THAI Holds Annual General Shareholders’ Meeting 2012

1. Operating Results for Year 2011 



At the Annual General Shareholders’ Meeting 2012, the Company’s Board of Directors acknowledged the operating results for year 2011. From January to end of December 2011 a series of external factors impacted the Company continuously and affecting operating results – the rapid rise in fuel price with Brent crude oil averaging at USD 111 per barrel and Singapore Spot Jet Kerosene averaging at USD 220.60 per barrel even though the company received 1.1 billion baht compensation from fuel hedging. While THAI closely monitored fuel prices and made necessary adjustments to the level of fuel surcharge to cover the jump in fuel cost, but with the strong competition in the market THAI was not able to sufficiently adjust fuel surcharge to cover the fuel cost increase. This caused THAI to not be able to meet 2011 operating target. 



The financial crisis in Europe and America , the Japan earthquake, and the flood in Thailand not only impacted travel demand, but also impacted the manufacturing industry and agricultural industry which in turn caused a decrease in cargo volume. 



However, to cope with the various adversities and the year-end flood, THAI rationalized its flights to better cope with the change in operating environment and demand. The combined impact of all the above factors adversely impacted THAI’s overall profitability for 2011. 



External factors and competition in the airline industry caused the Company to adjust its operational strategies, such as adjusting of flight frequency and aircraft utilization, implementing a number of special sales and promotions, applying risk management in the area of fuel costs and foreign exchange rates, boosting financial strength, delaying non-urgent investments, strictly controlling and reducing costs, increasing shares in and cooperating with Nok Air, and establishing the new business unit THAI Smile to expand its market share to maintain competitiveness in the airline industry. 



In 2011 THAI’s Revenue-Passenger Kilometer (RPK) decreased by only 0.7% which was close to 2010 percentage. Total number of passengers in 2011 was 18.39 million, an increase from 2010 by 1.2%. Available Seat-Kilometer (ASK) increased by 3.9%. Total revenues amounted to 194.34 billion baht, which was an increase of 10.07 billion baht or 5.5% from last year. Total operating revenue increased in the amount of 10.41 billion baht or 5.8% from last year. 



Total expenses, excluding gain (loss) on foreign currency exchange amounted to 199.83 billion baht, which was 23.11 billion baht or 13.1% higher than last year. The reason for the increase was a 38.7% rise in average jet fuel prices causing a 19.87 billion baht jump in fuel cost year on year . In addition, there was an increase in traffic production pushing up related cost including 400 million baht to compensate for employees affected by the flood. 



With the loss on foreign currency exchange in the amount of 2.43 billion baht, the Company had a loss before foreign currency exchange and income tax of 5.49 billion baht. Furthermore, on 11 October 2011, the Cabinet approved an income tax measure to increase national competitiveness. Tax rates were reduced and applied in 2011, which bears impact on deferred income tax assets and liabilities. In order to comply with Thai Accounting Standard (TAS) and International Financial Reporting Standard (IFRS) Issue 12, which the majority of airlines follow, and which THAI adopted early in 1998. 



In 2011, THAI recorded a tax rate change effect in the expense account amounting to 2.41 billion baht. The adjustment increased THAI’s net loss to 10.2 billion baht, and had earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) equivalent to 22.64 billion baht . 



As of 31 December 2011, total assets were 274.45 billion baht, with total liabilities of 211.01 billion baht, and total shareholders’ equity amounted to 63.44 billion baht. 



2. Distribution of Dividend 



At the Annual GeneralShareholders’ Meeting, it was approved to abstain from dividend payment resulting from the Company’s loss from operations for the year 2011.