THAILAND: Thai ends one Southern B777F contract early

Thai Airways International has decided to terminate the service of one of the two B777-200 LRF freighters operated on its behalf by the US carrier Southern Air ahead of the contract term.


B777F contract early Southern THAI Thailand


Thai Airways International has decided to terminate the service of one of the two B777-200 LRF freighters operated on its behalf by the US carrier Southern Air ahead of the contract term. Thai will end its block space purchase (BSP) contract for one plane on 1 August, ahead of the contract conclusion in March 2012. The carrier will incur a penalty of US$8.8 million for the early termination.

Thai said the decision reflects the global cargo slowdown as a result of the decelerating world economy, fierce competition from the influx of additional global cargo capacity and meagre operating margins that have hurt the carrier. Pichai Chunganuwad, managing director of Thai’s cargo and commercial mail department, admitted the move was to stem losses and could be widened in the future.

“The problem is not finding enough loads to carry, but the yields are too poor to sustain a good business,” Mr Pichai said according to a Bangkok Post report.

The Japanese tsunami, high oil prices, a glut in capacity and low-season demand have dampened cargo volumes. “Worse still, operators cannot raise charges to offset the rising costs, particularly fuel,” he added.

For the first half of this year, the cargo carrier handled 60,000 tonnes of cargo a month, about the same as last year, while recording a load factor of 58 per cent, lower than the same period last year when global air cargo movement was buoyant, driven by the economic recovery.