Thai Airways Renews Cargo Deal Ahead of Restructuring

Thai Airways has renewed and extended its cargo handling agreement with Paris-based Worldwide Flight Services (WFS) ahead of a major restructuring effort to drive down costs and return the flag carrier to profitability by 2022. 

Services covered under the new contract include cargo, mail, express handling, and offline handling at airports across France. The contract calls for WFS to provide cargo security services and trucking operations for Thai Airways between regional airports and Paris Charles de Gaulle Airport.  

Thai Airways connects Bangkok and Paris with daily roundtrip flights, using its fleet of Airbus A380s. The airline recorded strong performance in the first eight months of 2018, transporting 455,705 tons of cargo, representing an increase of 7.6 percent compared with the same period last year.

While cargo shipping has seen positive growth, newly appointed president Sumeth Damrongchaitham is implementing a range of measures to stimulate revenue across the airline’s other non-core business units such as catering and aircraft maintenance. Speaking to Thai media outlet The Bangkok Post, Damrongchaitham said the airline’s proposed maintenance, repair, and overhaul facility (MRO) at U-Tapao Airport in eastern Thailand will generate significant revenue and an internal rate of return of about 14 percent.

In June, Thai Airways and Airbus inked an agreement to establish an MRO center capable of providing heavy maintenance and line facilities for all widebody aircraft. The airline has since received an expression of interest from Boeing and plans to issue a public tender for a joint venture partner to sign and become public by February 2019.

Thai Airways is also betting big on its recent partnership with Rolls-Royce after becoming an authorized maintenance center for the company's Trent 700 and Trent 1000 engines at Bangkok's Don Mueang Airport. The airline expects to generate a revenue stream of $156.6 million in 2020. Rolls-Royce will also use Thai’s engine test cell at Don Mueang to support its Trent XWB engine program.

Beyond non-core businesses, Thai Airways wants to implement an ambitious fleet strategy to replace aging aircraft in an effort to cut maintenance costs. It continues work on revamping an initial purchasing plan calling for 23 aircraft before it goes before the National Economic and Social Development Board and Thai cabinet.

Damrongchaitham said the airline will finalize a complete rehabilitation plan by December.