THAI AIRWAYS INTERNATIONAL PCL: ROUTE ANALYSIS

Abstract

During the Thai Airway’s Board of Directors Meeting on March 21, 2016, the management team had reported to the Board of Directors and the President that the company had been riding the losses during the past three consecutive years; the year 2013 (12 billion Baht), the year 2014 (15.57 billion Baht), and the year 2015 (13.05 billion Baht). Board of Directors were not satisfied with the company’s situation and called for the immediate action from the President and Management team. The management team had proposed the measures for Transformation Plan Adjustments by implementing flight reductions on unprofitable routes, unnecessary expenses, and increasing revenue.

After the endorsement, each of the rehabilitation plans were allocated to related departments. For the task of route path analysis, the President assigned the financial manager, Mr. Putte (hypothetical name), to establish the model with the objective of performing flight route analysis, apply the model on Bangkok – Los Angeles route as the first prototype, and present the feasibility report to the President and Management team at their next scheduled meeting on April 7, 2016. The model was expected to analyze whether the benefits from reopening route would be sufficient to generate profits after considering all the costs and further to demonstrate the impact of route suspension/continuation on the company’s financial performance. The route analysis report was expected to include the comprehensive investigation of comparing the marginal benefits of suspending and the marginal benefits of reopening the route. The report should also propose a sound financial decision on route analysis based on the feasibility study and determine the contribution of route suspension/continuation to the overall value of the company.

Upon leaving the management team meeting, Mr. Putte instantaneously set about collecting the information that would be necessary to fulfill the task that he was going to present in the meeting on April 7, 2016 so that the company would have sufficient time to prepare the presentation for the Annual General Shareholders’ Meeting on May 4, 2016. He did so in the full awareness that he had been assigned for a high-visibility duty, the successful performance of which could only buttress his burgeoning career with Thai Airways.