currency swaps : CCS are also used at appropriate times to mitigate

fluctuations in exchange rates. As of 31 December 2008, THAI’s outstanding debt was in the proportion of USD :

EUR : JPY : THB = 3 : 43 : 15 : 39 percent (excluding off balance sheet liabilities on aircraft leases).

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4. RISK FROM PENDING LEGAL CASES

Air freight providers and passengers have filed civil lawsuits against the Company along with the filing

by the New Zealand Commerce Commission : NZCC and Commission of the European Communities for violating

antitrust laws of the respective countries along with other airlines in setting fuel surcharge and other fees.

For the U.S., THAI along with other airlines have been charged with violating the Sherman Act or Antitrust Law

along with that of the Commerce Act for New Zealand and EU Law for the European Union. THAI, has for all cases,

acquired the services of local law firms to assist in its defense. All the pending cases are still ongoing but there is

no indication of whether THAI is to be found in violation of each of the respective laws.

There has been general inquiry into potential criminal offense of the Anti-trust laws of the United States of

America, Australia and South Korea. There has been no indication so far as to whether the Company has violated

such laws but there have been from time to time requests for information from the Company. Services of law

firms in the respective countries have been sought to liaise with the respective governments.

5. RISK FROM INTEREST RATE FLUCTUATION

Since THAI has outstanding borrowings in foreign currency for investments in its fixed assets, THAI is

obliged to pay interest on the outstanding debt and is exposed to potential adverse risk on cost of funds should

interest rates move up. To control this risk, the Company upon anticipation of interest rates moving upwards, can

enter into interest rate swap (IRS) contracts to switch float rate loans into fixed rate and enjoy lower funding cost

over time.

In managing its above risk, the proportion of fixed rate interest on the Company’s outstanding debt rose

to 64% as of year-end 2008 (does not include off balance sheet obligations related to aircraft leasing) with

average funding cost of 3.55%.

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SHAREHOLDER AND MANAGEMENT STRUCTURE

Number of

Shares

1 Ministry of Finance 866,997,841 51.033

2 Vayupak Fund 1 by MFC Asset Management Pcl. 145,966,600 8.592

3 Vayupak Fund 1 by Krung Thai Asset Management Pcl. 145,966,600 8.592

4 Government Saving Bank 46,409,885 2.732

5 CHASE NOMINEES LIMITED 1 36,754,400 2.163

6 Thai NVDR Company Limited 36,370,312 2.141

7 MELLON BANK,N.A. 26,593,680 1.565

8 Social Security Office 22,152,400 1.304

9 CLEARSTREAM NOMINEES LTD. 18,729,933 1.103

10 NORTRUST NOMINEES LTD. 12,933,661 0.761

11 Other Shareholders 340,025,638 20.014

Total paid up capital 1,698,900,950 100.000

Thai Shareholders 1,464,414,922 86.198

Foreign Shareholders 234,486,028 13.802

As of December 31, 2008, the Ministry of Finance holds a 51.03% 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 on the Company’s consolidated financial statements and is subject

to consideration of future investment plans and other relevant factors.

Shareholders

The names of major shareholders, number of shares held and percentage of shareholding as of the

December 11, 2008 Share Register Book closure date are as follows:

Ranking Name of Shareholders Percentage

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ORGANIZATION CHART

President

Airline Business

CommercialExecutive Vice President

Finance & AccountingExecutive Vice President

OperationsExecutive Vice President

Corporate SecretariatExecutive Vice President

Human Resources & General ManagementExecutive Vice President

Board of Directors

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63THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED

Office of the Internal AuditVice President

Business UnitsExecutive Board

TechnicalManaging Director (Executive Vice President Level)

Cargo & Mail CommercialManaging Director (Vice President Level)

Ground Customer ServicesManaging Director (Vice President Level)

CateringManaging Director (Vice President Level)

Ground Support Equipment ServicesManaging Director (Vice President Level)

Audit Committee

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MANAGEMENT STRUCTURE

BOARD OF DIRECTORSAs of December 31, 2008 the Company’s Board of Directors consist of the following members:

1. Mr. Surachai Tansitpong Chairman

2. Mr. Suparut Kawatkul 1st Vice Chairman

3. Mr. Chaikasem Nitisiri 2nd Vice Chairman,

Independent Director

4. Mr. Amornsuk Noparumpa Independent Director

5. Mr. Visit Limprana Independent Director

6. Mr. Rangsan Saengsook Independent Director

7. Adm. Decha Yoo-Prot, RTN Independent Director

8. Mr. Vichit Suraphongchai Independent Director

9. Pol. Gen. Vudhichai Sriratanavudhi Independent Director

10. Mr. Wisudhi Srisuphan Director

11. Mr. Chulasingh Vasantasingh Director

12. Mr. Pichai Chunhavajira Director

13. ACM Sukumpol Suwanatat Director

14. Mr. Vikrom Koompirochana Director

15. Flg. Off. Apinan Sumanaseni Director

Directors Authorized to Sign Legal and Binding Contracts on the Company’s Behalf

Signatures of Mr. Surachai Tansitpong, Chairman of the Board of Directors and either ACM Sukumpol

Suwanatat or Adm. Decha Yoo-Prot, RTN or Pol. Gen. Vudhichai Sriratanavudhi or Mr. Vikrom Koompirochana or

Mr. Visit Limprana or Mr. Rangsan Saengsook or Flg. Off. Apinan Sumanaseni or Mr. Chulasingh Vasantasingh

along with the Company seal are reguired for a binding contract. Signature of 3 of the following Board Members

ACM Sukumpol Suwanatat or Adm. Decha Yoo-Prot, RTN or Pol. Gen. Vudhichai Sriratanavudhi or Mr. Vikrom

Koompirochana or Mr. Visit Limprana or Mr. Rangsan Saengsook or Flg. Off. Apinan Sumanaseni or Mr. Chulasingh

Vasantasingh along with a Company seal constitutes a binding contract.

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.

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The Company’s Board of Directors met in total 23 times for 2008. During the year, a number of

Committees were appointed to undertake specific tasks including the following :

AUDIT COMMITTEE

To 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 the following persons, on December 30, 2008 to the Audit Committee consisting of

non-executive Board members.

1. Mr. Chaikasem Nitisiri Chairman

2. Mr. Amornsuk Noparumpa Member

3. Pol. Gen. Vudhichai Sriratanavudhi Member

4. Vice President Secretary

Office of the Internal Audit

Mrs. Keseree Narongdej and Ms. Raweepon Kuhiran served as advisors 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, choose and establish compensation for the Company’s financial auditor to be submitted for

shareholder 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 10 times in 2008 and progress reports were made to the Company’s

Board of Directors.

INDEPENDENT COMMITTEE

To 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, on December 31, 2008 to the Independent Committee :

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2. Mr. Visit Limprana Member

3. Mr. Rangsan Saengsook Member

4. Adm. Decha Yoo-Prot Member

5. Mr. Chaikasem Nitisiri Member

6. Mr. Vichit Suraphongchai 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 strong good corporate governance, 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.

2. The Committee has the authority to obtain documents and summon relevant persons to provide

information in regards to assigned task(s).


This Committee performed its duties by providing independent thoughts and comments while ensuring

equal benefits for all shareholders.

GOOD CORPORATE GOVERNANCE COMMITTEE

To ensure integrity of the Company’s operations with respect to the principles of good corporate

governance as stipulated by both the Ministry of Finance and the Stock Exchange of Thailand and is in line with

international best practices, the Company’s Board of Directors appointed the following persons, on December

31, 2008 to the Good Corporate Governance Committee along with appointing a Committee secretary and

assistant secretary :

1. Mr. Amornsuk Noparumpa Chairman

2. Mr. Rangsan Saengsook Member

3. Mr. Visit Limprana Member

4. Mr. Thosaporn Sirisumphand Member

5. Executivie Vice President Member

Financial and Accounting Department

6. Executive Vice President Member

Corporate Secretariat

7. Executive Vice President Member and Secretary

Corporate Secretariat Department

8. Director of the Compliance Department Assistant Secretary

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Good Corporate Governance Committee’s Authority and Responsibilities

1. Audit and make recommendations to the Board of Directors to enhance good corporate governance

policies in accordance with 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.



4. If necessary, the Committee may propose to commission consultants and specialists to assist in the

process as deemed necessary.


The Committee met in total 6 times in 2008 and provided progess reports to the Company’s Board of

Directors.

NOMINATION, REMUNERATION AND HUMAN RESOURCE DEVELOPMENT COMMITTEE

Following 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, on December 31, 2008 to the Nomination, Remuneration and Human Resource

Development Committee :

1. Mr. Suparut Kawatkul Chairman

2. Mr. Wisudhi Srisuphan Member


4. Mr. Vikrom Koompirochana Member


6. ACM. Sukumpol Suwanatat Member


8. Executive Vice President Secretary

Human Resources and

General Management Department

Nomination, Remuneration and Human Resource Development Committee’s Authority and

Responsibilities

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 means to develop

the Company’s human resource. Such process must be ethical and comply with the good corporate

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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.




5. The authority and responsibilities of the Nomination, Remuneration and Human Resource

Development Committee includes evaluating appropriateness of responsibilities for all employee

positions and especially for all top management positions.

The Committee met a total of 14 times in 2008 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, on December 31, 2008 to the Risk Management Committee :

1. Mr. Vichit Suraphongchai Chairman

2. Mr. Pichai Chunhavajira Member


Corporate Secretariat Department

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5. Vice President Member

Corporate Planning Deparment

6. Vice President Secretary

Risk Management and Insurance Department

Risk Management Committee’s Authority and Responsibilities

1. Provide advice and consultation on risk issues and the management of such risks spanning all areas of

the Company’s operations.

2. Has the authority to summon relevant persons and documents to clarify matters under consideration.


The Risk Management Committee met 5 times in 2008 and provided progress reports to the Company’s

Board of Directors.

THE COMPANY’S EXECUTIVE BOARD

The Executive Board consisting of the persons below were appointed on December 31, 2008 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. Pichai Chunhavajira Chairman

2. Mr. Vikrom Koompirochana Member

3. ACM Sukumpol Suwanatat Member

4. Flg. Off. Apinan Sumanaseni Member


6. Mr. Chulasingh Vasantasingh Member

7. Executive Vice President Corporate Secretary

Secretariat Department

The Executive Board’s Authority and Responsibilities

1. Oversee the various aspects of the Company’s operations to ensure abidance with corporate

policies, corporate plans and that of the Company’s Board of Directors.

2. Screen issues to be submitted for Board of Directors’ consideration.

3. Provide suggestions in regards to approach and measures to improve effectiveness and efficiency

in the Company’s operations.

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4. Approve purchases within budget approved by the Board of Directors, which comply with Board

resolutions 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.

6. Has the authority to summon relevant staff and documents to clarify matters under consideration.

7. Has the authority to appoint sub-committees and working groups as deemed appropriate.


9. In case of necessity, the Executive Board may propose for the Board of Directors to approve hiring of

consultants to perform tasks on the Company’s behalf.

The Executive Board met a total of 17 times in 2008.

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.

THAI MANAGEMENT EXECUTIVES

As of December 31, 2008, the Company had 11 Senior Management positions : President - 1, Special

Activities Advisor, Senior Executive Vice President Level - 1, Executive Vice Presidents - 6, Vice Presidents - 3,

comprising :

1. Flg. Off. Apinan Sumanaseni President

2. ACM Narongsak Sangapong Executive Vice President

Corporate Secretariat Department,

Acting as President*

3. Mrs. Ngamnit Sombutpibool Executive Vice President


4. Mr. Pandit Chanapai Executive Vice President Commercial Department

5. Flg. Off. Norahuch Ployyai Executive Vice President Operations Department

6. Flt. Lt. Montree Jumrieng Executive Vice President

Human Resources and General Management Department

7. Mr. Tummasak Chutiwong Managing Director, Technical Department

Executive Vice President Level

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8. Mr. Kaweepan Raungpaka Executive Vice President, Office of the President

9. Mr. Thongchai Singhakul Vice President, Financial Accounting Department

10. Mr. Pichait Riengvattanasuk Vice President, Corporate Finance Department

11. Mrs. Charita Leelayudth Vice President,

Management Accounting and Budget Department

* For details please refer to page 72.

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 2007.

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

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- 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.

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.

The Board of Directors Meeting No.21/2008 held on November 25, 2008, approval was given to accept

Flg. Off. Apinan Sumanaseni’s resignation from his position as President effective from January 1, 2009 and his

intention to abstain from management duty until the effective date of his resignation.

To tend to daily operations, by the authority given to the Board of Directors as per the Company’s

Regulation regarding General Administration A.D. 2007, the Board of Directors Meeting No. 21/2008 held on

November 25, 2008, appointed Air Chief Marshal Narongsak Sangapong, Executive Vice President, Corporate

Secretariate, to perform the duties of the President with full authority, except for general activities, which shall

be represented by Flg. Off. Apinan Sumanaseni, President until the effective date of his resignation.

APPOINTMENT OF THE BOARD OF DIRECTORS AND MANAGEMENT EXECUTIVES

The 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:

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1. Each shareholder shall have one vote for each share held.

2. Shareholders must vote all votes by selecting one or several persons as Director but the votes may not

be divided.

3. The person(s) receiving the most votes in descending order will be appointed as Director according

to the number of Directors to be elected. In case that there is a tie for the last Directorship, a lottery is

to be drawn to choose the last member.

In 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 shareholder 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. If the

numbers of Directors do not match one-third exactly, the nearest amount to one-third shall be deemed

appropriate. The names of Directors to retire during the first and second year after the Company’s listing will be

drawn by 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 are as follows:

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.

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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 interest(s) 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 Nomination Committee

comprising of 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 suitable candidates according to the Act of

Standard Qualifications of the State Enterprise Directors and Staff B.E. 2518 and that of the amended version.

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 Committee to select the most appropriate candidate to fill

each available position.

REMUNERATION FOR MEMBERS OF THE BOARD OF DIRECTORS

The resolution reached on remuneration for members of the Board are as proposed by the Nomination,

Remuneration and Human Resource Development Committee and the Board of Directors for which received

shareholder approval on December 27, 2007 for the period from October 1, 2006 to September 30, 2007.

Monetary Remuneration

- Each Board member receives a fixed 50,000 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.

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- 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 THB 10,000 per meeting attendance. However,

the maximum allowance paid is 10,000 baht no matter how many meetings are called.

- External advisors to the Board of Directors are to receive THB 20,000 per month plus and additional

THB 30,000 per meeting attendance. However, the maximum allowance paid is THB 30,000, no matter

how many meetings are called.

- Bonus : Paid at the rate of 0.5% of dividend paid.

Board member remuneration for the year 2008 ending December 31, 2008.

Unit : Million Baht

Number of Persons Remuneration including allowance and bonus

Company’s Board of Directors 27 18.61

Audit Committee 7 1.18

Other Committees 24 3.05

Note : 1 One Board member also holds a Management position

Other Benefits

Ticket benefits for Board members must be abidance with the Company’s Regulations and that of

relevant governing entities.

Remuneration for Management Executives

Monetary Remuneration

Compensation for Management Executive for fiscal year 2008 ending December 31, 2007.

Unit : Million Baht

Number of Persons Compensation including salary, bonus & benefits

Management Executive 11 57.31

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Other Compensation

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 Management Executive’s provident fund and pension fund for fiscal year

2008 ending December 31, 2007.

Unit : Million Baht

Number of Persons Total Amount

Management Executive 10 2.24

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Operations wise, THAI has observed the principles of good corporate governance as stipulated by

the Ministry of Finance and in accordance with the guidelines stipulated by Stock Exchange of Thailand

for publicly listed companies which conforms to that of international best practices. This is reflected in the

clear goal of maximizing shareholder value through transparent and ethical management while being

responsible to all stakeholders including the environment, society and the country.

Good corporate governance began in earnest for the Company on October 28, 2002 serving the objective

of instilling the principles of good corporate governance for all THAI personnel starting with members of

the Company’s Board of Directors to its management and its staff. Such principles serve as basis to enhance

operating and overall efficiency and effectiveness along with ensuring equitable treatment of all stakeholders.

Adherence to the principles of good corporate governance leads to increased confidence in the Company’s

competitiveness through transparent and equitable treatment of all stakeholders which ultimately achieves

the Company’s goal of increasing shareholder value.

Charged with the responsibility to oversee good corporate governance, the Good Corporate Governance

Committee was established in 2002 with members of the Board of Directors, senior management and qualified

external persons appointed to the Committee. A number of sub-committees have also been appointed by the

Good Corporate Governance Committee to oversee the various aspects of the Company’s operations.

Upon establishment of the Good Corporate Governance Committee, the Company has earned a

“Very Good” commendation from various independent institutions since 2005. In 2008, the Thai Institute

of Directors (IOD) undertook to evaluate the Company and gave a “Very Good” overall rating for the 3rd

consecutive year with “Excellent” awarded to the Company in the areas of shareholders’ rights, equitable

treatment of shareholders and transparency of information disclosure, which was an improvement over 2006

(there were no evaluations undertaken by IOD in 2007).

The commendations received by the Company is a reflection of the Board of Directors, management

and staff ’s commitment and importance placed on running the Company’s operations transparently for

which operations undertaken can be audited and reflects equitable treatment of all concerned parties.

Such transparent undertakings form the basis for the Company’s sustainable growth while creating value for the

country as a whole.

Mr. Amornsuk Noparumpa

Chairman

GOOD CORPORATE GOVERNANCE COMMITTEE REPORT

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As a publicly listed company, THAI understands the importance of adopting good corporate governance

and diligently observes such principles in practice. To ensure comprehensiveness in observing such principles,

the Company’s Board of Directors 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’s 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 Thai Rating and Information Services Company Limited (TRIS) undertook 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 fiscal year 2004, and for the year 2005, 2006, and 2008, THAI

was rated as “Very Good” respectirely.

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 the

Company’s good corporate governance policies. 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 fourth 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.

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 on October 28, 2005

to embrace a culture of good corporate governance both in thought and actions of members of the Board of

GOOD CORPORATE GOVERNANCE

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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 ensuring 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 2006, 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 corpo-

rate governance policies on an ongoing basis. All Board members are encouraged to attend seminars provided

by IOD and other institutions on relevant topics concerning Good Corporate Governance.

In fiscal year 2008, 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 benchmarks its good corporate governance principles to the 15 principles stipulated by the SET

which is also in line with the 2004 Principles of Corporate Governance as stipulated by the Organization for

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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 3 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) to clarity its contents to ensure relevance, and

encompass the Company’s businesses. This handbook is 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 the

necessary improvements 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 par-

ties 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.

- Sub-Committee to Integrate the Guidelines of the Royal Decree on Good Governance into Thai

Airways International Public Company Limited.

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 to being submitted to the

Company’s Board of Directors.

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2. SHAREHOLDERS : RIGHTS AND EQUITABLE TREATMENTShareholders’ Rights

THAI recognizes the importance of shareholders and their rights in order to gain the confidence and trust

of shareholders to invest in the Company. 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 the 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

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 members and the Company’s

employees and external stakeholders including customers, business partners, creditors, competitors, regulatory

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 employees are expected to

abide. The Good Corporate Governance Committee has revised Thai Airways International Code of Conduct to be

more encompassing, more precise and better reflect 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. Stakeholder rights observed by the Company include:

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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.

- Safeguard 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 products to suit their needs and

to ensure 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 employees 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 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 Company benefit but on the basis of equality and fairness to partners.

Debtors - Avoid conflicts of interest and honor outstanding obligations.

- Disclose accurate and factual information. Resolutions to business problems should

be amicable to all parties.

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. As such, 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. The

Company has continually improved ongoing personnel development programs have

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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. In addition, the

Company has made salary adjustments have been made which is now comparable to

other entities 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 employees 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.

Society and Community.

- Undertake activities that are of mutual benefit to the Company and that of the

community. Avoid activities that will tarnish the country’s image, 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 employees levels.

- Avoid undertaking illegal actions or being accessory to illegal acts.

- Manage the Company free of political agenda.

The Environment - The Company 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, provide useful information related to environmental

conservation, cooperate with employees, 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 environmental management.

- Quick, efficient and effective response on situations caused by the Company bearing

impact on the environment and the community.

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4. ANNUAL GENERAL SHAREHOLDERS’ MEETINGThe Company held its 2007 Annual General Shareholders’ Meeting for the period October 1, 2006 to

September 30, 2007 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 by the Thai Investors Association and the Securities

and Exchange Commission (SEC) to enhance the quality of AGM. Areas of evaluation include the following :

Date, Time and Place to hold the Annual General Shareholders’ Meeting

The accounting cycle of the Company has now been changed from the period October 1, - September 30 to

January 1 - December 31 of every year henceforth. To accommodate for the change in accounting cycle, the

Company had to call for 2 AGMs. At the Board of Directors’ meeting 19/2007 held on November 26, 2007, a

resolution was reached to hold the first AGM for 2007 for the period from October 1, 2006 to September 30, 2007

on December 27, 2007. Relevant information was posted on the websites of both the SET and the

Company beginning November 27, 2007, which complies with the articles of association of Thai Airways

International requiring the AGM to be held within 4 months after posting its financial performances for 2007.

The venue for the AGM was held at the Makawanrangsan Hall, third floor, at the Royal Thai Military Club on

Vibhavadee Rangsit Road, Bangkok. A total of 1,894 shareholders and proxies attended the meeting representing

a total of 1,422,464,701 shares, which was more than one third of the Company’s paid-up capital constituting

a quorum.

At the Board of Directors’ meeting 4/2008 held on February 25, 2008, a resolution was reached by the

Company’s Board of Directors to hold the second AGM for 2007 for the period from October 1, 2007 to December

31, 2007 on April 9, 2008. Relevant information was posted for everyone to see on the SET’s website beginning

February 26, 2008, and the Company’s website beginning March 7, 2008, which complies with the articles of

association of Thai Airways International Public Company Limited requiring the AGM to be held within 4 months

after posting its financial performance for 2007. The venue for the AGM was held the Makawanrangsan Hall,

third floor, at the Royal Thai Military Club on Vibhavadee Rangsit Road, Bangkok. A total of 2,282 shareholders

and proxies attended the meeting representing a total of 1,416,153.567 shares, which was more than one third

of the Company’s paid-up capital constituting a quorum.

Prior to the AGM

To ensure abidance with the guidelines of good corporate governance and recognizing shareholders’

rights, THAI enabled its shareholders to submit name(s) of qualified candidates to be considered for election to

the Company’s Board of Directors for both AGMs. The time frame allowing submission of names of candidates for

the first period was from September 27, 2007 to October 31, 2007, and the second period from January 8, 2008

to February 8, 2008. Applicable guidelines and qualifications for persons to be considered for Board membership

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was posted on the Company’s website http://thaiairways.com. A letter stipulating qualifications of potential

Board candidates signed by the Company Secretariat was submitted to the President of the Stock Exchange of

Thailand. However, upon the deadline for submitting names of candidates, there were no proposed

candidates for consideration to be appointed to the Company’s Board of Directors.

Information Packet and Proxy Aplication Form

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 in accordance with legal requirements,

SET guidelines and the Company’s own guidelines. 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 employees on hand to

facilitate the process. Registration to attend the AGM began 2 hours prior to the meeting commencement 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

For 2007, the Company held two AGMs per the reasons specified above. Members of the Board of Directors

have placed importance in attending the 2007 AGM for the period October 1, 2006 to September 30, 2007 with

the Chairman of the Board of Directors presiding as Chairman of the AGM. A total of 13 Board Members attended

the AGM including the Chairman of the Board of Directors, Vice Chairman, Acting Chairman of the Audit

Committee, Chairman of the Good Corporate Governance Committee, Chairman of the Risk Management

Committee, Chairman of the Nomination, Remuneration and Human Resource Development Committee,

Chairman of the Executive Board, Independent Directors, and representatives from various departments. Senior

Management also attended the AGM taking note of issues raised by shareholders and answered questions

if needed. Board members attending the AGM include :

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Board of Directors

1. ACM Chalit Pukbhasuk Chairman of the Board of Directos and

Chairman, Nomination, Remuneration and

Human Resource Development Committee

2. Mr. Suparut Kawatkul Vice Chairman

3. Mr. Chaisawasd Kittipornpaiboon Vice Chairman

4. Mr. Chaisak Saeng-Xuto Chairman, Executive Board

5. Mr. Borwornsak Uwanno Chairman, Good Corporate Governance Committee

and Chairman, Risk Management Committee and


6. Mr. Sivaporn Dardarananda Acting Chairman of the Audit Committee and


7. Gen. Pairoj Panichsamai Independent Director

8. Mr. Wisudhi Srisuphan Director

9. Mr. Pichai Chunhavajira Director

10.Mr. Wichit Na-Ranong Director

11.Mr. Aviruth Wongbuddhapitak Director

12.Mr. Chaikasem Nitisiri Director

13.Flg. Off. Apinan Sumanaseni Director and President

Company’s Senior Management

1. ACM Narongsak Sangapong Executive Vice President

Corporate Secretariat Department and

Secretary to the Board of Directors

2. Mrs. Ngamnit Sombutpibool Executive Vice President

Finance and Accounting Department and Acting

Vice President, Management Accounting & Budget

3. Flt. Lt. Pravit Shinawatra Executive Vice President

Operations Department

4. Mr. Tummasak Chutiwong Managing Director

Technical Department

5. Mr. Chanchai Singtoroj Executive Vice President

Human Resources and

General Management Department

6. Mr. Pandit Chanapai Executive Vice President

Commercial Department

7. Ms. Monticha Khruasuwan Vice President Personnel Development

and Training Department

8. Mrs. Nareeluck Wimooktanon Vice President VVIP/VIP Travel Planning

and Coordination

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9. Mrs. Bhinkham Rohitasthira Vice President In-Flight Services Department

10.Flt.Lt. Sopit Pokasoowan Vice President Aviation Personnel

Development Department

11.Mr. Thongchai Singhakul Vice President Financial Accounting Department

12.Mr. Pichait Riengvattanasuk Vice President Corporate Finance Department

13.Mr. Raj Tanta-Nanta Vice President Investor Relations Department

14.Mrs. Suvakhon Nawongs Vice President Office of the Internal Audit

15.Mr. Pichai Chunganuwad Vice President Sales and Distribution Department

16.Mrs. Pismai Chandrubeksa Managing Director, Catering Department

17.Mr. Sarinthorn Dhanabhuthi Managing Director

Ground Support Equipment Services Department

18.Mrs. Wananporn Wibooncharoenkitcha Managing Director Ground Customer Services

19.Mr. Vorapravat Suebsaeng Managing Director

Cargo and Mail Commercial Department

20.Mr. Pridi Boonsue Vice President Alliance and

Royalty Management Department

21.Flg. Off. Apichai Sangsasi Vice President Flight Operations Department

22.Mr. Danuj Bunnag Vice President Market Planning and

Revenue Management Department

23.Flt. Lt. Charatpong Burutratanaphan Vice President General Administration Department

24.Mr. Chokchai Panyayong Vice President Suvarnabhumi Project

25.Flt. Lt. Montree Jumrieng Vice President Personnel Management Department

In 2007, the second AGM for the period October 1, 2007 to December 31, 2007 was held on April 9, 2008,

with the Vice Chairman and Acting Chairman of Board of Directors presiding over the AGM as Chairman,

along with five other Board Members, of which included the Chairman of the Nomination, Remuneration and

Human Resource Development Committee, Chairman of the Audit Committee, Independent Director, Director of

the Nomination, Remuneration and Human Resource Development Committee, representatives from various

departments, and Senior Management took note of issues raised by shareholders and answered questions

if needed.

In 2007, for both AGMs:

Prior to commencement of 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, the vote collection process, the vote counting process and the results of each agenda voted upon. The

voting documents are 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 vote per share 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 shareholder review.

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1. Mr. Suparut Kawatkul Vice Chairman and Acting Chairman and Chairman,

Nomination, Remuneration and Human ResourceDevelopment Committee

2. Mr. Chaisawasd Kittipornpaiboon Vice Chairman3. Mr. Wisudhi Srisuphan Director, Nomination

Remuneration and Human ResourceDevelopment Committee

4. Mr. Chaikasem Nitisiri Chairman of the Audit Committee andIndependent Director

5. Flg. Off. Apinan Sumanaseni Director and President

Management in Attendance at the AGM1. ACM Narongsak Sangapong Executive Vice President

Corporate Secretariat Department2. Mrs. Ngamnit Sombutpibool Executive Vice President Financial and

Accounting DepartmentActing Vice PresidentManagement Accounting and Budget Department

3. Flt. Lt. Pravit Shinawatra Executive Vice President Operations Department4. Mr. Tummasak Chutiwong Managing Director, Technical Department

Executive Vice President Level5. Mr. Pandit Chanapai Executive Vice President Commercial Department6. Mr. Chanchai Singtoroj Executive Vice President

Human Resources andGeneral Management Department

7. Mr. Apichart Danaivan Vice PresidentRisk Management and insurance Department

8. Mrs. Suvakhon Nawongs Vice President Office of the Internal Audit9. Mrs. Sunathee Isvaphornchai Special Activities Advisor Office of the President10.Flg. Off. Porpong Sanpakit Special Activities Advisor Office of the President11.Sqn.Ldr. Pairat Pawskul Vice President Technical Support Department12.Mr. Pridi Boonsue Vice President Alliance and

Royalty Management Department13.Mr. Raj Tanta-Nanta Vice President Investor Relations Department14.Mr. Pichait Riengvattanasuk Vice President Corporate Finance Department15.Mr. Teeratat Pornpiboon Vice President Corporate Planning Department16.Mr. Thongchai Singhakul Vice President Financial Accounting Department17.Mr. Teerapol Chotichanapibal Vice President

Commercial Development and Support Department18.Flt. Lt. Montree Jumrieng Vice President Personnel Management Department19.Mr. Danuj Bunnag Vice President Market Planning and

Revenue Management Department

20.Flg. Off. Apichai Sangsasi Vice President Flight Operations Department

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21.Mr. Sarinthorn Dhanabhuthi Managing DirectorGround Support Equipment Services Department

22.Mr. Vorapravat Suebsaeng Managing Director Cargo and Mail CommercialDepartment

23.Mrs. Wananporn Wibooncharoenkitcha Managing Director Ground Customer Services24.Ms. Monticha Khruasuwan Vice President Personnel Development and

Training Department25.Flt. Lt. Charatpong Burutratanaphan Vice President General Administration Department26.Mrs. Bhinkham Rohitasthira Vice President In-Flight Services Department27.Mr. Chailerk Thaipaychan Vice President Heavy Maintenance Department

Post the Annual General Shareholders’ Meeting Resolution DisclosureResolutions 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 andthe vote counts (approve/disapprove/refrain from votes) have been clearly indicated for each issue that wassubmitted for consideration. The detailed minutes to the AGM containing names of Board members andmanagement attending the meeting along with the resulting resolutions, (approved/disapproved) and the votecount (approve/disapprove/refrain from votes) on issues posed for shareholder consideration along with majorissues posed by shareholders and the response made by the Company were submitted to the Stock Exchange ofThailand and other relevant government bodies within 14 days post the AGM. The minutes to the AGM has alsobeen posted on the Company’s web site http://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 highranking government officials representing the respective Ministries. Each Board member clearly understandstheir roles and responsibilities thus enabling the Board of Directors to function smoothly. Members of the Boardactively contribute in various areas of the Company’s operations including the Company’s vision, mission, objec-tives, strategies, goals and approving the Company’s strategic directions and policies. The Board of Directors isalso responsible for development of the annual plan and the corresponding budget while overseeing manage-ment and ensuring adherence to and the effectiveness in meeting corporate strategies and the established bud-get. The Board needs to also ensure that all activities undertaken by the Company are in compliance with alllegal and regulatory guidelines, the Company’s own regulations and guidelines including those of the respectiveMinistries overseeing THAI along with the resolutions reached at the AGM. A robust internal audit process mustbe in place and a comprehensive risk management system must also be in effect to ensure maximum benefit forthe Company and for the Company’s stakeholders complying with the principles of good corporate governanceto 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 interestincluding related party transactions or transactions amongst business units within. It is required of everyonewithin the Company from Board members down to the Company’s employees to strictly adhere to the guidelines

below as stipulated by the SET.

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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 in case there be any relationship that falls within the

definition as stipulated by the SEC. Disclosure is made on the person and business 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 for 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 must 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 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 that is submitted to the Board of Directors and

management 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 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 incorporating 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.

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8. BALANCE OF POWER BY NON-EXECUTIVE DIRECTORSPrior to Board members being approved by the AGM, candidates were screened by the Nomination,

Remuneration and Human Resource Development Committee and then reviewed by the Company’s Board of

Directors as per the Company’s quidelines. The Company’s Board of Directors is made up of at least

5 persons but not more than 15. As of December 31, 2008 the Company’s Board of Directors consisted of 15

persons.

- Non-Executive Board Members - 7

- Independent Directors - 7

- Executive Directors - 1

Of the 15 Board members, 93.33% are Non-Executive Directors and 46.67% 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 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

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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. For the year

2008, the Board and Management Executive remuneration has been disclosed in the Board and Management

Executive Remuneration section.

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 each 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 member to review. For the year 2008,

the Board convened 23 times with attendance details for each Board member provided in the Board of

Director’s Shareholding and Meeting Attendance.

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 realizes the importance of having a robust internal control system that leads to good corporate

governance and efficient operations. A healthy, appropriate and sufficient internal control process has been put

in place to prevent and protect against potential losses in the areas of finance and accounting, general

operations and general management. Ongoing updates and adjustments are made to the internal control

process are made to ensure appropriateness, timeliness and relevant to the changing environment. An Internal

Control Policy handbook has been prepared to provide guidelines for all employees as reference for daily

52-02-012_077-099_V 3/24/09, 2:24 PM92


operations. A system has also been put in place to perform a self assessment and measure the effectiveness of

the internal control process as per guidelines stipulated within the State Enterprise Audit handbook that the

Ministry of Finane uses as reference December 2003 for each Department and each Division. Results of the

self-assessment are reported to the State Audit Commission, the Company’s Audit Committee and the

Company’s Board of Directors on an annual basis. The Company also put importance to the control self-

assessment : CSA process that reviews the Company’s key operating areas which began in 2003 and is

continuously being implemented to other areas of the Company’s operations.

The Company has a robust internal audit process with a reporting structure that enables the Internal Audit

Department to report directly to the Company’s Board of Directors. In turn, the Board of Directors appointed

the Audit Committee to oversee operations of the Internal Audit Department. The Internal Audit Department

is charged with the responsibility of auditing and assessing the integrity and adequacy of internal control

processes within each operating unit, measuring the importance of each factor by the severity of potential

negative impact on the Company. Consultancy and suggestions on improvements in internal control processes

also form part of the Department’s responsibility. Results of its findings are submitted to the respective

executive responsible for the various operating functions and the Audit Committee receives a quarterly

debriefing on such findings. Observations and suggestions relating to issues that may bear significant

negative impact to the Company’s operations, management of the Internal Audit Department immediately

notify the immediate supervisor, the Vice President to make the Audit Committee aware of such risks and

proposing immediate corrective actions to be taken. To ensure transparency and effectiveness of the auditing

process, an ongoing review process has been put in place so that opinions and comments can be used to proactively

enhance and improve the effectiveness of the internal audit process.

The Audit Committee is charged with the responsibility to assess the sufficiency of the Company’s

internal control process including ensuring that operations are in line with all relevant laws, guidelines,

covenants and policies. The Committee reviews work and results of tasks undertaken by the Internal Audit

Department along with that of the Company’s independent financial auditor on an ongoing basis. Findings

by the Audit Committee or recommendations as such are reported directly to the Company’s Board of

Directors for notice or for immediate corrective action.

Therefore the Company’s Board of Directors deem that THAI has a sufficient and appropriate

internal control system for the Company’s business operations.

15. BOARD OF DIRECTORS’ REPORTThe Board of Directors is responsible for preparing a summary of the Company’s performance and discuss

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.

52-02-012_077-099 new25_V 3/26/09, 3:12 PM93


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 AirlineIndustry and fostering a strong working relationship with Thai and foreign investors, shareholders, analysts andother 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 allstakeholders. 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 trustin the Company’s operating results and to enhance THAI’s corporate image as a publicly listed company withstrong Good Corporate Governance principles and a strong Board of Directors that is able to maximizeshareholders’ benefits.

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 Commission3. Ministry of Commerce4. 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 stakeholdersthrough various channels. Held analyst meetings, participated in road shows, held conference calls, participatedin SET related activities and one-on-one meetings were some of the direct communication channels usedincluding company visits to the Company’s various business units to provide stakeholders an opportunity toget first hand experience and learn about the Company. Activities undertaken by the Investor RelationsDepartment for the period October 1, 2007 to December 31, 2007 include :

Activities Frequency

International Non-deal Road Shows 2 time

Executive Management meeting/conference calls 73 times

Responding to emails & phone calls 3-5 per dayUpdating Company data/Statistical data update 3-6 times per week

Company Visits 2 times

Indirect Channels - Relevant statistical information, financial statements and notifications to the SEThave been provided for easy access through its Investor Relations website http://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 - Tel. : 662-545-2113 Fax. : 662-545-3971

52-02-012_077-099 new25_V 3/26/09, 3:15 PM94


17. OFFICE OF THE SECRETARIATIn recognizing the importance of the role of the Company Secretariat and to observe the Securities and

Exchange Commission and the Stock Exchange of Thailand’s Code of Best Practice 4th Edition 2008 Section 89/15,

for Directors of listed companies, the position of the Company Secretary and the Office of the Secretariat were

established. The Secretary reports directly to the Company’s Presidents. The current Company Secretary is ACM

Narongsak Sangapong, Executive Vice President and reports directly to the President and also serves as Secretary

to the Company’s Board of Directors. The 5 divisions for which the Company Secretary oversees include :

- Compliance Department

- Legal Department

- Risk Management and Insurance Department

- Council of the Board Members and Management Meeting Department

- Secretariat Management Department

- Corporate Strategy Department

- Government Affairs Department

- Public Information Centre 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 and file Board fo Directors registry

- Prepare and file complete Board fo Directors appointments, Board of Directors’s Meeting documents,

and board of Directors’ Meeting reports

- Prepare and file complete Shareholders’ appointments, Shareholders’ Meeting documents, and Share-

holders’ Meeting reports within the legal time limit

- Keeping a report on interest filed by a Diector or an executive

- 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 regula-

tions to the Board of Directors

- Direct, oversee, and is responsible for filling annual reports (Form 56-2) and copies of THAI’s 2008

annual report (Form 56-1)

52-02-012_077-099 new25_V 3/27/09, 12:35 AM95


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 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 consid-

ered 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. 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, it is the Company’s policy to emphasize the

vision, knowledge, and skill which are the key ingredients for Board of Directors and Executive Management to

possess in order for the Company to be able 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), amongst other institutions. 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 Securities Exchange of Thailand, The Office of

the Securities and Exchange Commission (SEC) and The Association of Publicly Listed Companies.

More than 90% of the Board of Directors have passed the courses organized by the IOD as follows :

- the Director Accreditation Program (DAP)

- the Director Certification Program (DCP)

- along with DCP Refresher Courses (Re - DCP)

- the Audit Committee Program (ACP)

- the Improving the Quality of Financial Reporting (QFR) course, The Role of Chairman Program

(RCP/RCM),

- the Role of Chairman Program (RCP)

- 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

52-02-012_077-099 new25_V 3/26/09, 3:13 PM96


- the Financial Statement for Director (FSD) 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 December 31, 2007, theCompany’s Board of Directors along with the Company’s Executive Management either have or were attendingthe following seminars provided by the Thai Institute of Directors (IOD) to utilize the knowledge and experiencegained to benefit the Company and its subsidiaries :

Name Position Course Attended

Mr. Surachai Tansitpong Chairman - Director Accreditation Program(DAP 73 / 2008)

Mr. Suparut Kawatkul 1st Vice Chairman - Director Accreditation Program(DAP 45 / 2005)

- Director Certification Program(DCP 72 / 2006)

Mr. Chaikasem Nitisiri 2nd Vice Chairman - Director Certification ProgramIndependent Director (DCP 8 / 2001)

- Role of the Chairman Program(RCP 16 / 2007)

Mr. Amornsuk Noparumpa Independent Director - Director Certification Program(DCP 30 / 2003)

- Audit Committee Program(ACP 23 / 2008)

Mr. Visit Limprana Independent Director - Director Certification Program(DCP 106 / 2008)

- Financial Statements for Directors(FSD 2 / 2008)

- Role of the CompensationCommittee (RCC 6 / 2008)

ADM Decha Yoo-prot Independent Director - Director Certification Program(DCP 106 / 2008)

Mr. Vichit Suraphongchai Independent Director - Role of the Chairman Program(RCP 1 / 2000)

Pol. Gen. Vudhichai Sriratanavudhi Independent Director - Director Certification Program(DCP 106 / 2008)

Mr. Wisudhi Srisuphan Director - Director Certification Program(DCP 3 / 2000)

- Role of the Chairman Program

(RCP 12 / 2005)

52-02-012_077-099 new25_V 3/26/09, 1:28 PM97


Name Position Course Attended

Mr. Chulasingh Vasantasingh Director - Director Certification Program

(DCP 35 / 2003)

- Financial for Non-Finance Director

(FN 7 / 2003)

- Understanding the Fundamental of

Financial Statements (UFS 1 / 2006)

- Audit Committee Program

(ACP 17 / 2007)

- DCP Refresher Course

(Re - DCP 1 / 2008)

Mr. Pichai Chunhavajira Director - Director Accreditation Program

(DAP 49 / 2005)

ACM Sukumpol Suwanatat Director - Director Certification Program

(DCP 107 / 2008)

Mr. Vikrom Koompirochana Director - Director Accreditation Program

(DAP 63 / 2007)

Flg. Off. Apinan Sumanaseni Director and President - Director Accreditation Program

(DAP 63 / 2007)

ACM Narongsak Sangapong Senior Executive Vice President - Director Accreditation Program

Corporate Secretariat Department (DAP 2 / 2003, DAP 25 / 2004)

Acting President - Role of the Chairman Program

(RCP 12 / 2005)

Mrs. Ngamnit Sombutpibool Executive Vice President - Director Accreditation Program

Finance and Accounting Department (DAP 25 / 2004)

- Director Certification Program

(DCP 72 / 2006)

Mr. Pandit Chanapai Executive Vice President - Director Certification Program

Commercial Department (DCP 111 / 2008)

Flg. Off. Norahuch Ployyai Executive Vice President - Director Accreditation Program

Operations Department (DAP 25 / 2004)

Mr. Tummasak Chutiwong Managing Director - Director Accreditation Program

Technical Department (DAP 25 / 2004)

Executive Vice President level - Company Secretary Program

(CSP 11 / 2005)

- Understanding the Fundamental of

Finance Statements (UFS 1 /2006)

Mr. Kaweepan Raungpaka Executive Vice President - Director Accreditation Program

Office of the President (DAP 25 / 2004)

52-02-012_077-099 new25_V 3/26/09, 1:23 PM98


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), an orientation is held to better acquaint new Board members with the Company’s

business and its operations. Documents and information prepared and given to assist in better fulfilling their

role as a Board member include :

1. THAI’s Director Handbook

2. Listed Company Directors Handbook No. 1-3

3. Summary of Key Guidelines of the Securities and Exchange Act. (4th edition) B.E. 2551

4. Memorandum and Articles of Association

5. THAI’s Ethics Handbook

6. Good Corporate Governance Guidelines for State Enterprise 2001

7. Principles of Good Corporate Governance - 2006

8. Recommendations on information disclosure for publicly listed companies

9. Latest copy of the Company’s Annual Report

AUDIT FEE AND RELATED EXPENSESAs 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 2008, the audit fee was 1.20 million baht and other audit expenses

were 0.33 million baht.

OTHER FACTORS THAT MAY AFFECT INVESTMENT DECISIONInherent 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.

52-02-012_077-099_V 3/24/09, 2:24 PM99


Board of Director’s Shareholdering and Meeting Attendance for the period December 31, 2008

1. Mr. Surachai Tansitpong Chairman - 3/3 - 19 Nov 08 - 31 Dec 08

2. Mr. Chaisawasd Kittipornpaiboon Former Chairman - 18/19 - 27 Dec 06 - 6 Nov 08

3. ACM Chalit Pukbhasuk Former Chairman - 3/3 - 8 Nov 06 - 8 Feb 08

4. Mr. Suparut Kawatkul 1st Vice Chairman - 15/23 - 27 Dec 07 - 31 Dec 08

5. Mr. Chaikasem Nitisiri 2nd Vice Chairman - 17/23 10/10 27 Dec 07 - 31 Dec 08

6. Mr. Chartsiri Sophonpanich Former Director - 5/6 2/2 23 Dec 05 - 9 Api 08

7. Mr. Borwornsak Uwanno Former Director - 5/6 - 27 Dec 07 - 2 Api 08

8. Gen. Pairoj Panichsamai Former Director - 6/6 - 27 Dec 07 - 2 Api 08

9. Mr. Sivaporn Dardarananda Former Director - 4/6 2/2 27 Dec 07 - 2 Api 08

10. Mr. Chaisak Saeng-Xuto Former Director - 6/6 - 6 Sep 06 - 2 Api 08

11. Mr. Wichit Na-Ranong Former Director - 3/6 - 27 Dec 06 - 2 Api 08

12. Mr. Aviruth Wongbuddhapitak Former Director - 1/3 - 16 May 07 - 7 Feb 08

13. Khun Pornthip Jala Former Director - - - 27 Dec 06 - 25 Dec 07

14. Gen. Ruengroj Mahasaranond Former Director - - - 10 May 06 - 2 Oct 07

15. Ms. Rachanee Tripipatkul Former Director - 6/6 2/2 9 Api 08 - 2 Jul 08

16. Mr. Amornsuk Noparumpa Director - 17/17 8/8 9 Api 08 - 31 Dec 08

17. Mr. Visit Limprana Director - 16/17 - 9 Api 08 - 31 Dec 08

18. Mr. Rangsan Saengsook Director - 10/17 - 9 Api 08 - 31 Dec 08

19. ADM Decha Yoo-prot Director - 16/17 - 9 Api 08 - 31 Dec 08

20. Mr. Vichit Suraphongchai Director - 8/17 - 9 Api 08 - 31 Dec 08

21. Pol. Gen. Vudhichai Sriratanavudhi Director - 17/17 8/8 9 Api 08 - 31 Dec 08

22. Mr. Wisudhi Srisuphan Director - 13/23 - 27 Dec 06 - 31 Dec 08

23. Mr. Chulasingh Vasantasingh Director - 6/6 - 22 Sep 08 - 31 Dec 08

24. Mr. Pichai Chunhavajira Director - 15/23 - 9 Api 08 - 31 Dec 08

25. ACM Sukumpol Suwanatat Director - 17/17 - 9 Api 08 - 31 Dec 08

26. Mr. Vikrom Koompirochana Director - 15/17 - 9 Api 08 - 31 Dec 08

27. Flg. Off. Apinan Sumanaseni Director - 20/23 - 27 Dec 06 - 31 Dec 08

Number of Number of Attendance/Total Meeting (times) Period of

Shares Board of Directors Audit Committee Time Board of Directors

Note : Former Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positions before December 31, 2008

52-02-012_100-101 new25_V 3/26/09, 1:40 PM100


1. Mr. Surachai Tansitpong Chairman 145,000.00 - - 145,000.00

2. Mr. Chaisawasd Kittipornpaiboon Former Chairman 948,625.00 30,000.00 260,626.85 1,239,251.85

3. ACM Chalit Pukbhasuk Former Chairman 175,000.00 10,000.00 289,585.39 474,585.39

4. Mr. Suparut Kawatkul 1st Vice Chairman 870,000.00 120,000.00 260,626.85 1,250,626.85

5. Mr. Chaikasem Nitisiri 2nd Vice Chairman 923,625.00 20,000.00 186,341.90 1,129,966.90

6. Mr. Chartsiri Sophonpanich Former Director 241,666.67 10,000.00 231,668.31 483,334.98

7. Mr. Borwornsak Uwanno Former Director 241,666.67 20,000.00 231,668.31 493,334.98

8. Gen. Pairoj Panichsamai Former Director 241,666.67 80,000.00 231,668.31 553,334.98

9. Mr. Sivaporn Dardarananda Former Director 241,666.67 - 231,668.31 473,334.98

10. Mr. Chaisak Saeng-Xuto Former Director 241,666.67 50,000.00 231,668.31 523,334.98

11. Mr. Wichit Na-Ranong Former Director 211,666.67 30,000.00 231,668.31 473,334.98

12. Mr. Aviruth Wongbuddhapitak Former Director 90,344.83 - 231,668.31 322,013.14

13. Khun Pornthip Jala Former Director - - 214,041.37 214,041.37

14. Gen. Ruengroj Mahasaranond Former Director - - 2,518.13 2,518.13

15. Ms. Rachanee Tripipatkul Former Director 226,666.67 20,000.00 - 246,666.67

16. Mr. Amornsuk Noparumpa Director 706,666.67 120,000.00 - 826,666.67

17. Mr. Visit Limprana Director 706,666.67 60,000.00 - 766,666.67

18. Mr. Rangsan Saengsook Director 646,666.67 20,000.00 - 666,666.67

19. ADM Decha Yoo-prot Director 706,666.67 130,000.00 - 836,666.67

20. Mr. Vichit Suraphongchai Director 646,666.67 90,000.00 - 736,666.67

21. Pol. Gen. Vudhichai Sriratanavudhi Director 706,666.67 60,000.00 - 766,666.67

22. Mr. Wisudhi Srisuphan Director 930,000.00 150,000.00 231,668.31 1,311,668.31

23. Mr. Chulasingh Vasantasingh Director 255,000.00 30,000.00 - 285,000.00

24. Mr. Pichai Chunhavajira Director 930,000.00 200,000.00 231,668.31 1,361,668.31

25. ACM Sukumpol Suwanatat Director 706,666.67 170,000.00 - 876,666.67

26. Mr. Vikrom Koompirochana Director 706,666.67 130,000.00 - 836,666.67

27. Flg. Off. Apinan Sumanaseni Director 930,000.00 150,000.00 231,668.31 1,311,668.31

Meeting Allowance Meeting Allowance Bonus Totalof Board of of Subsidiaries fiscal year RemunerationDirectors Committee 2008 (Baht)

(Baht) (Baht)

Board of Directors

Remuneration for the Board of Directors for the period December 31, 2008

Note : Former Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positions before December 31, 2008

52-02-012_100-101 new25_V 3/26/09, 1:41 PM101


Name of persons Relationship Type of Transaction Conditions / Pricing Type of Transaction Conditions / Pricing

who may have for the year ended for the year ended Policy for the year for the period from Policy for the period

conflicts of interest December 31, 2008 December 31, 2008 ended December 31, 2008 October 1, 2007 - from October 1, 2007 -

December 31, 2007 December 31, 2007

(1) (2) (3) (4) (5) (6)

Loans via the MOF are as

follows :

Long-term Loans

- Initial amount :

8,546.07 million baht

- Outstanding balance :


- Interest expense :

95.03 million baht

Short-term Loans

- Initial amount :





1.70 million baht

1.THAI borrowed loans from

GSB as follows :

Promissory notes

- Initial amount :





81.08 million baht

Long-term loans

- Initial amount :





28.99 million baht

2.THAI sold tickets, leased ATM

area and line telephone

to GSB

- Aggregate amount :

3.37 million baht


0.02 million baht

THAI borrowed a loan from

ISBT as follows :

Promissory note.

- Initial amount :

750.00 million baht


750.00 million baht

- Interest expense in the

form of profit payment :

8.14 million baht

Interest rate :

7.07% per annum

Repayment condition :

- 2 instalments

per year

- 20- year terms.

Interest rate :

- according to a

situation of market

rates


- Interest payment

1 year in advance

- 1- year term.

Interest rate :

5.25 and 5.75%

per annum


- 2 instalments per

year

- 10- year terms.

Interest rate :

2.88 and 3.52%

per annum


- 4 instalments per

year

- 7- year terms.

THAI sells and leases

goods and services at a

market price to related

parties on normal

commercial term as

unrelated parties.

Profit rate :

4.5% per annum

90- day terms.

Loans via the MOF are as

follows :

Long-term Loans

- Initial amount :





35.60 million baht

Short-term Loans

- Initial amount :





45.28 million baht

1.THAI borrowed loans from GSB

as follows :

Promissory notes

- Initial amount :





26.17 million baht

2.THAI leased ATM area to GSB


0.01 million baht

No Transactions

The loans bear

interest rate of 1.70,

7.07% per annum

and are repayable

in two instalments

per year over a 7

and 20 year term.

The loans bear

interest rates 3.93%

per annum and

one year of advance

interest paid for

a year.

Interest rate :

5.25 and 5.50%

per annum


- 2 instalments

per year

- 10- year terms.


goods and services at

a market price to

related parties on

normal commercial

term as unrelated

parties.

-

Ministry of

Finance (MOF)

Government

Saving Bank (GSB)

(Related Company)

Islamic Bank of

Thailand (ISBT)

(Related Company)

The MOF is a major

shareholder of THAI with

51.03% equity interest.

GSB is controlled by the

MOF, a major shareholder

of THAI.

GSB holds 2.73% of

THAI’s equity interest.

One of THAI’s Directors,

Mr. Wisudhi Srisuphan is a

Chairman of GSB.

ISBT is controlled by the


of THAI.

RELATED PARTIES

52-02-012_102-107 new25_V 3/26/09, 1:24 PM102


Export-Import Bank

of Thailand (EXIM)

(Related Company)

Bank for Agriculture

and Agricultural

Cooperative (BAAC)

(Related Company)

Government

Housing Bank (GHB)

(Related Company)

PTT Public

Company Limited

(Related Company)

Thailand Tobacco

Monopoly (TTM)

(Related Company)

EXIM is controlled by the


of THAI.

BAAC is controlled by the


of THAI.

GHB is controlled by the


of THAI.

The MOF, a major

shareholder of THAI, is a

major shareholder of PTT

Public Company Limited.

Two of THAI’s Directors,

Mr. Chaikasem Nitisiri is an

Independent Director of

PTT Public Company

Limited and Mr. Pichai

Chunhavajira is an Executive

of PTT Public Company

Limited.

TTM is controlled by the


of THAI.


Mr. Wisudhi Srisuphan, is a

Chairman of TTM.

1.THAI borrowed loans from

EXIM as follows :

Promissory notes

- Initial amount :

600.00 million baht

consisting of 2 P/N at

300.00 million baht each


300.00 million baht


1.21 million baht

2.THAI sold tickets to EXIM

- Initial amount :

0.06 million baht

THAI sold tickets to BAAC


1.77 million baht


0.38 million baht

THAI sold tickets to GHB


2.68 million baht


0.58 million baht

1. THAI purchased fuel for its

aircraft from PTT Public

Company Limited




492.29 million baht

2. THAI sold tickets to PTT Public

Company Limited


67.01 million baht


7.82 million baht

THAI sold tickets to TTM


4.33 million baht


0.39 million baht

Interest rate :

4.45 and 4.90%

per annum

30- day and 76-day

terms.

THAI sells goods and

services at a market

price to related parties

on normal commercial

term as unrelated

parties.





term as unrelated

parties.





term as unrelated

parties.

THAI purchases and

sells goods and services

at a market price from

and to related parties


term as unrelated

parties.





term as unrelated

parties.

No Transactions

No Transactions

No Transactions

1.THAI purchased fuel for its

aircraft from PTT Public

Company Limited





2.THAI sold tickets to PTT Public

Company Limited


20.35 million baht


8.88 million baht

THAI sold tickets to TTM


2.51 million baht


2.33 million baht

-

-

-

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.



price to related

parties on normal

commercial term as

unrelated parties.





(1) (2) (3) (4) (5) (6)

52-02-012_102-107 new25_V 3/26/09, 1:25 PM103


Airports of

Thailand Public

Company Limited

(AOT)

(Related Company)

Pearl Village

Company Limited

(Related Company)

Thai-Amadeus

Southeast Asia

Company Limited

(Subsidiary

Company)

The MOF, a major


major shareholder of AOT.

One of THAI’s Executives,

ACM Narongsak Sangapong

is a Vice Chairman of AOT.

Note : ACM Narongsak

Sangapong resigned from

Board of Directors of AOT

on February 14, 2008.


Mr. Wichit Na-Ranong is a

shareholder and a Director

of Pearl Village Company

Limited.

Note : Mr. Wichit Na-Ranong

resigned from THAI’s Board

of Directors on April 2, 2008.

THAI is a major

shareholder with 55%

equity interest.

Two of THAI’s Executives,

Mrs. Ngamnit

Sombutpibool, Mr. Pandit

Chanapai and one Vice

President Mr. Teerapol

Chotichanapibal are

Chairman and Directors of

Thai-Amadeus Southeast

Asia Company Limited,

respectively.

1.THAI leased land and

building at Bangkok

International Airport and

other airports in Thailand

from AOT




250.94 million baht

2.THAI sold tickets to AOT and

received 2% income from

collecting airport tax for AOT


57.16 million baht


9.75 million baht

THAI purchased

accommodation services for

its passengers from Pearl

Village Company Limited

- Aggregate amount for the

3-month periods ended

March 31, 2008 :

0.19 million baht

THAI leased to Thai-Amadeus

Southeast Asia Company

Limited office area, computers

and office equipment. THAI

also sold tickets to the

subsidiary


12.99 million baht


0.76 million baht

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.

THAI purchases goods

and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.

1.THAI leased land and building

at Bangkok International

Airport and other airports in

Thailand from AOT


676.60 million baht


228.02 million baht

2.THAI sold tickets to AOT and

received 2% income from

collecting airport tax for AOT


16.41 million baht


7.81 million baht

THAI purchased accommodation

services for its passengers from

Pearl Village Company Limited


0.09 million baht


0.03 million baht

THAI leased to Thai-Amadeus

Southeast Asia Company Limited

office area, computers and

office equipment. THAI also sold

tickets to the subsidiary


2.89 million baht


2.62 million baht

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.

THAI purchases


a market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.





(1) (2) (3) (4) (5) (6)

52-02-012_102-107 new25_V 3/26/09, 1:41 PM104


Donmuang

International

Airport Hotel

Company Limited

(Associated

Company)

Bangkok Aviation

Fuel Services

Public Company

Limited (BAFS)

(Associated

Company)

Royal Orchid Hotel

(Thailand) Public

Company Limited

(Associated

Company)

THAI holds 40% equity

interest in Donmuang

International Airport Hotel

Company Limited.

Four of THAI’s Executives,

Wg. Cdr. Supachai

Limpisvasti, Mrs. Ngamnit

Sombutpibool, ACM

Narongsak Sangapong and

Mr. Tummasak Chutiwong

are a Chairman and

Directors of Donmuang


Company Limited,

respectively.

Note : Wg. Cdr. Supachai

Limpisvasti resigned from

Chairmanship of Donmuang


Company Limited on August

29, 2008.

THAI holds 22.59% equity

interest in BAFS.

Three of THAI’s Executives,

ACM Narongsak Sangapong,


and Mr. Chanchai Singtoroj

are Vice Chairman and

Directors of BAFS,

respectively.

Note : Mr. Chanchai Singtoroj

retired from THAI on

September 30, 2008.


interest in Royal Orchid

Hotel (Thailand) Public

Company Limited.


Gen. Pairoj Panichsamai,

Mr. Wichit Na-Ranong and

two of THAI’s Executives,

Mrs. Ngamnit Sombutpibool

and Mr. Pandit Chanapai

are Directors of Royal

Orchid Hotel (Thailand)

Public Company Limited.

Note : Gen. Pairoj

Panichsamai and Mr. Wichit

Na-Ranong resigned from

THAI’s Board of Director on

April 2, 2008.

THAI purchased


its passengers from

Donmuang International

Airport Hotel Company

Limited


5.48 million baht

1. BAFS provides fuel services

for THAI


377.37 million baht


27.33 million baht

2. THAI sold tickets to BAFS


0.06 million baht

THAI purchased


its passengers from Royal

Orchid Hotel (Thailand)

Public Company Limited


14.85 million baht


and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and





term as unrelated

parties.


and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchased accommodation

services for its passengers from

Donmuang International Airport

Hotel Company Limited


0.14 million baht


0.01 million baht

1.BAFS provides fuel services

for THAI


98.60 million baht


35.22 million baht

2.THAI sold tickets to BAFS


0.01 million baht


0.01 million baht

THAI purchased

accommodation services for its

passengers from Royal Orchid

Hotel (Thailand) Public

Company Limited


4.31 million baht

THAI purchases


a market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.

THAI purchases


a market price from

related parties on

normal commercial

term as unrelated

parties.





(1) (2) (3) (4) (5) (6)

52-02-012_102-107 new25_V 3/26/09, 1:42 PM105


Phuket Air Catering

Company Limited

(Associated

Company)

Suvarnabhumi

Airport Hotel

Company Limited

(Associated

Company)

Nok Airlines

Company Limited

(Associated

Company)


interest in Phuket Air

Catering Company Limited.


Mr. Kaweepan Raungpaka,

Mr. Pichai Chunganuwad

and Mrs. Pismai

Chandrubeksa are

Chairman and Directors of

Phuket Air Catering

Company Limited,

respectively.

Note : Mrs. Pismai

Chandrubeksa retired from

THAI on September 30, 2008.


interest in Suvarnabhumi


Limited.


Mr. Teerapol

Chotichanapibal, Flt. Lt.

Montree Jumrieng and

Mr.Chokchai Panyayong are

Directors of Suvarnabhumi


Limited.


interest in Nok Airlines

Company Limited.


Mr. Vichit Suraphongchai

and Gen. Pairoj

Panichsamai are

Chairman and Director of

Nok Airlines Company

Limited respectively, three

of THAI’s Executives, Mrs.

Ngamnit Sombutpibool,


and Mr. Pandit Chanapai

are Directors of Nok

Airlines Company Limited

Note : Gen. Pairoj

Panichsamai resigned from

THAI’s Directors on April 2,

2008 and Mr. Vichit

Suraphongchai is a Chairman

of Nok Airlines Company

Limited on October 3, 2008.

1.THAI purchased food and

catering services from Phuket

Air Catering Company Limited


9.27 million baht


2.01 million baht

2.THAI sold food and catering

services to Phuket Air Catering

Company Limited


3.31 million baht


0.35 million baht

THAI purchased

accommodation services for its

passengers from Suvarnabhumi

Airport Hotel Company Limited


101.69 million baht

THAI has been leasing out

aircraft and providing aviation

operation services to Nok Airlines

Company Limited




123.57 million baht

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.


and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.


goods and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.

1.THAI purchased food and

catering services from

Phuket Air Catering Company

Limited


7.76 million baht


7.48 million baht

2.THAI sold food and catering

services to Phuket Air Catering

Company Limited


1.78 million baht


1.09 million baht

1.THAI purchased


its passengers from

Suvarnabhumi Airport Hotel

Company Limited


16.06 million baht


0.42 million baht

2.THAI sold ticket to

Suvarnabhumi Airport Hotel

Company Limited


0.03 million baht

THAI has been leasing out

aircraft and providing aviation

operation services to

Nok Airlines Company Limited


543.27 million baht


37.78 million baht

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.



a market price from

related parties on

normal commercial

term as unrelated

parties.





(1) (2) (3) (4) (5) (6)

52-02-012_102-107 new25_V 3/26/09, 1:26 PM106


Necessity and reasonableness of related parties transactions

Having scrutinized items on related parties transactions during 2008 ending December 31, 2008 the

Audit Committee is of the opinion that the aforementioned items were transacted in accordance with the

Company’s regular business practices and in a reasonable manner. The setting of prices, terms and conditions

were done in the same manner as those offered to non-related parties. There were no transfer benefits

between the Company, subsidiaries, joint ventures, associated, related companies and shareholders.

As a major shareholder of THAI, the Company enjoys favorable cost of funds on loans via 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 Directors and

Executives with conflicts of interest in the respective matter are 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 are to be disclosed in

compliance to the announcement and regulations by the Securities and Exchange Commission (SEC), and the

Stock Exchange of Thailand (SET).


interest in Fuel Pipeline

Transportation Limited.

One of THAI’s Executives,

Mr. Prakobkiat Ninnad is

a Director of Fuel Pipeline

Transportation Limited.

The MOF, a major


major shareholder of

AEROTHAI.


interest in AEROTHAI.

Two of THAI’s Executives,

Flt. Lt. Pravit Shinawatra

and Flg. Off. Norahuch

Ployyai are Directors of

AEROTHAI.

Note : Flt. Lt. Pravit

Shinawatra retired from THAI

on September 30, 2008.

THAI purchased fuel

transportation services from

Fuel Pipeline Transportation

Limited


4.81 million baht


1.49 million baht

1.THAI purchased aeronautical

navigation and leased

equipment from AEROTHAI


310.87 million baht


104.39 million baht

2.THAI sold tickets to AEROTHAI


0.08 million baht


0.06 million baht

Fuel Pipeline

Transportation

Limited

(Joint Venture

Company)

Aeronautical Radio

of Thailand Limited

(AEROTHAI)

(Related Company

and Joint Venture

Company)

THAI purchased fuel

transportation services from

Fuel Pipeline Transportation

Limited


15.95 million baht


0.97 million baht

1.THAI purchased aeronautical

navigation and leased

equipment from AEROTHAI



2.THAI sold tickets to AEROTHAI


20.38 million baht


0.05 million baht


and services at a

market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and





term as unrelated

parties.

THAI purchases


a market price from

related parties on

normal commercial

term as unrelated

parties.

THAI purchases and

sells goods and


price from and to

related parties on

normal commercial

term as unrelated

parties.





(1) (2) (3) (4) (5) (6)

52-02-012_102-107 new25_V 3/26/09, 1:26 PM107


1. OPERATING RESULTS

For the year 2008 ( January 1- December 31, 2008), the Company continuously encounters crises

that adversely affected the operating result such as the continuing sharp rise of jet fuel price which affected

airlines industry, the global economic slow down, as well as the political unrest in the country that caused

the decreasing number of outbound and inbound travelers to Thailand particularly in 4Q’08, the high season.

These factors caused a negative impact on the Company’s operating result in year 2008 which are summarized

as follows:

The Company’s total operating revenue amounted to THB 200,118 million, which was an increase of

THB 3,209 million or 1.6% from the same period last year. However, the operating expense totaled

THB 206,780 million, which was an increase of THB 20,105 million or 10.8% over the same period last year.

The increase in operating expense was mainly due to the rise in average jet fuel price of 47%, resulting in fuel

and oil expense higher by THB 26,849 million or 42.9% than last year, an increase in depreciation from the

change in estimated useful life of the new aircraft and engine types as well as a cost from the Mutual

Separation Plan in order to reduce personnel expense in the long run. In contrast, other operating expenses

decreased from last year. The Company’s loss from the operation amounted to THB 6,662 million, which was

lower than a gain from operation of THB 10,234 million last year.

Moreover, the weaken Thai baht at the end of the period caused the Company’s foreign currency exchange

loss in the amount of THB 4,471 million, which was mostly arising from converting of the Company’s outstanding

loan into Baht terms. Furthermore, the Company has reserved the damages for Antitrust and Competition cases.

The provision is calculated by approximation from the estimated damages figures by the lawyers in each region

taking into account the facts that the lawyers are aware, approximately THB 4,290 million. Also, the Company

recorded an impairment loss of Airbus A340-500 aircraft, amounting to THB 4,426 million. Consequently,

the Company incurred an operating loss before tax amount of THB 23,600 million, lower than a profit of

THB 6,338 million last year. The Company’s net loss was THB 21,379 million or 12.58 baht per share, which was

lower than the net profit of THB 4,368 million or 2.57 baht last year. EBITDA was THB 13,619 million.

Not including of the loss on foreign currency exchange as well as the reserve of the estimated damages

for Antitrust and Competition cases and also the aircraft impairment loss, the Company’s loss before tax was

THB 10,413 million.

for the Year Ending December 31, 2008for Thai Airways International Public Company Limited and Its Subsidiary

MANAGEMENT’S DISCUSSION AND ANALYSIS

52-02-012_108-115 new25 _V 3/26/09, 1:43 PM108


Summary of operating results for year 2008 as follows:

Units: million baht 2008 2007 % Change

Total operating revenue 200,118 196,909 + 1.6%

Operating expenses 206,780 186,675 + 10.8%

Gain(Loss) from the operation (6,662) 10,234 - 165.1%

Loss on foreign currency exchange (4,471) (652) - 585.7%

Damage arising from Antitrust and Competition Law (4,290) - -

Impairment losses of Airbus A340-500 (4,426) - -

Profit(Loss)before finance cost and income tax (18,114) 11,265 - 260.8%

Profit (Loss) before tax (23,600) 6,338 - 472.3%

Net profit (Loss) (21,379) 4,368 - 589.4%

Net Profit (Loss) per share (Baht) (12.58) 2.57 - 15.1

EBITDA 13,619 28,477 - 52.2%

Production and Traffic

For the year 2008, the Company’s total production (Available Ton - Kilometer : ATK) decreased by

5.1% from the same period last year. Total traffic (Revenue Ton - Kilometer : RTK) decreased by 7.9%. Average

load factor decreased from 70.3% last year to 68.2%. Passenger production (Available Seat - Kilometer : ASK)

decreased by 3.4% from the same period last year. Passenger traffic (Revenue Passenger - Kilometer : RPK)

decreased 8.5%, which was higher than the increase in passenger production. As a result, cabin factor was 74.8%,

which was lower than the same period last year. The details are as follows:

2008 2007 % Change

Production (MATK) 10,938 11,523 - 5.1%

Traffic (MRTK) 7,458 8,101 - 7.9%

Load Factor (%) 68.2 70.3 - 2.1

Passenger Production (MASK) 75,391 78,048 - 3.4%

Passenger Traffic (MRPK) 56,377 61,619 - 8.5%

Cabin Factor (%) 74.8 78.9 - 4.1

Freight Production (MADTK) 4,152 4,498 - 7.7%

Freight Traffic (MRFTK) 2,292 2,457 - 6.7%

Freight Load Factor (%) 55.2 54.6 + 0.6

No. of Passenger (million persons) 18.71 19.88 - 5.9%

Flight Hours (hours) 342,175 356,604 - 4.0%

Average of Aircraft Utilization (hour/aircraft/day) 11.7 11.8 - 0.8%

52-02-012_108-115 new25 _V 3/26/09, 1:44 PM109


Revenue

Due to the crises that affected the Company’s performance, total revenues for the year 2008 was

THB 202,605 million, an increase of only THB 2,684 million or 1.3% over the same period last year. The details

are as follows:


Revenue from Transportation Activities

- Passenger and Excess Baggage 164,319 160,558 + 2.3%

- Freight and Mail 26,754 27,035 - 1.0%

Total Revenue from Transportation Activities 191,073 187,593 + 1.9%

Revenue from Other Activities 9,045 9,316 - 2.9%

Total Operating Revenue 200,118 196,909 + 1.6%

Interest Income 493 745 - 33.8%

Other Incomes 1,994 2,267 - 12.0%

Total Revenues 202,605 199,921 + 1.3%

Total operating revenue totaled THB 200,118 million, which is an increase of THB 3,209 million or 1.6%

over the same period last year. Details are as follows:

Revenue from transportation activities amounted to THB 191,073 million, an increase of

THB 3,480 million or 1.9% over the same period last year. Resulting from:

- Passenger and excess baggage revenue excluding fuel surcharge collected from passenger decreased as

a result of the decrease in number of passenger while fuel surcharge revenue increased by THB 14,230 million

from last year, which was insufficient to offset the higher fuel cost of THB 26,849 million. Consequently, the total

passenger and excess baggage revenue amounted to THB 164,319 million, and increase of THB 3,761 million or

2.3% from last year.

- Freight and Mail revenue was THB 26,754 million, which was a decrease of THB 281 million or 1% from

the same period last year, resulting from lower in freight traffic.

The Company’s yield excluding insurance and fuel surcharge are as follows:

2008 2007 % Change

System-wide (Baht/RTK) 19.90 19.86 + 0.2%

Passenger (Baht/RPK) 2.28 2.25 + 1.3%

Freight (Baht/RFTK) 8.13 8.38 - 3.0%

52-02-012_108-115 _V 3/24/09, 2:42 PM110


Revenue from other activities mostly comprised of revenue from business units, such as Technical

Services, Cargo and Mail Commercial, Ground Support Equipment Services, Ground Customer Services, and

Catering Services, revenue from aircraft leased and providing maintenance & overhaul services to Nok Air and

revenue from Thai-Amadeus Southeast Asia Company Limited, totaled THB 9,045 million, which was a

decrease of THB 271 million or 2.9% from last year. The decrease was mainly due to the decreased number

of inbound and outbound travelers to and from Thailand and also the reduction of revenue from Nok Air.

Interest income amounted to THB 493 million, which was THB 252 million or 33.8% lower than last year

resulting from a decrease in cash.

Other incomes amounted to THB 1,994 million, which was THB 273 million or 12% lower than the

previous year due to the gain on sales of 2 Airbus A300-600, totaling THB 370 million, which is lower than last

year gain on sales of 4 aircraft, 2 Airbus A300-600 and 2 Boeing 747-300 aircraft in amount of THB 560 million

and also gain on sales of engines and spare part, totaling THB 193 million.

Expenses

Total expenses amounted to THB 220,720 million, which was THB 32,064 million or 17% higher than the

same period last year. A summary of operating expenses is as follows:


Operating expenses :

- Personnel 30,607 33,114 - 7.6%

- Fuel and oil 89,460 62,611 + 42.9%

- Flight service expenses 19,938 20,155 - 1.1%

- Inventories and supplies 8,827 9,850 - 10.4%

- Crew expenses 6,542 6,746 - 3.0%

- Aircraft maintenance and overhaul costs 10,848 11,837 - 8.4%

- Depreciation and amortisation 20,281 18,243 + 11.2%

- Lease of aircraft and spare parts 3,651 6,758 - 46.0%

- Sales and advertising cost 6,932 7,265 - 4.6%

- Insurance 751 894 - 16.0%

- Other operating expenses 8,922 9,176 - 2.8%

- Remuneration to board of directors 21 26 - 19.2%

Total Operating Expenses 206,780 186,675 + 10.8%

Other expenses 688 1,430 - 51.9%

Loss on foreign currency exchange 4,471 652 + 585.7%

Damage arising from Antitrust and Competition Law 4,290 - -

Impairment losses of Airbus A340-500 4,426 - -

Share of loss (profit) from investments by the equity method 65 (101) - 164.4%

Total Expenses 220,720 188,656 + 17.0%

52-02-012_108-115 _V 3/24/09, 2:42 PM111


Operating Expenses The Company’s operating expense amounted to THB 206,780 million, which was an

increase of THB 20,105 million or 10.8% from last year. Significant changes in operating expense included:

- Fuel and oil expense was THB 89,460 million, including fuel hedging compensation in amount of

THB 5,286 million, which was an increase of THB 26,849 million or 42.9% from the same period last year.

The increase mainly caused by the rise in average fuel price by 47% from the same period last year.

- Depreciation and amortisation amounted to THB 20,281 million, which was an increase of

THB 2,038 million or 11.2% mainly due to the change in the estimated useful life of new aircraft and engine types

from 20 years to 15 years, amounting to THB 1,387 million as well as an increase in number of aircraft.

- Lease of aircraft and spare part amounted to THB 3,651 million, a decrease of THB 3,107 million or 46%

from last year which was mainly due to the cancellation of cargo block space, the decrease of 3 operating lease

aircraft as well as the reduction in a lease rate of aircrafts from extending the lease contract.

- Personnel expense totaled THB 30,607 million, including Mutual Separation Plan expenses in amount of

THB 1,300 million, which was a decrease of THB 2,507 million or 7.6% from the same period last year. The

decrease was mainly due to the suspension of annual staff welfare fee payment this year whereas the annual

staff welfare fee payment for the previous year was 3 times monthly salary.

- Aircraft maintenance and Overhaul costs amounted to THB 10,848 million, a decrease of

THB 989 million or 8.4% from last year, which was mainly the result of acquiring the Total Care Agreement for

Rolls Royce Trent 500 engines.

Other operating expenses decreased from last year, which was mainly due to cost control measure to cope

with an impact from the crises.

Other expenses amounted to THB 688 million, which was a decrease of THB 742 million or 51.9% from

last year mainly due to a decrease in the reserve for obsolete aircraft spare parts to be disposed.

Loss on foreign currency exchange amounted to THB 4,471 million was mostly due to the weaken

Thai baht particularly against JPY currency at the end of the period, causing foreign currency exchange loss from

the converting of the outstanding loan into Baht terms.

Damages arising from Antitrust and Competition Law The Company has reserved the damages

and fines for the Antitrust and Competition cases. The provision is calculated by approximation from the

estimated damages figures by the lawyers in each region taking into account the facts that the lawyers are

aware, approximately THB 4,290 million.

Impairment Losses of Airbus A340-500 The Company recorded impairment Loss of 4 Airbus A340-500.

It appears that an appraisal value of those aircraft is lower than the net book value in the amount of

THB 4,426 million. The Company’s Board of Director has a resolution to decommission and sell 4 Airbus

A340-500 aircraft, non-stop flights to New York and Los Angeles. The Company has ceased the New York flights

since July 1, 2008. In the meantime, such aircraft are on the sale process.

Share of loss from investment by equity method was THB 65 million compared with share of profit

amounting to THB 101 million in the same period last year. Crucial factors were recognizing loss from

Nok Airlines Company Limited and Suvarnabhumi Airport Hotel Company Limited.

52-02-012_108-115 _V 3/24/09, 2:42 PM112


Finance cost was THB 5,485 million, comprising of interest expense and bank charges, which was an

increase of THB 558 million or 11.3% mainly due to increase in loan amount along with the rise in average

interest rate. However, the Company manages its interest rate risk by entering into Interest Rate Swaps from

long term floating into fixed interest rate during a low interest rate environment. As a result, the Company was

able to reduce its interest expense by THB 230 million.

2. FINANCIAL POSITION

Assets

As at December 31, 2008, the Company’s total assets were THB 259,534 million, a decrease of

THB 20,741 million or 7.4% from as at December 31, 2007. The current and non-current assets accounted for

16.3% and 83.7% of total assets, respectively consisting of :


MTHB % of MTHB % of

total assets total assets

Current assets 42,181 16.3 65,229 23.3

Property, plant and equipment-net 207,064 79.8 207,153 73.9

Other non-current assets 10,289 3.9 7,893 2.8

Current assets decreased by THB 23,048 million or 35.3% mainly due to a decrease in cash and cash

equivalents in the amount of THB 18,282 million, trade account receivable - net in the amount of

THB 2,950 million and tax refund in the amount of THB 1,272 million.

Property, plant and equipment-net decreased by THB 89 million or 0.04%, which was mainly due to the

impairment loss of A340-500 aircraft in the amount of THB 4,426 million. Furthermore, the Company took the

delivery of 1 new Airbus A340-600, repurchasing 2 operating lease aircraft, Boeing 747-400 and 1 Boeing

777-200, and advance payment in Airbus A330-300 and A380-800.

Liabilities

The Company’s total liabilities as at December 31, 2008 totaled THB 213,652 million, which was an

increase of THB 1,402 million or 0.7% from as at December 31, 2007. These comprise of:


MTHB % of total MTHB % of total

liabilities liabilities

Current liabilities (excluding current portion of long-term loans) 79,307 37.1 73,191 34.5

Long-term debt 125,693 58.8 134,087 63.2

Staff pension fund and Contingent Liability 8,652 4.1 4,972 2.3

52-02-012_108-115 _V 3/24/09, 2:42 PM113


Current liabilities (excluding current portion of long-term loans) increased from December 31, 2007 by

THB 6,116 million or 8.3% mainly due to an increase in short term loan whereas accrued dividends and

unearned transportation revenues had been decreased.

Long-term debt as at December 31, 2008, including current portion of long-term loans, were

THB 125,693 million which was a decrease by THB 8,394 million or 6.3% from as at December 31, 2007. The

decrease was mainly from repayment of debenture, liabilities under financial leases from acquiring aircraft and

promissory note.

Contingent liabilities totaled THB 3,874 million, which was mostly from estimated damages and penalty

charges from the violation of Antitrust or Competition Law in case the Company is guilty.

Shareholders’ Equity

As at December 31, 2008, the Company’s shareholders’ equity amounted to THB 45,882 million,

a decrease of THB 22,143 million or 32.6% from December 31, 2007 due to net loss from operation and dividends

payment for the operating result of the period October 1, - December 31, 2007.

Capital structure as of December 31, 2008 consisted of total liabilities of THB 213,652 million or 82.3%

and shareholders’ equity of THB 45,882 million or 17.7%. Debt to Equity Ratio as of December 31, 2008 was

4.66 times.

Liquidity

The impact of the crises strongly diverted the Company’s operating result for the fiscal year 2008 from

target which affecting cash flows from operation. Moreover, the Company had burden in loan repayment,

investment and other obligations. At the beginning of the fiscal year (January 1, 2008), the Company had cash

and cash equivalent in the amount of THB 25,813 million, which maintained the Company’s liquidity. In the

forth quarter which is normally the high season, where the Company transports great number of passenger and

obtains high cash flows from operation, but the political unrest in the country affected the Company’s operation

and also the liquidity. As a result, the Company had to acquire short-term loan in order to strengthen the

Company’s liquidity. Cash and cash equivalents as at December 31, 2008 amounted to THB 7,531 million,

a decrease of THB 18,282 million from the beginning of the period. Net cash from and used in each activities

are as follows:

- Net cash from operating activities amounted to THB 11,371 million.

- Net cash used in investing activities amounted to THB 20,309 million mainly used for advance

payment of Airbus A330-300 and A380-800 aircraft and repurchasing the operating lease aircraft, 2 Boeing

747-400 and 1 777-200.

52-02-012_108-115 _V 3/24/09, 2:42 PM114


- Net cash used in financing activities amounted to THB 9,283 million. This included net repayment of

THB 10,821 million in long-term loan and THB 4,500 million in debenture. In addition, promissory notes,

loan interest and dividend were paid in the amount of THB 1,050 million, THB 5,619 million and

THB 3,873 million, respectively. However, there was net cash received from short-term loans in this period,

amounting to THB 16,580 million.

The Company has reviewed business and investment plans to solve the liquidity problems. An business

plan improvement has been developed to cope with current circumstances in which emphasizes on cash flow

enhancement through increasing quality of revenue, managing more appropriate expenditure, improving

investment plan, and restructuring debt and capital structure to suit the investment plan.

The restatement of Financial Statements for fiscal year ending December 31, 2008 and 2007

The Company has restated its financial statement for fiscal year ending December 31, 2008 and 2007.

The summary is as follows.

1. The Company has reclassified the items in income statement to comply with Thai Accounting Standard

No. 35 (revised 2007) “Presentation of Financial Statements”, which is effective for the accounting periods

beginning on or after January 1, 2008. The Company restated its income statements for the year 2007 (January 1

2007 - December 31, 2007) for comparative purpose by separate disclosure categories and amounts for each

items (details are in the Notes to the Financial Statements No.6.)

2. Due to the change in accounting period, the Company restated the previous financial statements in

order to compare with same accounting period of the financial statements for the year ended December 31,2008.

Therefore, the Company adjusted the recognition of war risk insurance and fuel surcharge in passenger and

excess baggage revenues to match the period in which transactions incurred. Moreover, the Company adjusted

taxes collected from passenger, which the outstanding balances were over 3 years and were recognized in

accounting period from October 1, 2006 to September 30, 2007 and October 1 to December 31, 2007, as average

revenues in each quarter. In addition, the Company adjusted welfare fees as average expenses in each quarter

as well as relevant company income taxes. The asserted adjustments resulted in the increase in net profits of the

Company financial statements for the fiscal year ended December 31, 2007 in the amount of THB 216 million

as well as unappropriated retained earning as at January 1, 2007 decreased by THB 216 million (details are in

the Notes to the Financial Statements No.1.)

52-02-012_108-115 _V 3/24/09, 2:42 PM115


Strategies have been put in place to guide the Company towards achieving the corporate vision of being

the “First Choice Carrier with Touches of Thai” through providing service that exceeds expectations along with a

smooth and silk experience at every touch point. Long-term relationship is developed with customers through

THAI’s ability to provide service excellence and consistency at every touch point. The trust earned from

customers will enable THAI to weather storms that the Company may face.

This past year, the commercial airline industry was weighed down by the dramatic rise in cost of aviation

fuel which rose to its record peak in a very short period of time especially during the months of May and June

rocketing the Company’s operating expense to levels never before experienced. Simultaneously, demand for

travel was adversely affected by the global economic slowdown triggered by the meltdown of the U.S. financial

system which spread to other European and Asian countries. Making it even more challenging for THAI was the

political unrest at home starting with the closures of the Phuket and Hat Yai airports in August 2008 followed by

the closure of the 2 major airports from the November 26 - December 3, 2008. The loss of revenue during the

period was significant and caused a ripple effect on confidence for potential travelers to Thailand post the

re-opening of the airports. There were also cancellations that resulted from the airport closure contributing to

revenue loss while additional costs were borne by the Company in transporting and taking care of passengers

who were stranded and for having to operate flights out of the coastal airport of Utapao in Rayong province.

To address the lingering problems caused by the many events, the Company has reviewed its Corporate

plan which includes fleet restructuring taking into consideration potential replacements for outgoing aircraft

that are of 20 or more years. A network restructuring was also put into effect where planned increase in

frequencies of long-haul flights have been suspended while reducing flight frequency on sectors where fuel

cost constitutes a large proportion of the flight cost. Emphasis has been shifted more towards regional

destinations where the rate of economic growth is still expected to be healthier, consumption of fuel is lower and

has higher yield.

THAI’S OPERATING STRATEGY

52-02-012_116-118 new25_V 3/26/09, 1:17 PM116


For 2008, another major objective was added in addition to building shareholder value, 3 strategies were

implemented to ensure stability for the Company going forward in this period of uncertainty.

1. Ensuring the highest of quality and safety standards with competitive products through product

and enhancements and the rendering of services that meet the needs of target customers. Ensuring passengers

a Smooth as Silk travel experience is key and thus customer retention the ultimate goal. This travel experience

requires the cooperation with THAI’s business partners including Star Alliance and others through adjustments

in flight schedules enabling smooth as silk connectivity while incorporating information technology to more

effectively serve passenger needs.

2. Cost management and improving asset utilization are means to control its unnecessary costs while

maximizing utilization of assets to generate revenue and reduce per unit cost. Revising processes to eliminate

waste and redundancy to enhance and expedite service provided to customers to be competitive and

increase overall productivity. This is in addition to improving service quality to retain existing customers and

enable the Company to be cost competitive.

3. The Company is enacting transformation of its culture to ensure a competent organization that is

customer and business oriented with teamwork, happiness, awakening and inspiration (or THAI Spirit) at the

heart of this transpiration while upholding good corporate citizenship through giving back to society and being

responsible for the environment.

52-02-012_116-118_V 3/24/09, 2:47 PM117


FIVE - YEAR REVIEW

89 90 87 87 83

342,175 356,604 324,366 304,535 304,325

10,938 11,521 10,269 9,791 9,686

7,458 8,100 7,001 6,565 6,478

68.2 70.3 68.2 67.1 66.9

18,710 19,884 18,574 18,133 19,540

75,391 78,032 71,594 69,843 69,830

56,377 61,615 53,989 49,931 50,633

74.8 79.0 75.4 71.5 72.5

4,152 4,498 3,780 3,492 3,401

2,292 2,456 2,048 1,986 1,839

55.2 54.6 54.2 56.9 54.1

27,193 27,285 26,488 25,876 25,884

(23,600) 6,338 12,822 9,906 14,284

Definition of Aviation TermsAvailable Ton-Kilometers (ATK)Capacity offered for sale expressed as aircraftpayload multiplied by flown kilometers.

Revenue Ton-Kilometers (RTK)Capacity sold expressed as tons of load carriedmultiplied by flown kilometers.

Load FactorRevenue ton-kilometers expressed as percentage ofavailable ton-kilometers.

Available Seat-Kilometers (ASK)Passenger capacity offered for sale expressed asnumber of seats multiplied by flown kilometers.

Revenue Passenger-Kilometers (RPK)Passenger capacity sold expressed as number ofpassengers multiplied by flown kilometers.

Cabin FactorRevenue passenger-kilometers expressed as percentageof available seat-kilometers.

Available Dead Load Ton-Kilometers (ADTK)Capacity offered of aircraft payload after deductionof weight of the load of passengers multiplied byflown kilometers.

Revenue Freight Ton-Kilometers (RFTK)Freight capacity sold expressed as tons of freightcarried multiplied by flown kilometers.

Freight Load FactorRevenue freight-kilometers expressed as percentageof available dead load ton-kilometers.

Aircraft PayloadWeight of the load of passengers, cargo and otherload carried on a fully loaded aircraft using theaverage density of cargo.

Number of Aircraft

Flight Hours (Block Hours)

Available Ton-Kilometers (Million)

Revenue Ton-Kilometers (Million)

Load Factor (%)

Number of Passengers (000)

Available Seat-Kilometers (Million)

Revenue Passenger-Kilometers (Million)

Cabin Factor (%)

Available Dead Load Ton-Kilometers (Million)

Revenue Freight Ton-Kilometers (Million)

Freight Load Factor (%)

Number of Personnel (People)

Profit(losses) before Tax (Million Baht)

Year 2008 Year 2007 Year 2006 Year 2005 Year 2004

52-02-012_116-118 new25_V 3/26/09, 1:12 PM118


BOARD OF DIRECTORS’ DUTIES ON FINANCIAL DISCLOSURE

The Board of Directors of Thai Airways International Public Company Limited understands its

responsibilities as Board members of a publicly listed Company of ensuring the integrity, the sufficiency of

relevant information and transparent disclosure of information, which best reflects the Company’s financial

status, protect against fraud and undertaking of abnormal activities while observing generally accepted

accounting principles. Appropriate accounting principles have been applied on a consistent basis and due

consideration has been given in preparing the Company’s consolidated financial statements, the Company’s

own financial statements along with the ensuing notes to the financial statements as disclosed in the 2008

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 process 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 2008 financial

statements ending December 31, 2008 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.

Surachai Tansitpong

Chairman of the Board of Directors

Air Chief Marshal Narongsak Sangapong

Senior Executive Vice President

Corporate Secretariate

Acting President

52-02-012_119-122 new25_V 3/26/09, 1:10 PM119


To Shareholders,

The Board of Directors of Thai Airways International Public Company Limited has appointed The

Audit Committee of Thai Airways International Public Company Limited which is composed of three

Independent Directors.

Mr. Chaikasem Nitisiri Chairman

Mr. Amornsak Noparumpa Committee member

Pol. Gen. Vudhichai Sriratanavudhi Committee member

The Committee has performed the duties as entrusted by The Board of Directors and according to

the Audit Committee’s Charter which is in accordance with the Stock Exchange of Thailand’s guidelines for

the Audit Committee. Mrs. Kesaree Narongdej and Mrs. Raweepon Kuhiran served as consultants to the

Committee and both are experts in accounting and internal control.

In 2008 the Committee met on 10 occasions and all members attended all meetings. The work can

be summarized as follows:

1. Ensure accurate, adequate and reliable financial report.

The Committee reviewed the Company’s quarterly and annual financial statements for the year

2008 together with management responsible for preparing financial reports and the external auditors

who are responsible for expressing an opinion on the Company’s audited financial statements. The Committee

reviewed and received the analytic comments as well as advised recommendations and opinions on the

issues that are relevant to the financial reports.

2. Review and express opinion on connected transactions.

The Committee reviewed and gave opinion on connected transactions as well as reviewed the sufficiency

of the disclosure of these transactions in accordance with the requirement of the Stock Exchange of Thailand.

3. Ensure suitable and efficient internal control, risk management and internal audit systems.

The Committee examined the policy and management of risk management and determined the

sufficiency and effectiveness of internal control by examining results from internal audit reports which

include key business processes according to the approved audit plan as well as reviewing Control Self-Assessment

reports as per the State Audit Commission’s internal audit guidelines of B.E. 2544.

The Committee reviewed and approved a long term audit plan for year 2009 - 2011 and an annual

audit plan of the Office of the Internal Audit as well as approved a change of audit plan for year 2008 so that

it is better aligned with the Company’s current risks and situations. The Committee also recommended audit

practice and monitored the Office of the Internal Audit’s quarterly activity report.

AUDIT COMMITTEE’S REPORT

52-02-012_119-122 new25_V 3/26/09, 1:17 PM120


4. Ensure compliance with Securities and Exchange laws, regulations or the Stock Exchange of

Thailand, and other relevant laws.

The Committee met with the relevant executives and received reports from the Company Secretary

who is responsible for regulatory compliance monitoring.

5. Conduct a self-assessment.

The Committee evaluated 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 Committee assessed the

performance of its own as a whole committee and cross examining by individual basis.

6. Appoint the external auditor and determine compensation.

The Committee recommended to the Board of Directors to ask for approval at the annual general

meeting of shareholders the appointment of the Auditor General as the Company’s external auditor

for the year 2009.

In 2008, The Audit Committee met and performed its duties to which it was entrusted with utmost

care and attention. It provided opinions and recommendations based on independent expertise that is free

of conflict of interest. Conclusion from discussion with relevant executives, head of the Office of the Internal

Audit, and the Company’s external auditor, the Committee has determined that the Company’s financial

statements were prepared and sufficiently disclosed in accordance with generally accepted accounting

principles. Furthermore, it has determined that the Company’s internal control and risk management are

sufficient and appropriate. Furthermore the Company has performed in accordance with related laws and

regulations without material flaw.

Mr. Chaikasem Nitisiri

Chairman of the Audit Committee

52-02-012_119-122 new25_V 3/26/09, 1:18 PM121


No. 0022/0504 Office of the Auditor General

of Thailand

Rama VI Road, Phayathai,

Bangkok 10400, Thailand

Tel : 0 2273 9627

Fax : 0 2618 5783

E-mail : [email protected]

This letter is given to confirm that the English version of the Auditor’s Report together with the

consolidated financial statements for the years ended December 31, 2008 and 2007 of Thai Airways International

Public Company Limited and its subsidiary and the Company’s financial statements for the years ended

December 31, 2008 and 2007 of Thai Airways International Public Company Limited was translated by Thai

Airways International Public Company Limited. The Office of the Auditor General of Thailand reviewed the

aforementioned translated Auditor’s Report and financial statements and found that there were no substantial

differences of content from those of the Thai version.

Given on March 6, 2009

(khunying Jaruvan Maintaka)

Auditor General

52-02-012_119-122_V 3/24/09, 2:54 PM122


AUDITOR’S REPORT

TO : THE SHAREHOLDERS OF THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED

The Office of the Auditor General of Thailand has audited the accompanying consolidated balance

sheets of Thai Airways International Public Company Limited and its subsidiary and the balance sheets of

Thai Airways International Public Company Limited as at December 31, 2008 and 2007, 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 December 31, 2008 and 2007, 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.

Without gualifying an opinion on these financial statements, the office of the Auditor General of

Thailand would like to draw attention to Note 8.33 “Guideline to Resolve Liquidity Problem”, Note 8.31

“Contingent Liabilities”, and Note 8.35 “Events After the Balance Sheet Date”.

(Signed) Jaruvan Maintaka

(Khunying Jaruvan Maintaka)

Auditor General

(Signed) Dawan Wongphayak

(Dawan Wongphayak)

Senior Audit Specialist level 9

Office of the Auditor GeneralFebruary 23, 2009

52-02-012_123,125,126,128_V 3/24/09, 3:36 PM123


ASSETS

Current Assets

Cash and cash equivalents 8.1 7,531,047,543 25,813,370,034 7,489,025,061 25,459,894,270

Current investment 530,000,000 180,876,983 - -

Trade account receivables-net 8.2 15,828,787,561 18,778,977,501 15,793,218,252 18,731,965,198

Inventories and supplies-net 8.3 6,779,288,740 6,103,676,049 6,779,288,740 6,103,676,049

Other current assets 8.4 11,512,507,139 14,352,525,807 11,469,714,777 14,315,991,306

Total Current Assets 42,181,630,983 65,229,426,374 41,531,246,830 64,611,526,823

Non-Current Assets

Investments in associated and subsidiary companies 8.5.1 1,337,095,375 1,468,520,602 731,770,500 926,770,500

Other long-term investments 8.5.2 87,996,063 105,949,623 87,996,063 86,159,947

Property, Plant and Equipment-Net 8.7 207,063,975,232 207,152,807,792 207,031,025,112 207,096,129,851

Intangible assets-net 8.8 807,891,935 898,002,372 803,584,846 893,960,359

Deferred income taxes 8.9 6,405,772,675 3,976,402,761 6,388,074,822 3,964,088,339

Other non-current assets 8.10 1,650,221,989 1,444,207,614 1,650,221,989 1,444,207,614

Total Non-Current Assets 217,352,953,269 215,045,890,764 216,692,673,332 214,411,316,610

Total Assets 259,534,584,252 280,275,317,138 258,223,920,162 279,022,843,433

Thai Airways International Public Company Limited and Its SubsidiaryAs at December 31, 2008 and 2007

BALANCE SHEETS

Consolidated The Company

Units : Baht

Notes 2008 2007 2008 2007

The accompanying notes are an integral part of these financial statements.

52-02-012_124,127,129-131_V 3/24/09, 3:29 PM124


LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent Liabilities

Trade account payables 7,374,883,465 10,065,516,556 7,368,749,682 10,059,366,513Short-term loans 8.11 21,488,272,000 4,962,020,000 21,488,272,000 4,962,020,000Current portion of long-term loans

Debentures 8.15 7,500,000,000 11,500,000,000 7,500,000,000 11,500,000,000Long-term loans 8.12 572,000,000 2,697,444,000 572,000,000 2,697,444,000Liabilities under financial leases 8.13 10,153,590,708 9,112,226,002 10,153,590,708 9,112,226,002Promissory notes 8.14 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000

Provision 8.17.3 458,200,000 - 458,200,000 -Other current liabilities

Accrued expenses 15,757,105,163 17,364,579,002 15,734,092,813 17,339,342,733Accrued dividends 71,253,242 3,120,715,633 71,253,242 3,120,715,633Accrued income taxes 34,188,813 879,321,409 - 833,515,244Unearned transportation revenues 30,262,520,143 32,481,674,489 30,262,520,143 32,481,674,489Others 8.16 3,860,934,990 4,317,223,448 3,839,619,686 4,295,817,554

Total Current Liabilities 98,582,948,524 97,550,720,539 98,498,298,274 97,452,122,168

Non-Current LiabilitiesLong-term debts

Debentures 8.15 35,500,000,000 36,000,000,000 35,500,000,000 36,000,000,000Long-term loans 8.12 4,831,296,000 1,355,400,000 4,831,296,000 1,355,400,000Liabilities under financial leases 8.13 65,335,908,882 70,571,831,245 65,335,908,882 70,571,831,245Promissory notes 8.14 750,000,000 1,800,000,000 750,000,000 1,800,000,000

Staff pension fund 8.29 4,777,978,683 4,972,103,862 4,777,978,683 4,972,103,862Long-term provisions 8.17 3,874,319,870 - 3,874,319,870 -

Total Non-Current Liabilities 115,069,503,435 114,699,335,107 115,069,503,435 114,699,335,107

Total Liabilities 213,652,451,959 212,250,055,646 213,567,801,709 212,151,457,275

Shareholders’ EquityShare capital 8.19

Authorized1,700.00 million ordinary shares par value of Baht 10 each 17,000,000,000 17,000,000,000 17,000,000,000 17,000,000,000

Issued and paid-up1,698.90 million ordinary shares par value of Baht 10 each 16,989,009,500 16,989,009,500 16,989,009,500 16,989,009,500

Premium on share capital 15,637,625,278 15,638,075,844 15,637,625,278 15,638,075,844Unrealised gain on current investment-available-for-sale securities - (1,318) - -Retained earnings

AppropriatedLegal reserve 8.20 1,700,000,000 1,700,000,000 1,700,000,000 1,700,000,000

Unappropriated 11,276,187,481 33,422,721,112 10,329,483,675 32,544,300,814

Total Company Shareholders’ Equity 45,602,822,259 67,749,805,138 44,656,118,453 66,871,386,158Minority Interests 279,310,034 275,456,354 - -

Total Shareholders’ Equity 45,882,132,293 68,025,261,492 44,656,118,453 66,871,386,158

Total Liabilities and Shareholders’ Equity 259,534,584,252 280,275,317,138 258,223,920,162 279,022,843,433

(Signed) ACM Narongsak Sangapong (Signed) Ngamnit Sombutpibool(Narongsak Sangapong) (Ngamnit Sombutpibool)Senior Executive Vice President Executive Vice PresidentCorporate Secretariat Finance and AccountingActing President



Units : Baht

Notes 2008 2007 2008 2007

52-02-012_123,125,126,12#2CA432 3/26/09, 1:20 PM125


Revenues

Passenger and excess baggage 164,318,701,819 160,558,009,434 164,318,701,819 160,558,009,434

Freight 25,840,755,700 26,056,631,651 25,840,755,700 26,056,631,651

Mail 912,990,339 978,550,784 912,990,339 978,550,784

Other activities 9,045,532,774 9,315,968,095 8,667,504,802 8,942,912,485

Interest income 493,287,861 745,465,199 478,228,682 732,767,866

Other incomes 8.22 1,994,352,142 2,266,634,839 2,140,917,687 2,446,377,360

Total Revenues 202,605,620,635 199,921,260,002 202,359,099,029 199,715,249,580

Expenses

Personnel 30,606,524,742 33,114,383,072 30,578,304,238 33,081,447,770

Fuel and oil 89,459,872,853 62,611,279,160 89,459,872,853 62,611,279,160

Flight service expenses 19,938,599,141 20,155,065,690 19,938,599,141 20,155,065,690

Inventories and supplies 8,826,777,548 9,849,677,796 8,826,777,548 9,849,677,796

Crew expenses 6,542,134,756 6,745,831,044 6,542,134,756 6,745,831,044

Aircraft maintenance and overhual costs 10,847,783,197 11,837,125,214 10,847,783,197 11,837,125,214

Depreciation and amortisation 20,281,081,576 18,242,975,148 20,254,971,296 18,209,835,830

Lease of aircraft and spare parts 3,650,964,476 6,758,173,256 3,650,964,476 6,758,173,256

Sales and advertising costs 6,932,244,544 7,265,263,758 6,883,688,984 7,215,521,757

Insurance 751,270,159 894,267,833 751,270,159 894,267,833

Damages arising from Antitrust/ Competition Law 8.17.3 4,290,169,870 - 4,290,169,870 -

Other operating expenses 8.23 8,921,951,844 9,175,693,365 8,843,484,995 9,107,232,264

Remuneration for Board of Directors 8.21 20,901,442 25,701,133 19,739,503 24,099,785

Aircraft impairment losses 8.24 4,425,587,951 - 4,425,587,951 -

Other expenses 8.25 687,514,868 1,429,756,506 882,507,010 1,429,756,506

Losses on foreign currency exchange 4,471,388,154 651,609,955 4,473,610,566 654,861,733

Share of losses (profits) from investments by the equity method 65,137,572 (100,490,301) - -

Total Expenses 220,719,904,693 188,656,312,629 220,669,466,543 188,574,175,638

Profits (Losses) before Finance Costs and Income Tax Expenses (18,114,284,058) 11,264,947,373 (18,310,367,514) 11,141,073,942

Finance costs 5,485,353,628 4,926,520,724 5,485,264,531 4,926,424,177

Income tax expenses (income) 8.26 (2,285,253,584) 1,910,097,895 (2,345,266,641) 1,853,237,165

Net profits (losses) (21,314,384,102) 4,428,328,754 (21,450,365,404) 4,361,412,600

Profits (Losses) Attributable to:

Equity holders of the parent (21,379,451,415) 4,368,420,962 (21,450,365,404) 4,361,412,600

Minority interest 65,067,313 59,907,792 - -

(21,314,384,102) 4,428,328,754 (21,450,365,404) 4,361,412,600

Basic earnings per share 8.27

Net profits (losses) per share (12.58) 2.57 (12.63) 2.57

Thai Airways International Public Company Limited and Its SubsidiaryFor the years ended December 31, 2008 and 2007

STATEMENTS OF INCOME


Units : Baht

Notes 2008 2007 2008 2007(restated) (restated)



52-02-012_123,125,126,12#2CA432 3/26/09, 1:21 PM126


16,988,961,500 15,643,806,138 (102,355) 1,700,000,000 32,325,311,256 66,657,976,539 213,313,684 66,871,290,223

- - - - (769,320,449) (769,320,449) - (769,320,449)

- - - - 371,012,971 371,012,971 - 371,012,971

- - - - 90,279,083 90,279,083 - 90,279,083

- - - - 92,408,518 92,408,518 - 92,408,518

16,988,961,500 15,643,806,138 (102,355) 1,700,000,000 32,109,691,379 66,442,356,662 213,313,684 66,655,670,346

- - 101,037 - - 101,037 82,667 183,704

- - - - 4,368,420,962 4,368,420,962 59,907,792 4,428,328,754

- - - - (3,058,021,710) (3,058,021,710) - (3,058,021,710)

48,000 24,000 - - - 72,000 - 72,000

- (5,754,294) - - - (5,754,294) - (5,754,294)

16,989,009,500 15,638,075,844 (1,318) 1,700,000,000 33,420,090,631 67,747,174,657 273,304,143 68,020,478,800

16,989,009,500 15,638,075,844 (1,318) 1,700,000,000 33,422,721,112 67,749,805,138 275,456,354 68,025,261,492

- - - - (2,630,481) (2,630,481) (2,152,211) (4,782,692)

16,989,009,500 15,638,075,844 (1,318) 1,700,000,000 33,420,090,631 67,747,174,657 273,304,143 68,020,478,800

- - 1,318 - - 1,318 1,078 2,396

- - - - (21,379,451,415) (21,379,451,415) 65,067,313 (21,314,384,102)

- - - - 53,692 53,692 - 53,692

- - - - (764,505,427) (764,505,427) (59,062,500) (823,567,927)

- (450,566) - - - (450,566) - (450,566)

16,989,009,500 15,637,625,278 - 1,700,000,000 11,276,187,481 45,602,822,259 279,310,034 45,882,132,293

Units : Baht

Share Capitalissued andfully paid

Premiumon sharecapital

Unrealised gains(losses) onavailable-for-sale

securities

LegalReserve

RetainedEarnings

Unappropriated

MinorityInterest Total

Equity Holders of the Parent

CONSOLIDATED

Notes




STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Balance as at January 1, 2007

(before adjustment)

- Adjustment of staff welfare fees

- Adjustment of passenger revenues

- Adjustment of airport tax revenues

collected from passengers

- Adjustment of income tax


(after adjustment)

- Unrealised loss on current investment -

available-for-sale securities

Add Net profits

Less Dividends paid

Add Issued share capital

Less Share offering expense

Balance as at December 31, 2007


(before adjustment)

- Adjustment of the recognition of

subsidiary’ s R/E


(after adjustment)

- Unrealised gains on current investment -

available-for-sale securities

Add Net profits (losses)

Add Dividends return 8.18

Less Dividends paid 8.18



Total

52-02-012_124,127,129-13#2C34E9 3/26/09, 1:15 PM127


Notes

Units : BahtTHE COMPANY

TotalShare Capital

issued andfully paid

Premiumon sharecapital

LegalReserve

RetainedEarnings

Unappropriated

16,988,961,500 15,643,806,138 1,700,000,000 31,456,529,801 65,789,297,439

- - - (769,320,449) (769,320,449)

- - - 371,012,971 371,012,971

- - - 90,279,083 90,279,083

- - - 92,408,518 92,408,518

16,988,961,500 15,643,806,138 1,700,000,000 31,240,909,924 65,573,677,562

16,988,961,500 15,643,806,138 1,700,000,000 31,240,909,924 65,573,677,562

- - - 4,361,412,600 4,361,412,600

- - - (3,058,021,710) (3,058,021,710)

48,000 24,000 - - 72,000

- (5,754,294) - - (5,754,294)

16,989,009,500 15,638,075,844 1,700,000,000 32,544,300,814 66,871,386,158

16,989,009,500 15,638,075,844 1,700,000,000 32,544,300,814 66,871,386,158

- - - (21,450,365,404) (21,450,365,404)

8.18 - - - 53,692 53,692

8.18 - - - (764,505,427) (764,505,427)

- (450,566) - - (450,566)

16,989,009,500 15,637,625,278 1,700,000,000 10,329,483,675 44,656,118,453

Balance as at January 1, 2007 (before adjustment)

- Adjustment of staff welfare fees

- Adjustment of passenger revenues

- Adjustment of airport tax revenues collected from passengers

- Adjustment of income tax

Balance after adjustment

Balance as at January 1, 2007 (after adjustment)

Add Net profits

Less Dividends paid

Add Issued share capital




Add Net profits (losses)

Add Dividends return

Less Dividends paid





52-02-012_123,125,126,12#2CA432 3/26/09, 1:20 PM128


Cash Flows from Operating Activities

Profits (Losses) before Income Tax (23,599,637,686) 6,338,426,649 (23,795,632,045) 6,214,649,765

Adjustment to reconcile net profit to cash

provided by (paid from) operating activities :

Depreciation and amortisation 20,281,081,576 18,242,975,148 20,254,971,295 18,209,835,830

Dividends income - - (139,350,155) (148,274,825)

Income from investments by equity method 64,262,571 (101,260,301) - -

Stock dividends - - - (19,197,750)

Interest income (493,287,861) (745,465,199) (478,228,682) (732,767,866)

Interest expenses 5,485,264,531 4,926,424,177 5,485,264,531 4,926,424,177

Gains on sales of assets (373,250,235) (885,941,287) (373,258,092) (885,941,287)

Gain on current investments-available-for-sale securities (1,950,749) (4,597,289) - -

Losses on foreign currency exchange 4,487,906,443 1,360,578,902 4,489,093,120 1,361,505,572

Provision for obsolete inventories and supplies 107,199,417 39,318,744 107,199,417 39,318,744

Doubtful accounts 44,671,440 110,834,247 33,539,086 102,279,928

Impairment loss of investment - - 195,000,000 -

Impairment loss of aircraft 4,425,587,951 - 4,425,587,951 -

Impairment loss of assets 324,252,785 1,194,021,162 324,252,785 1,194,021,162

Operating profit before changes in operating assets

and liabilities 10,752,100,183 30,475,314,953 10,528,439,211 30,261,853,450

Decrease (increase) in operating assets :

Trade account receivables 2,329,559,738 (354,600,334) 2,334,892,205 (347,504,200)

Inventories and supplies (782,812,108) (1,003,276,783) (782,812,108) (1,003,276,783)

Prepaid expenses and deposits 341,860,133 (249,250,460) 339,845,303 (248,662,102)

Tax refund A 1,497,087,076 (1,116,514,183) 1,497,087,076 (1,116,514,183)

Other current assets 1,462,788,186 (1,087,155,017) 1,469,789,625 (1,027,766,137)

Deferred Income Taxes (19,630,890) - (19,630,890) -

Other assets (74,348,668) (69,165,421) (74,348,668) (69,165,421)

Deferred charges (337,967,569) 704,965 (337,967,569) 704,965

Increase (decrease) in operating liabilities :

Trade account payables (2,714,295,249) 3,119,382,211 (2,714,276,359) 3,127,278,807

Accrued expenses and other current liabilities (1,407,882,929) 1,130,581,815 (1,405,568,418) 1,122,823,908

Staff pension fund (194,125,179) 339,975,368 (194,125,179) 339,975,368

Unearned transportation revenue (2,195,772,880) 7,291,978,677 (2,195,772,880) 7,291,978,677

Long-term provisions 3,874,319,870 - 3,874,319,870 -

Payment of income tax (1,159,715,355) (3,703,338,430) (1,084,751,240) (3,656,238,331)

Net Cash from Operating Activities 11,371,164,359 34,774,637,361 11,235,119,979 34,675,488,018


STATEMENTS OF CASH FLOWS


Units : Baht



52-02-012_124,127,129-131_V 3/24/09, 3:30 PM129


Cash Flows from Investing Activities

Cash paid for acquisition of fixed assets B (21,402,982,898) (11,983,570,760) (21,401,097,704) (11,979,518,021)

Cash paid for intangible assets (136,093,966) (590,808,212) (135,323,766) (590,090,612)

Cash received from transferring down payment of

aircraft and aircraft spare parts 316,941,565 497,142,420 316,941,565 497,142,420

Cash received from sales of assets 702,391,458 1,909,467,157 702,391,458 1,909,467,157

Interest income 471,360,021 703,319,191 457,572,094 692,506,381

Dividends income 67,162,655 148,274,825 139,350,155 148,274,825

Investments decrease (increase) (638,054) 84,760,449 (638,054) (3,630,051)

Cash received from current investments-available-for-

sale securities (327,380,195) (74,227,000) - -

Net Cash Used in Investing Activities (20,309,239,414) (9,305,641,930) (19,920,804,252) (9,325,847,901)

Cash Flows from Financing Activities

Cash received from debentures 7,000,000,000 7,500,000,000 7,000,000,000 7,500,000,000

Cash received from short-term loans 52,272,020,000 4,701,300,000 52,272,020,000 4,701,300,000

Cash received from long-term loans 4,528,433,104 3,475,357,656 4,528,433,104 3,475,357,656

Cash received from issuing ordinary shares - 48,000 - 48,000

Cash received from premium on ordinary shares (450,566) (5,730,294) (450,566) (5,730,294)

Cash paid for repayment of short-term loans (35,692,020,000) (12,844,467,900) (35,692,020,000) (12,844,467,900)

Cash paid for repayment of debentures (11,500,000,000) - (11,500,000,000) -

Cash paid for repayment of long-term loans (15,348,935,222) (8,166,814,500) (15,348,935,222) (8,166,814,500)

Cash paid for repayment of promissory notes (1,050,000,000) (1,050,000,000) (1,050,000,000) (1,050,000,000)

Cash paid for loan interest (5,619,049,171) (3,028,261,356) (5,619,049,171) (3,028,261,356)

Dividends paid (3,872,976,626) (2,845,431,522) (3,813,914,126) (2,798,181,522)

Net Cash from (used in) Financing Activities (9,282,978,481) (12,263,999,916) (9,223,915,981) (12,216,749,916)

Increase in cash and cash equivalents (18,221,053,536) 13,204,995,515 (17,909,600,254) 13,132,890,201

Increase in the effect from changing in exchange rate

on cash and cash equivalents (61,268,955) 240,352,298 (61,268,955) 240,352,298

Cash and cash equivalents at the beginning of the periods 25,813,370,034 12,368,022,221 25,459,894,270 12,086,651,771

Cash and Cash Equivalents at the End of the Periods C 7,531,047,543 25,813,370,034 7,489,025,061 25,459,894,270


Units : Baht



STATEMENTS OF CASH FLOWS


52-02-012_124,127,129-131_V 3/24/09, 3:30 PM130


A. Tax Refund - Consolidated and the Company

Units : Million Baht

2008

Proceeds from P.N.D 50 for the year 2005/06 455.97

Proceeds from P.N.D 50 for the year 2006/07 1,034.71

Adjustment of tax refund 29.09

Tax refund for the year 2006/07 (additional submitting) (22.68)

1,497.09

2007

Adjustment of tax refund for the year 2005/06 (31.44)

Book Value of tax refund for the year 2006/07 (1,085.07)

(1,116.51)

B. Property, Plant and Equipment

Consolidated

During the year 2008, the Company bought property, plant and equipment under financial lease amount of THB 3,600.34

million and cash payment amount of THB 21,402.98 million, total cost amount of THB 25,003.32 million.



The Company





C. Cash and Cash Equivalents



2008 2007 2008 2007

Cash on hand and balances with banks 7,592.32 25,573.02 7,550.30 25,219.54

Short-term investments - - - -

Cash and cash equivalents as previously reported 7,592.32 25,573.02 7,550.30 25,219.54

Effect of exchange rate changes (61.27) 240.35 (61.27) 240.35

Cash and cash equivalents as reported 7,531.05 25,813.37 7,489.03 25,459.89

Note to Statement of Cash Flows


52-02-012_124,127,129-13#2C34E9 3/26/09, 1:05 PM131


1. THE CHANGE IN ACCOUNTING PERIOD

On January 9, 2007, the Company has registered to the Department of Business Development, Ministry of Commerce,

for the change in its accounting period beginning on January 1 to December 31 according to the calendar year. The first of

accounting period to be changed was October 1 to December 31, 2007. This was also approved by the Revenue Department

on April 30, 2007. The change is to facilitate the evaluation of corporate governance and for a comparative purpose

comparing to the listed companies in the Stock Exchange as well as other airlines using the same accounting period.

Due to the change in accounting period, the Company restated the previous financial statements in order to compare

with the same accounting period of the financial statements for the year ended December 31, 2008. Therefore, the

Company adjusted the recognition of war risk insurance and fuel surcharges in passenger and excess baggage revenues to

match the period in which transactions incurred. Moreover, the Company adjusted taxes collected from passengers, which

the outstanding balances were over 3 years and were recognised in accounting period from October 1, 2006 to September

30, 2007 and October 1 to December 31, 2007, as average revenues in each quarter. In addition, the Company adjusted

welfare fees as average expenses in each quarter as well as relevant company income taxes. The asserted adjustments

resulted in the increase in net profits of the Company financial statements for the year ended December 31, 2007 increased

by THB 215.62 million, as well as unappropriated retained earnings as at January 1, 2007 decreased by THB 215.62 million.

2. BASIC OF FINANCIAL STATEMENT PREPARATION

The consolidated and the Company financial statements have been prepared in accordance with generally accepted

accounting principles under the Accounting Act B.E. 2543 (2000) being those Thai accounting standards which issued by

the Accounting Profession Act B.E. 2547 (2004) and the financial reporting requirements of the Securities and Exchange

Commission, Thailand under the Securities and Exchange Act B.E. 2535 (1992).

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.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 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 (%)

over 6 months to 1 year 50

over 1 year to 2 years 75

over 2 years 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.

3.2 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.


NOTES TO THE FINANCIAL STATEMENTS

52-02-012_132-157_V 3/24/09, 3:31 PM132


- 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.

3.3 Investments

3.3.1 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.

3.3.2 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.

3.3.3 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.

3.4 Property, Plant and Equipment and Depreciation

3.4.1 Aircraft and aircraft under financial leases

3.4.1.1 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. As for the aircraft and aircraft under financial leases, which the

Company has taken the delivery since the fiscal year of 2006/07, and the existing aircraft having the same as those aircraft

type are calculated the depreciation on a straight-line basis over the estimated useful life of 15 years with a salvage value of

10% of cost.

3.4.1.2 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.

3.4.1.3 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.

3.4.2 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.

3.4.3 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.

3.4.4 Leasehold buildings are amortised as expense over a lease term of 10-30 years.

3.4.5 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, improvements to passenger seats, and 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.

3.5 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.

52-02-012_132-157_V 3/24/09, 3:31 PM133


3.6 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.

3.7 Deferred Charges

3.7.1 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.

3.7.2 Loan guarantee premiums are recorded as deferred charge and amortised as expenses over the period of

loans in each accounting period.

3.8 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.

3.9 Revenue Recognition

3.9.1 Passenger and excess baggage revenues:

3.9.1.1 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.

3.9.1.2 Unused tickets and service orders are recognised as revenue after 2 years.

3.9.1.3 Deferred revenues for war risk insurance and fuel surcharges are recognised as revenues when

the outstanding balances are over 3 years.

3.9.2 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.

3.9.3 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.

3.9.3.1 Unredeemed awards are recognised as revenue after 3 years.

3.9.3.2 Redemptions with Star Alliance partners involve interline billing arrangements and costs per

mile specified in partner agreements. Revenues are recognised when transportation is provided.

3.9.3.3 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.

3.9.4 Revenues from business units, Aircraft Maintenance Services, Ground Customer Services, Ground Support

Equipment Services and Cargo and Mail Commercial Services are recognised when services are provided. Revenues from

Catering Services are recognised at sales. As for revenues from supporting activities such as Sale on Board and Thai Shop are

recognised at sales but revenues from Dispatch Services are recognised when services are provided.

52-02-012_132-157_V 3/24/09, 3:31 PM134


3.9.5 Other revenues are recognised on an accrual basis.

3.10 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.

3.11 Foreign Currency Transactions

Foreign currency transactions incurred during the year are translated into Baht at exchange rates calculated

from the average exchange rate of the Bank of Thailand and commercial banks in the month in which the transaction

occurs. Except for foreign loans, the Company uses the exchange rate of the Bank of Thailand at cash received date.

Assets and liabilities denominated in foreign currency at year-end are translated 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.

3.12 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.

3.13 Deferred Income Tax

The Company’s tax expenses are 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.

3.14 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.

3.15 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 Swap Confirmation to

exchange the principal amount and interest at maturity according to the contract. The arising different will be recorded as

interest expenses in an income statement. For the Forward Contracts, the Company will recognise in its financial statements

at the end of forward contracts. The arising difference will be recorded as gain or loss on foreign currency exchange 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.

52-02-012_132-157_V 3/24/09, 3:31 PM135


4. EFFECT OF CHANGE IN ACCOUNTING ESTIMATION

The Company has changed the estimated useful life of aircraft and engines, which are received since the fiscal year

2006/07 and the existing aircraft having the same as those aircraft type, from 20 years to 15 years beginning from January

1, 2008. This is to facilitate the Company having a new aircraft fleet which is suitable for the status of present competitive

airline industry. Moreover, the operating expenses of the Company can be reduced. As a result the depreciation for the year

ended December 31, 2008 increased by THB 1,386.63 million, compared with the depreciation previously computed by the

former estimated useful life.

5. REVISED ACCOUNTING STANDARDS WHICH ARE EFFECTIVE FOR THE CURRENT YEAR

The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding

Accounting Standards. The Notifications mandate the use of the following new Accounting Standards, which become

effective for the financial statements for fiscal year beginning on or after January 1, 2008.

TAS 25 (revised 2007) Cash Flow Statements

TAS 29 (revised 2007) Leases

TAS 31 (revised 2007) Inventories

TAS 33 (revised 2007) Borrowing Costs

TAS 35 (revised 2007) Presentation of Financial Statements

TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors

TAS 41 (revised 2007) Interim Financial Reporting

TAS 43 (revised 2007) Business Combinations

TAS 49 (revised 2007) Construction Contracts

TAS 51 (revised 2007) Intangible Assets

The Company follows the above accounting standards that do not have any significant impact on the consolidate

and the Company financial statements.

6. REVISED ACCOUNTING STANDARDS WHICH ARE NOT EFFECTIVE FOR THE CURRENT YEAR

TAS 36 (revised 2007) Impairment of Assets

TAS 54 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations

These accounting standards will become effective for the financial statements for fiscal years beginning on or after

1 January 2009. The management has assessed the effect of these accounting standards and believes that they will not

have any significant impact on the financial statements for the year in which they are initially applied.

7. ACCOUNTING PRESENTATION IN FINANCIAL STATEMENT

The Company has reclassified the items in income statement to comply with Thai Accounting Standard No. 35

(revised 2007) Presentation of Financial Statements, which is effective for the accounting periods beginning on or

after January 1, 2008. The Company restated its income statement for the year 2007 (January 1 - December 31, 2007) for

comparative purpose by separate disclosure categories and amounts for each item shown as follows:

7.1 Flight operation expenses are separately shown as:

7.1.1 Flight service expenses

7.1.2 Crew expenses

7.1.3 Aircraft maintenance and overhaul costs

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7.2 Sales and advertising expenses composed of commission expenses, sales incentive, advertising and publicity

expenses, booking fees, internet reservation, reimbursed revenue from the reservation, transit passenger expenses, and

credit card collection fees.

7.3 Loss (gain) on foreign currency exchange mostly arised from translating foreign loans as well as foreign financial

assets and liabilities at the year-end into Baht term.

7.4 Finance costs consist of interest expenses, bank charges and other borrowing expenses.

8. SUPPLEMENTARY INFORMATION

8.1 Cash and Cash Equivalents



2008 2007 2008 2007

Cash - Domestic 8.78 16.23 8.78 16.23

Cash - Abroad 27.57 21.33 27.57 21.33

Bank Deposits - Domestic 3,495.71 6,335.13 3,453.69 5,981.65

Bank Deposits - Abroad 3,998.99 19,440.68 3,998.99 19,440.68

Total 7,531.05 25,813.37 7,489.03 25,459.89

8.2 Trade Account Receivables - Net

Trade account receivables are classified according to their stages of delinquency, as expressed in the

schedule below.



2008 2007 2008 2007

Period of overdue

Not over 6 months 15,773.90 18,738.24 15,734.76 18,691.23

Over : 6 months to 1 year 99.52 43.01 85.11 43.01

Over : 1 year to 2 years 63.58 76.95 63.58 76.93

Over : 2 years 1,320.56 1,302.58 1,291.70 1,273.72

17,257.56 20,160.78 17,175.15 20,084.89

Less Allowance for doubtful accounts (1,428.77) (1,381.80) (1,381.93) (1,352.92)

Trade account receivables - net 15,828.79 18,778.98 15,793.22 18,731.97

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8.3 Inventories and Supplies - Net



2008 2007 2008 2007

Aircraft spare parts 5,218.28 4,487.28 5,218.28 4,487.28

Less Provision for obsolescence (10% of the year-end balance) (521.83) (448.73) (521.83) (448.73)

Aircraft spare parts - Net 4,696.45 4,038.55 4,696.45 4,038.55

Vehicle spare parts and ground support equipments 275.44 247.04 275.44 247.04

Slow moving aircraft spare parts and spare parts for sale 1,976.45 1,872.28 1,976.45 1,872.28

Less Provision for obsolescence

(33.33% of incurred balance during the period) (1,859.73) (1,831.68) (1,859.73) (1,831.68)

Slow moving aircraft spare parts and spare parts for sale - Net 116.72 40.60 116.72 40.60

Fuel and oil for aircraft 252.14 1,047.38 252.14 1,047.38

Goods for sales 241.21 198.02 241.21 198.02

Cabin supplies 313.93 276.05 313.93 276.05

Supplies and other consumables 23.36 20.27 23.36 20.27

Stationery and office supplies 111.61 104.50 111.61 104.50

Inventories and spare parts in transit 748.43 131.27 748.43 131.27

Total inventories and supplies 1,690.68 1,777.49 1,690.68 1,777.49

Obsolete and damaged inventories for disposal 24.16 18.10 24.16 18.10

Less Provision for obsolescence (100%) (24.16) (18.10) (24.16) (18.10)

Obsolete and damaged inventories for disposal - Net - - - -

Total inventories and supplies - Net 6,779.29 6,103.68 6,779.29 6,103.68

Total inventories and supplies at year-end 9,185.01 8,402.19 9,185.01 8,402.19

Less Total provision for obsolete inventories and supplies (2,405.72) (2,298.51) (2,405.72) (2,298.51)

Total inventories and supplies - Net 6,779.29 6,103.68 6,779.29 6,103.68

8.4 Other Current Assets



2008 2007 2008 2007

Prepaid expenses and deposits 4,738.35 4,850.36 4,732.22 4,842.22

Tax refund 247.59 1,519.77 247.59 1,519.77

Cash and fixed deposits of pension fund 4,549.93 4,563.38 4,549.93 4,563.38

Others 1,976.64 3,419.02 1,939.97 3,390.62

Total 11,512.51 14,352.53 11,469.71 14,315.99

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8.5 Investments

Consolidated


Percentage of Investments Income on

Name of Company Shareholding Cost method Equity method investments

2008 2007 2008 2007 2008 2007 2008 2007

8.5.1 Investments using the equity method

Royal Orchid Hotel (Thailand)

Public Company Limited 24 24 225.00 225.00 300.25 261.03 42.36 29.35

(Market value for the year 2008 amount of

THB 675.00 million and the year 2007

amount of THB 922.50 million)

Donmuang International Airport Hotel

Company Limited 40 40 48.00 48.00 189.84 193.81 (3.97) (10.16)

Bangkok Aviation Fuel Services

Public Company Limited 22.6 22.6 115.19 115.19 582.71 551.41 85.44 101.90

(Market value for the year 2008 amount of

THB 610.49 million and the year 2007

amount of THB 1,290.09 million)

Phuket Air Catering Company Limited 30 30 30.00 30.00 71.35 53.22 27.13 14.46

Suvarnabhumi Airport Hotel Company Limited 30 30 305.33 305.33 192.95 223.35 (30.40) (25.99)

Nok Airlines Company Limited 39 39 195.00 195.00 - 185.70 (185.70) (9.07)

Less Allowance for impairment of

Nok Airlines Company Limited (195.00) - - - - -

Total investments using the equity method 1,337.10 1,468.52 (65.14) 100.49

8.5.2 Other long-term investments

stated at cost

Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -

Aeronautical Radio of Thailand Limited 2.7 2.6 17.96 16.89 - -

SITA Investment Certificate - - 33.47 33.76 - -

Trade Siam Company Limited 3.5 3.5 1.75 1.75 - -

(paid 25% of authorized share capital)

SITA Information Networking Computing - - 31.83 30.77 - -

Other Shares - - 2.99 2.99 0.88 0.77

Investment in private fund - - - 19.79 - -

Less Allowance for impairment of

Fuel Pipeline Transportation Limited (133.00) (133.00) - -

Total other long-term investments 88.00 105.95 0.88 0.77

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The Company


Percentage of Investments Dividend Income

Name of Company Shareholding Cost method

2008 2007 2008 2007 2008 2007

8.5.1 Investments using the cost method

Subsidiary Company

Thai-Amadeus Southeast Asia Company Limited 55 55 8.25 8.25 72.19 -

Associated Companies

Royal Orchid Hotel (Thailand) Public Company Limited 24 24 225.00 225.00 3.15 94.95

(Market value for the year 2008 amount of THB 675.00 million and

the year 2007 amount of THB 922.50 million)

Donmuang International Airport Hotel Company Limited 40 40 48.00 48.00 - 2.40

Bangkok Aviation Fuel Services Public Company Limited 22.6 22.6 115.19 115.19 54.14 63.35

(Market value for the year 2008 amount of THB 610.49 million and

for the year 2007 amount of THB 1,290.09 million)

Phuket Air Catering Company Limited 30 30 30.00 30.00 9.00 6.00

Suvarnabhumi Airport Hotel Company Limited 30 30 305.33 305.33 - -

Nok Airlines Company Limited 39 39 195.00 195.00 - -

Less Allowance for impairment of Nok Airlines Company Limited (195.00) - - -

Total 723.52 918.52 66.29 166.70

Total investments using the cost method 731.77 926.77 138.48 166.70

8.5.2 Other long-term investments

stated at cost

Fuel Pipeline Transportation Limited 8.4 8.4 133.00 133.00 - -

Aeronautical Radio of Thailand Limited 2.7 2.6 17.96 16.89 - -

SITA Investment Certificate - - 33.47 33.76 - -

TRADESIAM Company Limited 3.5 3.5 1.75 1.75 - -

(paid 25% of authorized share capital)

SITA Information Networking Computing - - 31.83 30.77 - -

Other Shares - - 2.99 2.99 0.88 0.77

Less Allowance for impairment of Fuel Pipeline Transportation Limited (133.00) (133.00) - -

Total other long-term investments 88.00 86.16 0.88 0.77

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8.5.3 Financial Data Summary of Subsidiary and Associated Companies


Name of Company Assets Liabilities Income Gains (Losses)

Subsidiary Company

Thai-Amadeus Southeast Asia Company Limited 706.10 85.41 397.42 144.59

Associated Companies

Royal Orchid Hotel (Thailand) Public Company Limited 1,443.05 192.03 249.48 10.07

Donmuang International Airport Hotel Company Limited 513.69 39.10 147.54 (7.16)

Bangkok Aviation Fuel Services Public Company Limited 5,386.39 2,806.88 1,289.53 351.80

Phuket Air Catering Company Limited 248.60 10.75 176.23 64.38

Suvarnabhumi Airport Hotel Company Limited 2,400.44 1,757.29 759.46 (91.41)

Nok Airlines Company Limited 536.71 616.65 2,843.28 (377.93)

The Company used the financial statements of associated companies as at September 30, 2008 to record

the investment by equity method in the consolidated financial statement and by cost method in the Company’s financial

statement. Because the associated companies cannot summit their financial statements to the Company in time for

accounting closing. This is no material impact to the Company.

8.6 Related Parties The Company

8.6.1 Major Shareholders


2008 2007

Ministry of Finance

Foreign loans via the Ministry of Finance 4,911.57 9,014.86

8.6.2 Subsidiary Company


2008 2007

Sales Purchase Sales Purchase

Thai-Amadeus Southeast Asia Company Limited 12.99 - 24.54 -


2008 2007

Account Account Account Account

Receivables Payables Receivables Payables

Thai-Amadeus Southeast Asia Company Limited 0.76 - 2.62 -

52-02-012_132-157_V 3/24/09, 3:31 PM141


8.6.3 Associated Companies


2008 2007

Sales Purchase Sales Purchase

Royal Orchid Hotel (Thailand) Public Company Limited - 14.85 - 20.27

Donmuang International Airport Hotel Company Limited - 5.48 - 3.41

Bangkok Aviation Fuel Services Public Company Limited 0.06 377.37 0.03 396.07


Suvarnabhumi Airport Hotel Company Limited - 101.69 0.03 60.04

Nok Airlines Company Limited 2,022.38 - 1,963.23 -


2008 2007

Account Account Account Account

Receivables Payables Receivables Payables

Royal Orchid Hotel (Thailand) Public Company Limited - - - -

Donmuang International Airport Hotel Company Limited - - - 0.01

Bangkok Aviation Fuel Services Public Company Limited - 27.33 0.01 35.22


Suvarnabhumi Airport Hotel Company Limited - - - 0.42

Nok Airlines Company Limited 123.57 - 37.78 -

The Company purchases goods and services at a market price from related parties on normal commercial

term as unrelated parties.

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8.7 Property, Plant and Equipment - Net

Consolidated


Aircraft Aircraft under Aircraft Land buildings Other plant Total

financial leases spare parts and development and equipment

Cost

As at January 1, 2008 139,361.79 142,363.58 28,262.77 19,034.90 28,435.57 357,458.61

- Adjust/Transfer 3,046.24 (3,832.13) 24.00 (144.55) 301.63 (604.81)

- Increased asset 17,316.08 4,395.62 1,744.71 155.79 1,393.61 25,005.81

- Sold (2,969.59) (29.37) (732.69) (280.22) (603.32) (4,615.19)

As at December 31, 2008 156,754.52 142,897.70 29,298.79 18,765.92 29,527.49 377,244.42

Accumulated depreciation

As at January 1, 2008 79,806.98 25,125.50 17,740.21 8,993.79 18,639.32 150,305.80

- Depreciation 7,131.02 7,895.62 2,005.60 858.01 2,089.48 19,979.73

- Adjust/Transfer (567.74) - 32.47 - (10.73) (546.00)

- Sold (2,674.54) (29.37) (430.91) (251.45) (598.40) (3,984.67)

As at December 31, 2008 83,695.72 32,991.75 19,347.37 9,600.35 20,119.67 165,754.86

Impairment 950.40 3,475.19 - - - 4,425.59

Net book value

As at December 31, 2007 59,554.81 117,238.08 10,522.56 10,041.11 9,796.25 207,152.81

As at December 31, 2008 72,108.40 106,430.76 9,951.42 9,165.57 9,407.82 207,063.97

The Company


Aircraft Aircraft under Aircraft Land buildings Other plant Total

financial leases spare parts and development and equipment

Cost

As at January 1, 2008 139,361.79 142,363.58 28,262.77 19,034.90 28,182.69 357,205.73

- Adjust/Transfer 3,046.24 (3,832.13) 24.00 (144.55) 312.50 (593.94)

- Increased asset 17,316.08 4,395.62 1,744.71 155.79 1,391.73 25,003.93

- Sold (2,969.59) (29.37) (732.69) (280.22) (603.32) (4,615.19)

As at December 31, 2008 156,754.52 142,897.70 29,298.79 18,765.92 29,283.60 377,000.53

Accumulated depreciation

As at January 1, 2008 79,806.98 25,125.50 17,740.21 8,993.79 18,443.12 150,109.60

- Depreciation 7,131.02 7,895.62 2,005.60 858.01 2,063.88 19,954.13

- Adjust/Transfer (567.74) - 32.47 - 0.13 (535.14)

- Sold (2,674.54) (29.37) (430.91) (251.45) (598.40) (3,984.67)

As at December 31, 2008 83,695.72 32,991.75 19,347.37 9,600.35 19,908.73 165,543.92

Impairment 950.40 3,475.19 - - - 4,425.59

Net book value

As at December 31, 2007 59,554.81 117,238.08 10,522.56 10,041.11 9,739.57 207,096.13

As at December 31, 2008 72,108.40 106,430.76 9,951.42 9,165.57 9,374.87 207,031.02

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In this fiscal year, there are 89 aircraft in the Company’s fleet consisting of 54 own aircraft, 26 aircraft under

financial leases and 9 aircraft under operating leases.

Aircraft spare parts consist of aircraft engines and other aircraft spare parts.

Other plants and equipment-net amount of THB 9,407.82 million (consolidated) and THB 9,374.87 million

(the Company) have already included the work in progress of Suvarnabhumi project amount of THB 17.15 million

consisting of building, facilities, equipment and information technology which support to the services at Suvarnabhumi.

The Company uses buildings and equipment amount of THB 37,706.54 million that are now fully depreciated.

Financial leased assets are aircraft under financial leases which the purchase contracts are made in USD

currency but the financial leases are made in EUR, JPY and USD currency.

8.8 Intangible Assets-net



Cost

As at January 1, 2008 1,073.74 1,069.17

- Assets increase 136.08 135.31

As at December 31, 2008 1,209.82 1,204.48

Accumulated amortisation

As at January 1, 2008 175.74 175.21

- Amortisation 226.19 225.69

As at December 31, 2008 401.93 400.90

Net book value

As at December 31, 2007 898.00 893.96

As at December 31, 2008 807.89 803.58

8.9 Deferred Income Taxes



2008 2007 2008 2007

Contribution to staff pension fund 1,050.57 1,195.11 1,050.57 1,195.11

Allowance for obsolete inventories 721.72 689.56 721.72 689.56

Allowance for doubtful accounts 484.79 470.71 470.74 462.05

Allowance impairment in value of assets 1,728.31 345.11 1,728.31 345.11

Estimated accrual expenses 1,742.16 476.74 1,742.16 476.74

Frequent flyer program (ROP) 345.97 461.17 345.97 461.17

Deferred loss on foreign currency exchange 313.41 313.61 313.41 313.61

Others 18.84 24.39 15.19 20.74

Total 6,405.77 3,976.40 6,388.07 3,964.09

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Currency

8.10 Other Non-Current Assets



2008 2007 2008 2007

Deferred charges 1,506.71 1,375.04 1,506.71 1,375.04

Others 143.51 69.17 143.51 69.17

Total 1,650.22 1,444.21 1,650.22 1,444.21

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.

8.11 Short-term Loans Consolidated and the Company

Loan Currency Baht Equivalent (Million)

2008 2007 2008 2007

THB 17,980,000,000 - 17,980.00 -

EUR - 100,000,000 - 4,962.02

JPY 9,000,000,000 - 3,508.27 -

Short-term loans 21,488.27 4,962.02

As at December 31, 2008, the Company borrowed the short-term loans for an aggregate of THB 17,980.00 million

from 7 domestic banks - Krung Thai Bank Public Company Limited, Kasikornbank Public Company Limited, Bangkok Bank

Public Company Limited, TMB Bank Public Company Limited, Islamic Bank of Thailand, Siam Commercial Bank Public

Company Limited, and Export - Import Bank of Thailand. In addition, the Ministry of Finance borrowed a short-term foreign

loans in the form of Euro Commercial Paper (ECP) and loaned such loans to the Company amount of THB 3,508.27 million.

So, the total of the short-term loans are THB 21,488.27 million.

8.12 Long-term Loans Consolidated and the Company


2008 2007 2008 2007

JPY - 9,000,000,000 - 2,697.44

USD 40,000,000 40,000,000 1,403.29 1,355.40

THB 4,000,000,000 - 4,000.00 -

Total Long-term loans 5,403.29 4,052.84

Less Current portion of long-term loans 572.00 2,697.44

Net Long-term loans 4,831.29 1,355.40

Currency

52-02-012_132-157_V 3/24/09, 3:31 PM145


Currency

At the year-end, long-term loans of the Company consisted of the foreign loans borrowed via the Ministry of

Finance amount of THB 1,403.29 million and loans from the Government Saving Bank amount of THB 4,000.00 million,

totalling to THB 5,403.29 million. As at December 31, 2008, such long-term loans have been transferred to a current portion

of long-term loans amount of THB 572.00 million, leaving the balance of long-term loans amount of THB 4,831.29 million.

8.13 Liabilities Under Financial Leases Consolidated and the Company


2008 2007 2008 2007

JPY 39,941,610,829 47,592,068,844 15,569.56 14,264.10

USD 147,853,326 203,417,535 5,187.05 6,892.80

EUR 1,102,341,130 1,179,502,493 54,732.89 58,527.15

Total liabilities under financial leases 75,489.50 79,684.05

Less Current portion of financial leases 10,153.59 9,112.22

Net Liabilities under financial leases 65,335.91 70,571.83

The Company has entered into the financial leases with buyout options. The Company had financial leases with6 foreign financial institutions. The accounting policy for recording aircraft under financial leases is described in Note 3.8.As at December 31, 2008, the Company has outstanding obligations totalling THB 89,647.02 million under financial leasesfor 26 aircraft with maturities ranging from 2009 to 2020. After deducting interest expenses due amount of THB 14,157.53million, the principal balance of obligations under the Company’s financial leases is THB 75,489.50 million. As at December31, 2008, the amount of THB 10,153.59 million has been transferred to a current portion of financial lease, leaving thebalance of liabilities under financial lease amount of THB 65,335.91 million.

8.14 Promissory NotesThe Company received the loans 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-monthfixed deposits at the Government Saving Bank plus 2.90% to 3.00% per annum. In this fiscal year, the brought forwardbalance was THB 2,850 million and the amount of THB 1,050 million was repaid during the period, leaving a balance ofTHB 1,800 million. As at December 31, 2008, these promissory notes were transferred to current portion of long-term loansin the amount of THB 1,050 million, leaving the long-term liabilities balance amount of THB 750 million.

8.15 DebenturesAccording 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 had already issued itsdebentures 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 had already been transferred to the Company’s account. On November 12, 2007,the Securities and Exchange Commission (SEC) permitted the Company issuing and offering of THB debentures No.1/2550for an aggregate of THB 7,500 million which were offered in 2 tranches. The first tranch amount of THB 3,000 millionand the second tranch amount of THB 4,500 million had already been transferred to the Company account, totalling THB7,500 million. In addition, the Company had issued its debentures No. 1/2551 for an aggregate of THB 7,000 million onOctober 2, 2008. Such debentures were offered in 3 tranches. The first tranch amount of THB 3,455.29 million, the secondtranch amount of THB 987.92 million and the third tranch amount of THB 2,556.79 million, totalling to THB 7,000 million,had already been transferred to the Company’s account. On May 12 and October 8, 2008, the Company redeemed the duedebentures amount of THB 6,000 and 5,500 million, respectively. As at December 31, 2008, the amount of THB 7,500 millionwas transferred to a current portion of long-term loans, leaving the balance of long-term loans amount of THB 35,500million. The details are as follows:

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Interest Rate Amount

Pay every 6 months (MTHB) Redemption date

(%)

The first 7 3.70 4,500.00 October 8, 2010

The second 5 4.65 7,500.00 October 20, 2009

7 5.20 4,500.00 October 20, 2011

10 5.80 3,000.00 October 20, 2014

15,000.00

The third 6 4.67 6,000.00 May 12, 2011

10 5.19 3,000.00 May 12, 2015

9,000.00

The 1/2550 3 4.51 3,000.00 November 22, 2010

5 5.04 4,500.00 November 22, 2012

7,500.00

The 1/2551 1.5 4.77 3,455.29 April 2, 2010

3 5.05 987.92 October 2, 2011

5 5.50 2,556.79 October 2, 2013

7,000.00

The balance as at December 31, 2008 43,000.00

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.

8.16 Current Liabilities - Others



2008 2007 2008 2007

Airport fees 1,612.72 2,335.13 1,612.72 2,335.13

Deferred income 2.95 2.80 2.68 2.53

Taxes payable 740.39 686.81 738.20 684.33

Fringe benefits-field office staff 524.91 423.25 524.91 423.25

Other account payables 979.96 869.23 961.11 850.58

Total 3,860.93 4,317.22 3,839.62 4,295.82

8.17 Long-Term Provisions

8.17.1 The Court of First Instance has sentenced the Company to pay compensatory damages claimed by the

employees in the amount of THB 15.35 million. At present, the Company has appealed the case to the Court of Appeal.

8.17.2 The Court of First Instance has sentenced the Company to pay compensatory damages for the cancellation

the purchase of wines claimed by Ming Yeng International Co., Ltd. in the amount of THB 27 million. The Company’s lawyer

is going to appeal the case.

Tenor

(Year)

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8.17.3 In this accounting period, the Company has set up the reserve for damages and fines for the Antitrust andCompetition cases and investigations in the amount of THB 4,290.17 million. On December 31, 2008, the amount wastransferred to short-term provision in the amount of THB 458.20 million, leaving the balance of long-term provision amountof THB 3,831.97 million. The provision is calculated by approximation from the estimated damages and fines figured by thelawyers in each region taking into account the facts that the lawyers are aware of and in according with the followingcriteria:

1. The above estimated damages and fines are calculated from the lowest fine rates that may be used incase the courts rule or sentence that the Company has committed guiltiness as alleged or claimed.

2. The above estimated fine amount is approximation by the authority of each country that investigationand litigation are in process, but excluding the civil class actions of both cargo and passenger cases in U.S., as in such bothcases the civil courts are on the process of initiation of litigation, and there are no claim statements that seek the proof ofdamages of the claimants.

3. The sentence or decision on the cases shall be given separately in the next forth coming differentfiscal years.

4. The above provision may be substantially deviate from the truth due to:4.1 In the countries where investigations are initiated and no allegation are filed yet , the is no clear

fact as to whether an allegation will be filed against the Company. And if such an allegation is filed against the Company, inwhich locations that such allegation may cover. The turn over amount of such locations which shall be base for calculationof a fine is unaware then.

4.2 The determination of a fine is up to the discretion of the deciding body. Other facts of the casesmay need to be considered by such deciding body.

4.3 Before the decision is made, there may be a compromise of the fine amount, depending on thepolicy of each country and the case aspects.

8.18 Dividends Payment the CompanyAccording to the 2nd Annual General Shareholders’ Meeting for the year 2007 (October 1 - December 31, 2007) held

on April 9, 2008 approved the Company to pay the dividends for the period from October 1 - December 31, 2007 operationat THB 0.45 per share for an aggregate of THB 764.51 million. But the Company paid the dividends amount of THB 764.50million because there are 22,100 nominee shares having no rights to receive the dividends amount of THB 0.01 million and24,304 shares having no right to receive the dividends for 2007 operation of the year ended September 30, 2007 announcedto pay the dividends on December 27, 2007 amount of THB 0.04 million, totalling THB 0.05 million which has no rights toreceive the dividends.

8.19 Share CapitalAs at December 31, 2008, 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.

8.20 Legal ReserveAs at December 31, 2008, the Company’s legal reserve balance was THB 1,700 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.

8.21 Directors’ Remuneration



2008 2007 2008 2007

Meeting Allowance 17.41 10.44 16.25 9.40Bonus 3.49 15.26 3.49 14.70

Total 20.90 25.70 19.74 24.10

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Besides the monetary remuneration, the Board of Directors of the Company also receive ticket benefits. In the

fiscal year 2008 and 2007, they issued the tickets for themselves and related parties amount of 458 and 385 tickets with the

value of THB 49 and 36.52 million, respectively, estimated from the full fare value as of December 2008 in those travel

classes.

8.22 Other Incomes



2008 2007 2008 2007

Gains on sales of assets 373.26 885.94 373.26 885.94

Dividends from subsidiary and associated companies - - 138.48 166.70

Revenue from other services of Aircraft Maintenance Department 307.70 237.11 307.70 237.11

Revenue from airport fees collected from passengers 660.48 360.23 660.48 360.23

Others 652.91 783.35 661.00 796.40

Total 1,994.35 2,266.63 2,140.92 2,446.38

8.23 Other Operating Expenses



2008 2007 2008 2007

Rentals and utilities 2,989.07 3,095.35 2,989.07 3,095.35

Office supplies 287.92 334.79 287.92 334.79

Repair of building and equipment 484.25 433.73 484.25 433.73

Outsource services 1,148.70 1,415.91 1,148.70 1,415.91

Consultant and service fees 447.41 413.79 447.41 413.79

Legal fee for Antitrust/ Competition Law 73.44 - 73.44 -

Computer service expenses 395.47 422.20 395.47 422.20

Travelling and transportation expenses 699.27 576.34 699.27 576.34

Concession fees 401.01 588.85 401.01 588.85

Passenger claim expenses 404.86 317.78 404.86 317.78

Others 1,590.55 1,576.95 1,512.08 1,508.49

Total 8,921.95 9,175.69 8,843.48 9,107.23

8.24 Aircraft Impairment Loss

The Resolution of the Board of Directors held on June 6, 2008 approved the Company to decommission and sell

4 Airbus A340-500 aircraft, non-stop flights to New York and Los Angeles. The Company has ceased the New York flights since

July 1, 2008. In the meantime, such aircraft are on the sale process. In January 2009, it appears that the net book value of

those aircraft is higher than an appraisal value of The Aircraft Value Analysis Company. Therefore, the Company recorded

the aircraft impairment loss amount of THB 4,425.59 million consisting of 1 own aircraft amount of THB 950.40 million and

3 aircraft under financial lease amount of THB 3,475.19 million.

Text

Text

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Text

Text

8.25 Other Expenses



2008 2007 2008 2007

Impairment loss of assets 324.25 1,194.02 519.25 1,194.02

Other expenses 363.26 235.74 363.26 235.74

Total 687.51 1,429.76 882.51 1,429.76

8.26 Company Income Tax



2008 2007 2008 2007

Tax expense (income) from taxable profit for the period 122.44 2,287.37 59.09 2,230.03

Add(less): deferred tax asset/ liability from temporary

different increase/ decrease (2,407.69) (377.27) (2,404.36) (376.79)

Net tax expense (income) (2,285.25) 1,910.10 (2,345.27) 1,853.24

8.27 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.

Consolidated

For the years ended December 31, 2008 and 2007

Gains No. of Shares Earnings per share

2008 2007 2008 2007 2008 2007

Million Baht Million Baht Million Shares Million Shares Baht Baht

Basic earnings per share

Net Profits (losses) attributable to

ordinary shareholders (21,379.45) 4,368.42 1,698.90 1,698.90 (12.58) 2.57

The Company


Gains No. of Shares Earnings per share

2008 2007 2008 2007 2008 2007

Million Baht Million Baht Million Shares Million Shares Baht Baht

Basic earnings per share

Net Profits (losses) attributable to

ordinary shareholders (21,450.37) 4,361.41 1,698.90 1,698.90 (12.63) 2.57

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8.28 Financial Information by Segment Consolidated

8.28.1 Business Segments

Statements of Income



Inter - Segment

Revenues

2008 2007 2008 2007 2008 2007 2008 2007

(restated) (restated)

Air transportation 191,072.45 187,593.19 - - 191,072.45 187,593.19 (10,182.49) 10,800.73

Business Units 7,976.10 8,156.31 14,476.93 15,891.63 22,453.03 24,047.94 (1,066.75) (706.63)

Other activities 1,069.44 1,159.65 400.27 404.24 1,469.71 1,563.89 296.95 139.62

Eliminations - - (14,877.20) (16,295.87) - - - -

Operating profits (losses) (10,952.29) 10,233.72

Share of net profits (losses) from

subsidiary and associated companies (65.14) 100.49

Interest expenses-net (4,992.06) (4,181.05)

Losses on foreign currency

exchange (4,471.39) (651.61)

Other revenues (3,118.75) 836.88

Minority interests (65.07) (59.91)

Income taxes 2,285.25 (1,910.10)

Net profits (losses) (21,379.45) 4,368.42

Assets and Liabilities

As At December 31, 2008 and 2007


Current Assets Non-Current Assets Total Assets

2008 2007 2008 2007 2008 2007

Air transportation 38,582.51 61,880.90 207,120.36 203,827.18 245,702.87 265,708.08

Business Units 617.80 497.83 10,177.63 11,125.89 10,795.43 11,623.72

Other activities 651.14 620.52 54.96 92.82 706.10 713.34

Non-allocated assets 2,330.18 2,230.18 - - 2,330.18 2,230.18

Total 42,181.63 65,229.43 217,352.95 215,045.89 259,534.58 280,275.32


Current Liabilities Non-Current Liabilities Total Liabilities

2008 2007 2008 2007 2008 2007

Air transportation 97,302.25 95,056.18 114,959.78 114,588.37 212,262.03 209,644.55

Business Units 885.35 2,070.30 109.72 110.97 995.07 2,181.27

Other activities 85.41 101.22 - - 85.41 101.22

Non-allocated liabilities 309.94 323.02 - - 309.94 323.02

Total 98,582.95 97,550.72 115,069.50 114,699.34 213,652.45 212,250.06

Revenues Total Revenues Segment Results

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Segment results derive from segment revenues net of segment costs and operating 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.

8.28.2 Geographical Segments


2008 2007

Domestic Revenues

Transportation 12,166.27 11,763.06

Business units 7,976.09 8,156.31

Other activities 1,069.44 1,159.66

Total domestic revenues 21,211.80 21,079.03

Foreign Transportation Revenues

Regional Asia 62,604.95 69,665.76

Europe 49,164.40 50,925.38

North Pacific 5,249.29 7,303.42

Australia & New Zealand 16,931.35 17,670.64

Africa 1,193.75 1,341.22

Total foreign transportation revenues 135,143.74 146,906.42

Charter revenues and others 8,290.14 7,525.25

Insurance surcharge from passengers 2,466.56 2,872.84

Fuel surcharge from passengers 33,005.74 18,525.62

Interest income 493.29 745.47

Other income 1,994.35 2,266.63

Total 202,605.62 199,921.26

8.29 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:


2008 2007

Current assets 4,760.27 4,956.07

Others 66.33 52.35

Total 4,826.60 5,008.42

Other current liabilities 48.62 36.32

Pension fund 4,777.98 4,972.10

Total 4,826.60 5,008.42

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As at December 31, 2008, the fund balance was THB 4,777.98 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 173.69 million, consisting of

contributions at a rate equivalent to 10% of employee salaries in the amount of THB 258.12 million net of the amounts to

match the Company’s obligation of THB 84.43 million.

8.30 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 1,155.06 million in this

fiscal year.

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).

8.31 Contingent Liabilities

The Company has contingent liabilities, not presented in the financial statements, as follows:


2008 2007

Letters of guarantee issued by banks - Domestic 3.25 2.89

Letters of guarantee issued by banks - Abroad 106.24 69.08

The Company as defendant in

Labour dispute cases 1,658.09 1,619.06

Damage claims cases 1,859.49 1,308.92

Total 3,627.07 2,999.95

Moreover, the other contingent liabilities are as follows :

1. The Company still has the competition law infringement. A group of 35 cargo shippers have brought an

action against the Company before the Civil Court of New York alleging that the Company jointly with other 38 airlines fixed

fuel surcharge, war risk surcharge and other fees in violation of the Sherman Antitrust Act of 1890 and the Clayton Antitrust

Act of 1914 and European Union laws causing damages to them. They sought the court’s order for compensation by the

Company.

2. A group of passengers has brought actions against the Company before the Civil Court in Los Angles and San

Francisco totally 19 cases alleging that conspiracy among airlines to fix, maintain, and /or stabilize prices for long haul

passenger transpacific flights to and from the United States (Price Fixing in respect of Transpacific carriers) in violation of the

Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914. The Judicial Panel on Multi-district Litigation has

ordered to combine the 19 cases to be considered by the court at San Francisco as a single case. In both cases (at the Civil

Court of New York and at San Francisco) are civil class action where at the time of complaints, the Plaintiffs have not

determined the amount of compensation and shall request to the courts later.

In both litigation, the Company has retained the expert law firms and has joined the Joint Defense Group. The

cases are now being considered by the courts. The damages in both cases are yet to be determined until the Company would

have been found guilty. In case that the courts rule that the Company is guilty, the courts shall determine the damages and

compensations and penalty which, under the law, could be up to 3 times of the damages proven by the Plaintiffs. At present,

the amount of the compensatory damages in the US. cases cannot be determined.

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3. The Company received the Statement of Objections from the Commission of the European Communities

alleging that the Company and other 27 airlines infringed the Treaty establishing the European Community (the EC Treaty)

by coordinating pricing behavior in the provision of air freight services on a global basis with respect to the fuel surcharge,

the security surcharge, the war surcharge, freight rates and the payment of commission to forwarders on surcharges causing

damages to air freight shippers. The law sets forth penalty provisions in a fine of 30% of the turnover of freight service

transport to and from and within EU in the preceding business year before decision times the number of years of

infringement but not exceed 10% of the total worldwide turnover of a company in the preceding business year before

decision. The Company has retained an expert law firm to take charges of the case. At present, the Company is not aware

of the amount of the fine as to which turnover shall be calculated. The case is now being considered by the Commission.

In case that the Commission considers that the Company is guilty, the Company shall be fined in what amount, and from

which turnover, are yet to be determined.

4. At present, there is a claim against the Company following the investigation made by the New Zealand

Commerce Commission (NZCC). The NZCC has brought suit against the Company and other 13 airlines before the court of

Auckland alleging that the Company jointly with other airlines fixed fuel surcharge and security surcharge in violation of

Commercial Act of New Zealand. The pled seeks the court to order the Company to pay a fine and legal expenses. At the time

of submission, however, NZCC has not specified the fine and expense amounts. The amounts are yet to be determined by

the court.

5. The cases where the Company has been investigated by the U.S., Australia, Republic of Korea, are now being

scrutinized by each country authority. The Company has retained local law firms in each country to coordinate with the

authority of each country. At present, no claims or legal actions have been sought against the Company.

The legal fees and expenses for all antitrust /competition cases have been recorded as expenses in the amount

of THB 73.44 million, and the estimated damages that may be arising has been recorded as expenses in the amount of

THB 4,290.17 million regarding Note to financial statement No. 8.17.3.

8.32 Disclosure of Financial Instruments The Company

8.32.1 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 in the present and the future.

The following tables show weighted average interest rates and the amount of financial liabilities.

2008

Weighted Outstanding Balances Outstanding Balances

Average Floating Interest Rates Fixed Interest Rates Total

Interest Rate Less than 1 year 1 to 5 years Over 5 years Less than 1 year 1 to 5 years Over 5 years

USD 5.89 850.25 1,788.22 - 1,231.29 2,720.59 - 6,590.35

JPY 0.96 3,002.59 10,636.29 1,930.67 3,508.27 - - 19,077.82

EUR 4.48 3,639.66 15,617.08 21,739.38 1,429.81 6,039.56 6,267.41 54,732.90

THB 3.71 5,122.00 3,038.00 1,140.00 21,980.00 29,500.00 6,000.00 66,780.00

Total 12,614.50 31,079.59 24,810.05 28,149.37 38,260.15 12,267.41 147,181.07

Financial

Liabilities


52-02-012_132-157_V 3/24/09, 3:33 PM154


Financial

Liabilities

Units : Million Baht2007

Weighted Outstanding Balances Outstanding Balances

Average Floating Interest Rates Fixed Interest Rates Total

Interest Rate Less than 1 year 1 to 5 years Over 5 years Less than 1 year 1 to 5 years Over 5 years

USD 6.20 773.75 2,548.41 - 1,109.05 2,461.60 1,355.40 8,248.21

JPY 1.06 2,292.96 9,329.99 2,641.15 2,697.44 - - 16,961.54

EUR 4.28 3,539.14 15,133.95 24,728.62 6,359.35 5,906.07 7,822.04 63,489.17

THB 4.50 1,050.00 1,800.00 - 11,500.00 30,000.00 6,000.00 50,350.00

Total 7,655.85 28,812.35 27,369.77 21,665.84 38,367.67 15,177.44 139,048.92

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. As at December 31, 2008, the

portion of the Company’s debt after swap with floating to fixed interest rate is 36 : 64.

At the moment, THAI has the total of 6 IRS transactions, swapping debt with floating interest rate to one

with fixed interest rate. Two of these transactions are in JPY currency, the remaining 4 in EUR. As at December 31, 2008, IRS

transactions’ total notional amount was THB 18,336.26 millions of which interest exchange payments are done quarterly.

The two transactions in JPY currency will expire in 2013 and the four transactions in EUR currency will expire in 2017.

8.32.2 Foreign Currency Exchange Rate Risk

The Company generates revenues in more than 40 currencies, mainly in USD, THB, EUR and JPY while

incurring liabilities mainly in 4 major currencies : USD, JPY, EUR and THB as well as expenses mainly in USD 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 manage this risk by increasing the matching of currency

between the revenue and expenses and to arrange for loan and restructure loan to coincide with net operating cash flow,

and at the same time, to decrease foreign currency debt risk partially by relying on Thai baht loan in order to decrease the

fluctuation of gain or loss from foreign exchange in the financial statement. In addition, The Company has a policy to enter

into Cross Currency Swap (CCS) when the financial market benefits to the Company. As at December 31, 2008, the proportion

of the Company’s debts after swap in each currency i.e. USD : EUR : JPY : THB is 3 : 43 : 15 : 39. Gradually, the Company also

used hedging strategy named Forward Contracts, by providing various degrees of participation in favorable exchange rate

movement to hedge our future obligation that has underlying exposures.

At present, the Company has 2 CCS transactions, swapping debt in USD currency with floating interest rate

to EUR currency with fixed rate. As at December 31, 2008, the two CCS transactions’ total notional amount was THB 2,751.77

millions of which exchange payments, both principal and interest, are done quarterly. The two CCS transactions will expire

in 2011.

Foreign Currency Liabilities

2008 2007

Currency Due within Due 1 to Due over Due within Due 1 to Due over

1 year 5 years 5 years 1 year 5 years 5 years

USD 2,081.54 4,508.81 - 1,882.80 5,010.01 1,355.40

JPY 6,510.86 10,636.29 1,930.67 4,990.40 9,329.99 2,641.15

EUR 5,069.47 21,656.64 28,006.79 9,898.49 21,040.02 32,550.66


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8.32.3 Fuel Price Risk

Fuel price fluctuation depends on supply and demand of global economic situation and political

uncertainty worldwide. Fuel price has impact on the Company’s operating result as fuel plays vital factor in airline industry.

The Company has implemented jet fuel price hedging in order to reduce the risk of fuel price volatility, to protect the value

of shareholder and is not to be treated as a profit-marking venture.

This was in accordance with the Company’s policy, specifying that fuel hedging be conducted on a regular

basis at not more than 50 percent of annual fuel consumption, whereby the tenor of each contract would be for a period of

not more than one year. The Company selected a financial tool that was suitable for the market situation by establishing the

lowest and highest prices of jet fuel, whereby the Company would incur the difference in USD currency, should the price of

jet fuel falls below the lowest price. On the contrary, the Company would be compensated should the price of jet fuel rises

higher than the highest price. In this fiscal year, the Company’s hedge portion account to 26.18 percent of its annual fuel

consumption. As at December 31, 2008, the Company still has are obligation from full hedging until March 2009 amount of

1 million barrels of Jet fuel which account to 22.22 percent of its estimated fuel consumption for said period whereby the

average lowest and the highest jet fuel prices are at USD 92.60 per barrel and USD 114.80 per barrel, respectively.

8.32.4 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 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 the carrying

value.

Investments in related companies not having market prices are stated at cost net of allowance of

impairment. As for the investments in related companies having market prices are stated at 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.

8.33 Guideline to Resolve Liquidity Problem

The Company has reviewed its business plan to resolve liquidity problem by arranging the Business Improvement

Plan in order to conform to the current situation. The Company focuses on increasing cash flow, that is increasing quality of

revenues and improving cost management, adjusting investment plan as well as restructuring both debts and financial

structure to conform to its investment plan for acquiring the government support fund. Such plan has been approved

in principle and guideline by the Company’s Board of Directors at the Board meeting held on February 11, 2009. The

resolution was for the Company to prepare additional details in order to resubmit to the Board of Directors for final

approval before submitting to the Ministry of Transportation and State Enterprise Policy Office (SEPO), the Ministry of Finance.

8.34 Contractual Obligations

8.34.1 Obligation to Purchase Aircraft

The Company has a payment obligation to purchase aircraft amount of THB 60,983.66 million.

8.34.2 Leases and obligations of aircraft

8.34.2.1 The Company has obligations from entering into operating leases amount of USD 105.29 million

or approximately to THB 3,693.78 million (exchange rate USD 1 : THB 35.0824).

8.34.2.2 The Company sent the notification to exercise the purchase option for one aircraft after expiry

date of operating leases, a Boeing 777-200. This was due to the need to utilize of such aircraft and no plan to remove those

aircraft from the Company’s fleet.

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8.34.2.3 On May 14, 2008, the Company’s Board of Directors has a resolution to extent the operating lease

of Boeing 737-400 No. 8-10 for 6 years further and to return Boeing 737-400 No. 11 at the end of the lease period from

January 15, 2009.

8.34.3 Obligations to Repair and Maintenance Agreement with Airline Customer

On August 3, 2008, fire occurred on Boeing 747-400 of airline customer while receiving maintenance

services at the Company’s maintenance facilities, Don Muang Airport. Following the incident, the Company’s Aviation

Insurers have appointed lawyers to handle and coordinate with airline customer to find out the cause of fire as well as costs

of repair in this respect. The investigation on the proximate cause of damage is still under processes and there is no

conclusion at this stage. At the present, The Company has not yet received any claim notification from this incident.

The Company’s Aviation Insurers already put up the reserve and defending costs at this stage in the amount

of USD 12 million or approximately to THB 421 million. In case the Company has to be responsible for this incident then the

Company’s Aviation Insures will indemnify for all sums that the Company is legally liable.

8.34.4 Obligation of the Annual Welfare Fee

The Board of Directors meeting held on February 11, 2009 has a resolution not to pay the 2008 annual

welfare fee. However, because of the effort of the Company employees to solve the problem impacting the Company’s

operation and pass through it, the Company will reconsider to pay the annual welfare fee when the situation and the

Company’s operation improve.

8.35 Events After the Balance Sheet Date

8.35.1 The Company acquired additional funds amount of THB 9,504.91 million which can be summarized as

follows:

- On January 7, 2009, the Company borrowed a 1-year short-term loan from the Ministry of Finance in

the form of Euro Commercial Paper (ECP) using as Bridge Financing amount of USD 33.30 million or approximately THB

1,164.91 million. Such loan is to finance the purchase of one Boeing 777-200 under the operating lease. The Company

exercised the purchase option for this aircraft on January 9, 2009.

- On January 8, 2009, the Company has entered into a Sale and Buy Back Agreement with Islamic Bank

of Thailand in the amount of THB 2,500 million with 5-year maturity. The Company received this credit amount of THB

2,250 million on the same date. For the rest of THB 250 million, the Company will receive after the repayment of the

short-term loan.

- On January 20, 2009, the Company issued its debentures No. 1/2552 for an aggregate of THB 4,790

million offered to specific investors (not more than 10 investors). The debentures were offered in 4 tranches - Series 1

amount of THB 170 million with 3-year tenor at an interest rest rate of 5.30% per annum, Series 2 amount of THB 720

million with 5-year tenor at an interest rate of 5.45% per annum, Series 3 amount of THB 300 million with 7-year tenor at an

interest rate of 5.60% per annum, and Series 4 amount of THB 3,600 million with 10-year tenor at an interest rate of 6.00%

per annum.

- On February 4, 8 and 17, 2009, the Company borrowed the short-term loans from the Company’s

pension funds amount of THB 400, 300 and 600 million, respectively.

8.35.2 The Company borrowed short-term loans for repayment of existing short-term loans amount of THB 9,930

million which can be summarized as follows:

- On January 9, 2009 amount of THB 2,000 million and on January 12, 2009 amount of 1,000 million

with 3 - month maturities.

- On January 23, 2009 amount of THB 6,930 million with 1 - month maturity.

8.36 Approval of Financial Statements

These financial statements were approved by the Audit Committee, the Authorized Board of Directors, on

February 23, 2009.

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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 December 31, 2008 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%

Company Names Business Type Share Type Percentof Interest

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)-7632-7497-9, 66 (0)-7632-7500-6Fax. 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 510.00 22.59171/2 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


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REFERENCES

Securities Registrar THAILAND SECURITIES DEPOSITORY CO., LTD.62 Ratchadapisek Road, Khlong Toei, Bangkok 10110Tel. 66 (0) 2229-2800, 66 (0) 2229-2888, 66 (0) 2654-5599Fax. 66 (0) 2359-1262-3

Debenture Holders’ Representative 1/2546 KASIKORNBANK PLC.Securities Service DepartmentFl.20, 1 Soi Kasikornthai, Ratburana RoadRatburana, Bangkok 10140Tel. 66 (0) 2470-3687, 66 (0) 2470-1986 Fax. 66 (0) 2470-3684

Debenture Registrar 1/2546 KASIKORNBANK PLC.Securities Service DepartmentFl.20, 1 Soi Kasikornthai, Ratburana RoadRatburana, Bangkok 10140Tel. 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 10330Tel. 66 (0) 2665-9129 Fax. 66 (0) 2655-9001

Debenture Registrar 1/2547 SIAM COMMERCIAL BANK PLC.Corporate Trust Operations DivisionBuilding 2, Fl.3, 1060 Phetchaburi Tat Mai Road,Mukkasun, Ratchatawee Bangkok 10400Tel. 66 (0) 2256-2323-27 Fax. 66 (0) 2256-2405

Debenture Holders’ Representative 1/2548 BANKTHAI PLC.44 Langsuan Road, Lumpini, PathumwanBangkok 10330Tel. 66 (0) 2626-7000 Fax. 66 (0) 2626-7543

Debenture Registrar 1/2548 TMB BANK PLC.Registrar and Paying Agent393 Silom Road, Soi 7Bangrak, Bangkok 10500Tel. 66 (0) 2230-5575, 66 (0) 2230-5304 Fax. 66 (0) 2230-6093

Debenture Registrar 1/2550 TMB BANK PLC.Registrar and Paying Agent393 Silom Road, Soi 7Bangrak, Bangkok 10500Tel. 66 (0) 2230-5575, 66 (0) 2230-5304 Fax. 66 (0) 2230-6093

Debenture Holders’ Representative 1/2550 TMB BANK PLC.Registrar and Paying Agent393 Silom Road, Soi 7Bangrak, Bangkok 10500Tel. 66 (0) 2230-6295, 66 (0) 2230-5647 Fax. 66 (0) 2230-6093

Auditor OFFICE OF THE AUDITOR GENERAL OF THAILANDRama 6 Road, Phayathai, Bangkok 10400Tel. 66 (0) 2273-9674-91 Fax. 66 (0) 2618-5769-70

52-02-012_158-168_V 3/24/09, 3:44 PM159

BOARD OF DIRECTORS

Mr. Surachai TansitpongChairmanEducation- Master of Public Administration (MPA.)

National Institute of Development AdministrationExperience- Deputy Permanent Secretary, Ministry of Transport- Director-General, The Department of Rural Roads- Deputy Director-General, Department of Public WorksPresent Positions- Permanent Secretary, Ministry of Transport

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, 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. Chaikasem Nitisiri2nd Vice ChairmanIndependent DirectorEducation- LL.M. Columbia University, U.S.A.Experience- Deputy Attorney General- Director-General, Department of Legal Counsel- Director-General, Department of Attorney General LitigationPresent Positions- Attorney General, Office of the Attorney General- Director and Executive Board Chairman Government Housing Bank- Vice-President of the Bar Committee


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Mr. Rangsan SaengsookIndependent DirectorEducation- Ph.D. (Honorary Degree) in Technology, Moscow State Aviation Institute (MAI),

Russian Federation (1997)Experience- President, Ramkhamhaeng University- Director, Provincial Electric Authority- Advisor to the President of The Senate (Legal)Present Positions- Officer in Charge, Faculty of Fine and Applied Arts


Mr. Visit LimpranaIndependent DirectorEducation- Master of Economics (Political Economics) Chulalongkorn UniversityExperience- Advisor to the Board of Agriculture Products of the Thai Chamber of

Commerce & Board of Trade of Thailand- Advisor to the Minister of the Ministry of Agriculture and Cooperatives- Advisor to the Minister of the Ministry of Industry ThailandPresent Positions- Managing Director, Phufa Shop, The Office of Her Royal Highness,

Princess Maha Chakri Sirindhorn’s Projects- Vice President of Food Industry Club, The Federation of Thai Industries- Vice Secretarial of the Federation of Thai Industries- Managing Director, Artchit International Pepper and Spice Co., Ltd.

Mr. Amornsuk NoparumpaIndependent DirectorEducationOf Lincoln’s Inn, Barrister-at-Law, LondonExperience- Senior Executive Vice President, Bank of Ayudhya Public Company Limited- First Executive Vice President and Senior Legal Advisor,

Bank of Ayudhya Public Company Limited- Director and Audit Committee, Regional Container Lines

Public Company LimitedPresent Positions- Senior Advisor, Bank of Ayudhya Public Company Limited- Director and Chairman of the Audit Committee, L.P.N.

Development Public Company Limited- Chairman of the Board, Ayudhya Securities Public Company Limited

ADM Decha Yoo-protIndependent DirectorEducation- Master of Public Administration, Syracuse University, New York, U.S.A.Experience- Superintendent, Institute of Advanced Naval Studies- Chief of Staff, Royal Thai Navy- Vice Chairman, Bangkok Dock 1957 Limited

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Mr. Vichit SuraphongchaiIndependent DirectorEducation- Ph.D. University of California, Los Angeles, U.S.A.Experience- Director, Thai Airways International Public Company Limited.- Member of the Board, Trustee of the

Asian Institute of Technology (AIT)- Member of the Board, The National Institute of Development

Administration (NIDA)Present Positions- Director, Chairman of the Executive Committee,

Siam Commercial Bank Public Company Limited.- Director & Advisor General, The Crown Property Bureau- Member of the Senate of Mahidol University- Chairman, Nok Airlines Co., Ltd.

Mr. Wisudhi SrisuphanDirectorEducation- M.A.A. Business Economics, Thammasat UniversityExperience- Director-General, The Customs Department, Ministry of Finance- Director-General, The Excise Department, Ministry of Finance- Chairman of the Board of Directors, Thailand

Tobacco Monopoly, Ministry of FinancePresent Positions- Deputy Permanent Secretary Office of the Permanent Secretary- Chairman of the Board of Directors, Government Savings Bank,

Ministry of Finance- Director, The Electricity Generating Authority Of Thailand,

Ministry of Energy

Pol. Gen. Vudhichai SriratanavudhiIndependent DirectorEducation- Bachelor of Administration, Royal Police Cadet AcademyExperience- The President of The National Anti - Corruption Commission- Member of Thai Anti - Money Laundering Board- Deputy Commissioner, General Office of Legal AffairsPresent Positions- Retired Police Officer, Royal Thai Police


Mr. Chulasingh VasantasinghDirectorEducation- Master of Comparative Law (MCL.), University Illinois, U.S.A.Experience- Director General, Department of Litigation of the Attorney General,

Department of Litigation of the Attorney General- Director General, Department of the Legal counsel of the Attorney

General, Department of the Legal counsel of the Attorney General- Inspector General Department of Inspector GeneralPresent Positions- Director, Petroleum Exploration and

Production Public Company Limited- Director, Electricity Generating Authority of Thailand- Director, Ratchaburi Electricity Generating

Holding Public Co., Ltd.

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Mr. Vikrom KoompirochanaDirectorEducation- Ph.D. (History), Michigan State University, U.S.A.Experiences- Ambassador of Thailand to the United Kingdom- Ambassador of Thailand to Italy- Ambassador of Thailand to New Zealand- Deputy Permanent Secretary, Ministry of Foreign Affairs- Director, Thai Airways International Public Company LimitedPresent Positions- Director of the Chairman’s Directorate, TCC Land Co., Ltd.- Chairman of Audit Committee, Oishi Group Public Company Limited- Chairman of the Board, Dragon One Public Company Limited

ACM Sukumpol SuwanatatDirectorEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Assistant Commander in Chief, RTAF- Chief of the Air Staff- Deputy Chief of the Air StaffPresent Positions- Defence Inspector General, Ministry of Defence

Flg. Off. Apinan SumanaseniDirectorEducation- Bachelor of Science, Royal Thai Air Force AcademyExperiences- 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


Mr. Pichai ChunhavajiraDirectorEducation- MBA. (Business Administration),

Indiana University of Pennsylvania, U.S.A.Experience- Senior Executive Vice President, Corporate Finance and Accounting,

PTT Public Company Limited- Acting President, The Bangchak Petroleum Public Company Limited- Deputy Governor, Corporate Finance and

Accounting, Petroleum Authority of ThailandPresent Positions- Chief Financial Officer, PTT Public Company Limited- Director, Thaioil Public Company Limited- Director, PTT Exploration and Production Public Company Limited

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MANAGEMENT TEAM

Flg. Off. Apinan SumanaseniPresidentEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Executive Vice President

Operations Department- Vice President

Flight Operations Department- Deputy Vice President

Flight Operations Department

ACM Narongsak Sangapong- Senior Executive Vice President

Corporate Secretariat Department- Acting PresidentEducation- Bachelor of Science, Aeronautical Engineering

Royal Thai Air Force AcademyExperience- Executive Vice President

Special Project Department

Mrs. Ngamnit SombutpiboolExecutive Vice PresidentFinance and Accounting DepartmentEducation- Bachelor of Accounting, Chulalongkorn UniversityExperience- Executive Vice President

Office of the Internal Audit- Vice President

Comptroller Department- Deputy Vice President

Revenue Planning and Management Department


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Mr. Pandit ChanapaiExecutive Vice PresidentCommercial DepartmentEducation- Master of Arts, Graduate School, The University of Connecticut U.S.A.Experience- Vice President

Commercial Development and Support Department- Director

The Americas and East Asia Region

Flg. Off. Norahuch PloyyaiExecutive Vice PresidentOperations DepartmentEducation- Bachelor of Science, Royal Thai Air Force AcademyExperience- Executive Vice President

Standards and General Administration Department- Vice President

Special Project Department- Director

Operations Appraisal and Coordination Department

FLT.LT. Montree JumriengExecutive Vice PresidentHuman Resources andGeneral Management DepartmentEducation- Bachelor of Science, Mechanical Engineering

Royal Thai Air Force, AcademyExperience- Vice President

Personnel managment Department- Director

Pilot Administration Department- Deputy Director

Crew General Administration Department

Mr. Tummasak ChutiwongManaging DirectorTechnical DepartmentExecutive Vice President levelEducation- Master of Engineering, Lamar University, U.S.A.Experience- Executive Vice President

Corporate Secretariat Department- Executive Vice President

Human Resources Developmentand Management Department

- Vice PresidentCorporate Strategic Department

- Vice PresidentCrisis Management andInformation Center (2000-2004)


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Mr. Kaweepan RaungpakaExecutive Vice PresidentOffice 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


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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)

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, AUSTRALIALEVEL 10, 380 QUEEN STREET e-mail : [email protected] QUEENSLAND 4000, AUSTRALIA TKT/RSVN : (61-7) 3215-4777

FAX : (61-7) 3215-4737

BANGALORE, REPUBLIC OF INDIATHAI AIRWAYS INTERNATIONAL PLC., LTD. e-mail : [email protected] 14, CONCORDE TOWER, UB CITY TKT/RSVN : (91-80) 4030-0396/971, VITTAL MALLYA ROAD, BENGALURU FAX : (91-80) 4030-0577KARNATAKA, REPUBLIC OF INDIA - 560 001

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 INDIA (TEMPORARY OFFICE)INPAC TRAVELS (INDIA) PVT LTD. TEL : (91-0631) 220-0124 / 220-1156C/O MR CB SINGH FAX : (91-0542) 250-5353GF, HOTEL THE ROYAL RESIDENCYDUMUHAN ROAD, BODHGAYADISTT GAYA, BIHAR, REPUBLIC OF INDIA

CHENNAI, REPUBLIC OF INDIATHAI AIRWAYS INTERNATIONAL PLC., LTD. e-mail : [email protected] PARK SHERATON HOTEL, 1ST FLOOR TKT/RSVN : (91-44) 4206-3399LLOYDS ROOM, 132 TTK ROAD FAX : (91-44) 4206-3355CHENNAI 600 018, REPUBLIC OF INDIA

CHENGDU, PEOPLE’S REPUBLIC OF CHINAROOM 2309, 23RD FLOOR e-mail : [email protected] BUILDING, 35 ZONGFU ROAD : [email protected], SICHUAN TKT/RSVN : (86-28) 8678-1336PEOPLE’S REPUBLIC OF CHINA : (86-28) 8675-7755

FAX : (86-28) 8678-1048

CHITTAGONG, BANGLADESHFINLAY HOUSE , AGRABAD, CHITTAGONG e-mail : [email protected] TKT/RSVN : (880-31) 713-435

FAX : (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 INDIATHAI AIRWAYS INTL PCL, THE AMERICAN PLAZA e-mail : [email protected] INTERCONTINENTAL EROS, NEHRU PLACE TKT/RSVN : (91-11) 4149-7777NEW DELHI 110019, REPUBLIC OF INDIA FAX : (91-11) 4149-7788

DENPASAR, INDONESIATHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected] GRAND BALI BEACH HOTEL TKT/RSVN : (62-361) 288-141JL. HANG TUAH, SANUR - BALI 80227 FAX : (62-361) 288-063INDONESIA

DHAKA, BANGLADESHDACAA : MR. KITIPONG MANITYAKUL e-mail : [email protected] SHERATON HOTEL , MINTO ROAD TKT/RSVN : (880-2) 831-4711-18DHAKA 1000, BANGLADESH FAX : (880-2) 832-2353

DUBAI, U.A.E.NO.1 BU HALEEBA PLAZA e-mail : [email protected] ROAD, DEIRA P.O. BOX 13142 TKT/RSVN : (971-4) 268-1701

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 VIETNAM29 LE DUAN STREET, DISTRICT 1 e-mail : [email protected] CITY TKT/RSVN : (84-8) 822-3365SOCIALIST REPUBLIC OF VIETNAM FAX : (84-8) 822-3465

HONGKONG, PEOPLE’S REPUBLIC OF CHINA24A UNITED CENTRE e-mail : [email protected] QUEENSWAY, HONG KONG TKT : (852) 2179-7789PEOPLE’S REPUBLIC OF CHINA FAX : (852) 2179-7600

RSVN : (852) 2179-7777FAX : (852) 2179-7661

HYDERABAD, 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, INDIA FAX : (91-40) 2333-3003

ISLAMABAD, ISLAMIC REPUBLIC OF PAKISTANOFFICE NO 3, 4 HOLIDAY INN ISLAMABAD HOTEL e-mail : [email protected], PAKISTAN RSVN : (92-51) 227-2140

(92-51) 227-2141FAX : (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, PAKISTANAPT NO. A, C110 e-mail : [email protected] LEGACY, BLOCK 2 TKT/RSVN : (92-21) 279-2294CLIFTON, KARACHI, PAKISTAN FAX : (92-21) 279-1934

KATHMANDU, NEPALTHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected] ARCADE TKT/RSVN : (977-1) 422-3565DURBAR MARG, KATHMANDU, NEPAL 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) 2412-2568REPUBLIC 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.OF KUNMING JINJIANG HOTEL e-mail : [email protected] BEIJING ROAD, KUNMING 650011 TKT/RSVN : (86-871) 351-1515PEOPLE’S REPUBLIC OF CHINA FAX : (86-871) 316-7351

KUWAITDAWLIAH COMMERCIAL CENTER e-mail : [email protected]. BOX 26775, SAFAT 13128, KUWAIT TKT/RSVN : (965) 2242-1444

FAX : (965) 245-3702

LAHORE, REPUBLIC OF PAKISTAN9-A, DAVIS ROAD e-mail : [email protected] HOTEL & TOWER : [email protected] TKT/RSVN : (92-42) 631-6236

FAX : (92-42) 636-8690

LONDON, UNITED KINGDOM41 ALBEMARLE STREET e-mail : [email protected], W1S 4BF, UNITED KINGDOM TKT/RSVN : (44-870) 606-0911

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, SPAINTHAI AIRWAYS INTERNATIONAL P.C.L e-mail : [email protected] DE VERGARA 185 TKT : (34-91) 782-0523-24MADRID, 28002, SPAIN RSVN : (34-91) 782-0520-22

FAX : (34-91) 564-5620

MANILA, PHILIPPINESCOUNTRY SPACE e-mail : [email protected] BUILDING SEN. GIL J. PUYAT AVENUE TKT/RSVN : (63-2) 812-4412MAKATI CITY, PHILIPPINES FAX : (63-2) 817-4044

MELBOURNE, AUSTRALIATHAI AIRWAYS INTERNATIONAL e-mail : [email protected] 3, 250 COLLINS STREET TKT/RSVN : (61-3) 8662-2200MELBOURNE, VICTORIA 3000, AUSTRALIA 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

MOSCOW, RUSSIAN FEDERATION AND C.I.S.BUILDING 6/1, OFFICE 11 e-mail : [email protected] STREET, OFFICE 11 TKT/RSVN : (7-495) 647-1082MOSCOW, RUSSIAN FEDERATION, 119019 FAX : (7-495) 647-1083

MOSCOW, RUSSIAN FEDERATION AND C.I.S.BUILDING 6/1, OFFICE 11 e-mail : [email protected] STREET, OFFICE 11 TKT/RSVN : (7-495) 647-1082MOSCOW, RUSSIAN FEDERATION, 119019 FAX : (7-495) 647-1083


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MUMBAI, REPUBLIC OF INDIATHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected] TOWERS, A WING, GROUND FLOOR 2A TKT/RSVN : (91-22) 6637-3737NARIMAN POINT, MUMBAI - 400021 FAX : (91-22) 6637-3738REPUBLIC OF INDIA

MUNICH, GERMANYBAYER KARREE e-mail : [email protected] 85A : [email protected] MUNICH, GERMANY TKT/RSVN : (49-89) 2420-7011

FAX : (49-89) 2020-7070

MUSCAT, SULTANATE OF OMANTHAI AIRWAYS INTERNATIONAL PUBLIC CO., LTD. e-mail : [email protected]. BOX NO. 282, POSTAL CODE 100, CBD TKT/RSVN : (968) 2470-4455 MUSCAT SULTANATE OF OMAN FAX : (968) 2478-8753

NAGOYA, JAPANSOUTH HOUSE 9F, 6-29, NISHIKI 3-CHOME e-mail : [email protected], NAGOYA 460-0003, JAPAN TKT/RSVN : (81-52) 963-8585

FAX : (81-52) 963-8588

OSAKA, JAPANSUMITOMOSEIMEI YODOYABASHI BUILDING e-mail : [email protected] KITAHAMA, CHUO-KU TKT/RSVN : (81-06) 6202-5161OSAKA 541-0041, JAPAN FAX : (81-06) 6202-5453

PARIS, FRANCETHAIAIRWAYS INTERNATIONAL PUB.COMP.LTD. e-mail : [email protected] OPUS 12, 5TH FLOOR RSVN : (33-1) 5568-807477 ESPLANADE DU GENERALE DE GAULLE FAX : (33-1) 4090-716592914 PARIS-LA DEFENSE

PENANG, MALAYSIALEVEL 3 BURMAH PLACE e-mail : [email protected] BURMAH ROAD TKT : (604) 226-700010050 PENANG, MALAYSIA FAX : (604) 226-6821

RSVN : (604) 226-6000FAX : (604) 226-1857

PERTH, AUSTRALIALEVEL 4, ST MARTINS TOWER e-mail : [email protected] ST GEORGES TERRACE TKT/RSVN : (61-8) 9488-9203PERTH, WESTERN AUSTRALIA 6000, AUSTRALIA FAX : (61-8) 9488-9260

PHNOM PENH, KINGDOM OF CAMBODIATHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected]. 9-14B, REGENCY BUSINESS COMPLEX B TKT/RSVN : (855-23) 214-359-61294 MAO TSE TOUNG BOULEVARD (STREET 245) FAX : (855-23) 220-790SANKAT TOMNOUTEOUK, KHAN CHAMKARMONPHNOM PENH 3, KINGDOM OF CAMBODIA

ROME, ITALY50 VIA BARBERINI e-mail : [email protected] ROME, ITALY TKT : (39-06) 4781-3329

RSVN : (39-06) 4781-3304FAX : (39-06) 474-6449

SEOUL, KOREA15TH FL., SHIN DONG AH FIRE & MARINE e-mail : [email protected] BLDG., 43, TAEPYUNGRO 2-GA TKT : (82-2) 3707-0133JUNG-GU, SEOUL, R.O.K. RSVN : (82-2) 3707-0011

FAX : (82-2) 755-5251, (82-2) 3707-0155

SHANGHAI, PEOPLE’S REPUBLIC OF CHINAUNIT 2301-2302A/B, 23RD FLOOR e-mail : [email protected] HING FINANCE CENTRE TKT/RSVN : (86-21) 5298-5555288 NANJING ROAD (WEST), SHANGHAI 200003 FAX : (86-21) 5298-6166PEOPLE’S REPUBLIC OF CHINA

SINGAPORE100 CECIL STREET #03-00 e-mail : [email protected] GLOBE, SINGAPORE 069532 TKT/RSVN : (65) 6210-5000

FAX : (65) 6223-9005

SINGAPORE100 CECIL STREET #03-00 e-mail : [email protected] GLOBE, SINGAPORE 069532 TKT/RSVN : (65) 6210-5000

FAX : (65) 6223-9005

STOCKHOLM, SWEDENDROTTNINGGATAN 33 , BOX 1118 e-mail : [email protected], SWEDEN TKT/RSVN : (46-8) 5988-3600

FAX : (46-8) 5988-3690

SYDNEY, AUSTRALIA75-77 PITT STREET, SYDNEY e-mail : [email protected] SOUTH WALES 2000 TKT/RSVN : (61-2) 9844-0999AUSTRALIA FAX : (61-2) 9251-1106

SYDNEY, AUSTRALIA75-77 PITT STREET, SYDNEY e-mail : [email protected] SOUTH WALES 2000 TKT/RSVN : (61-2) 9844-0999AUSTRALIA FAX : (61-2) 9251-1106

TAIPEI, TAIWAN7F, NO. 308, SEC. 2, BADE ROAD e-mail : [email protected] 10492 TAIWAN TKT : (886) 2-2509-6899 ext. 711

FAX : (886) 2-2509-2931RSVN : (886) 2-2509-6800FAX : (886) 2-2508-4910

TOKYO, JAPAN1-5-1 YURAKUCHO, CHIYODA-KU e-mail : [email protected] 100-0006, JAPAN TKT/RSVN : (81-3) 3503-3311

FAX : (81-3) 3503-3323

VIENTIANE, LAO PEOPLE’S DEMOCRATIC REPUBLICM AND N BUILDING, GROUND FLOOR e-mail : [email protected] NO. 70/101-103, LUANGPRABANG ROAD TKT/RSVN : (856-21) 222-527-29KHOUNTATHONG, SIKHOTTABONG DISTRICT FAX : (856-21) 216-143VIENTIANE, LAO P.D.R

VARANASI, REPUBLIC OF INDIA (TEMPORARY OFFICE)TOP TRAVEL AND TOURS (P) LTD. TEL : (91-0542) 329-5158GF-3, R.H. TOWERS, THE MALL FAX : (91-0542) 250-5353VARANASI CANTT, VARANASI - 221001UTTAR PRADESH, REPUBLIC OF INDIA

XIAMEN, PEOPLE’S REPUBLIC OF CHINA1 FLOOR INTERNATIONAL PLAZA e-mail : [email protected] 8, XIAMEN, 361001 TKT/RSVN : (86-592) 226-1688PEOPLE’S REPUBLIC OF CHINA FAX : (86-592) 226-1678

YANGON, UNION OF MYANMAR0101 SAKURA TOWER e-mail : [email protected] BOGYOKE AUNG SAN STREET TKT/RSVN : (95-1) 255-499KYAUKTADA 11182 FAX : (95-1) 255-490YANGON, MYANMAR

ZURICH, SWITZERLANDTHAI AIRWAYS INTERNATIONAL LTD. e-mail : [email protected] 67 TKT/RSVN : (41-44) 215-6500SIHLSTR 1, 2ND FLOOR FAX : (41-44) 212-3408CH-8001 ZURICH, SWITZERLAND

CHIANGMAI, THAILAND240 PRAPOKKLAO ROAD e-mail : [email protected] MUANG, TKT/RSVN : (053) 920-999CHIANGMAI 52000, THAILAND FAX : (053) 920-995

CHIANGRAI, THAILAND870 PHAHOLAYOTIN ROAD e-mail : [email protected] MUANG, CHIANGRAI 57000 TKT/RSVN : (053) 711-179, 715-207, 715-734THAILAND FAX : (053) 713-663

PHITSANULOK, THAILAND209/26-28 BOROMTRILOKNART ROAD e-mail : [email protected] 65000, THAILAND TKT/RSVN : (055) 242-971

FAX : (055) 247-863

HAT YAI, THAILAND180, 182, 184 NIPHAT UTHIT 1 ROAD e-mail : [email protected] YAI, SONGKHLA 90110, THAILAND : [email protected]

TKT/RSVN : (074) 230-445FAX : (074) 233-114

PHUKET, THAILAND78 RANONG ROAD, TALADNUE e-mail : [email protected] DISTRICT, PHUKET 83000, THAILAND TKT/RSVN : (076) 360-111, 258-239

FAX : (076) 360-487-8, 360-485-6

KRABI, THAILANDKRABI INTERNATIONAL AIRPORT e-mail : [email protected] MOO 5 PETKASEM RD. T.NUAKLONG TKT/RSVN : (075) 701-591-593A.NUAKLONG KRABI 81130, THAILAND FAX : (075) 701-594

PATTAYA, THAILANDTHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected] RESORT, 240/2 PATTAYA BEACH ROAD : [email protected] CITY, CHONBURI 20150, THAILAND TKT/RSVN : (038) 420-994-7

FAX : (038) 420-998

KHONKAEN, THAILANDHOTEL SOFITEL RAJA ORCHID KHONKAEN e-mail : [email protected]/9 PRACHASAMRAN ROAD, : [email protected] MUANG, KHONKAEN 40000, THAILAND TKT/RSVN : (043) 227-701-04

FAX : (043) 227-708

UBON RATCHATHANI, THAILANDTHAI AIRWAYS INTERNATIONAL PCL e-mail : [email protected] CHAYANGGOON ROAD, AMPHUR MUANG TKT : (045) 313-340-2UBON RATCHATHANI 34000, THAILAND FAX : (045) 256-069

BANGKOK, THAILANDHEAD OFFICE89 VIBHAVADI RANGSIT ROAD TEL : 02-545-1000BANGKOK 10900 : 02-695-1000

SILOM OFFICE (TEMPORARILY)BANGKOK UNION INSURANCE TEL : 02-288-7000175-177 ANUMANRAJCHATHON 1 FAX : 02-288-7006, 02-288-7200SURAWONGSE RD, SURIYAWONGSEBANGRAK, BANGKOK 10500

LARNLUANG OFFICE6 LARNLUANG ROAD TKT : 02-288-7000BANGKOK 10100 FAX : 02-280-1748

RSVN : 02-356-1111FAX : 02-356-2222

AIRPORT OFFICE- SUVARNABHUMI AIRPORT TEL : 02-137-0000

333 MOO 1, NONGPRUE : 02-137-1111BANGPREE, SAMUTPRAKARN 10540 TKT : 02-134-5483

: 02-134-5486

- DOMESTIC AIRPORT TKT : 02-535-4299VIBHAVADI RANGSIT ROADBANGKOK 10210


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