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“Thai Airways will survive”. Emergency meeting next Wednesday.

Jack Burton

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“Thai Airways will survive”. Emergency meeting next Wednesday. | The Thaiger
PHOTO: TTR Weekly
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“Thai Airways will not collapse. The fact that Deputy PM Somkid stepped in to handle the issue means the government will rescue it.”

It’s no secret that Thailand’s national carrier has been a financial basket case for over a decade, bleeding money and marketshare as the years pass. The top-heavy Thai company is bailed out by the Thai government each year with continual demands for restructure and business plans that never appear to address the airlines’ fundamentally-flawed management structure.

Thai staff put together their own video (below).

Now the fate of the national carrier may finally be decided in a meeting next week chaired by PM Prayut Chan-o-cha. The government will attempt to decide the fate of the ailing carrier in a meeting of the State Enterprise Policy Commission on Wednesday, with the possibility of a shareholder restructuring to help the ailing airline stay afloat. With the Government seeking to cut budgets from all departments due to the financial impact of the Covid-19 crisis, the annual burden of bailing out the national carrier has become more acute.

The meeting will decide the conditions and scope of rehabilitation for the bruised and battered airline. The airline has continually been told to sort out its unwieldy middle-management, ageing fleet and fare structure. The airline has been stuck with a 1990s national airline model whilst newer, more nimble, better financed and managed airlines, with younger fleets and management styles, have flown straight past the legacy airline.

Deputy PM Somkid Jatusripitak yesterday called urgent talks with Transport Minister Saksayam Chidchob and Finance Minister Uttama Savanayana to discuss whether the national flagship carrier should remain a state enterprise under the Transport Ministry, or be privatised.

Saksayam told reporters that a future share structure was not discussed at that meeting, but hinted that Thai executives had been assigned to draw up plans to resurrect the company from years of financial woes before the crucial meeting.

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PHOTO: Deputy PM Somkid Jatusripitak – Thai PBS World

Faith, or the lack thereof, in Thai Airways has captured headlines in recent months, with Covid-19 battering the already financially struggling airline.

Due to coronavirus outbreak, Thai was forced to enact furloughs and slash salaries. There have been unsubstantiated reports that private businesses with deep pockets might become significant new shareholders.

To quash those rumours, Somkid reportedly stepped in on Thursday and established an ad-hoc panel to find ways to revive the 60 year old carrier after a report that the Finance Ministry will have the Government Savings Bank and state-owned Krung Thai Bank’s Vayupak fund will acquire more shares.

The Ministry of Finance currently owns 51.03% of the shares, leaving 15.12% with the Vayupak 1 fund and 2.13% with the Government Savings Bank, according to Bangkok Post.

Deputy Transport Minister Thavorn Senniam says one potential plan is to have the Finance Ministry reduce its shares, allowing the Vayupak fund to increase its stake. He believes with the Vayupak fund as a major shareholder, Thai Airways will be forced to operate more efficiently like other SET-listed companies.

Thavorn ruled out rumours that private investors will become major shareholders.

“This direction is impossible as it tantamount to privatising the national carrier.”

Thavorn says other options include requesting more funding, the issuance of corporate bonds or a capital increase. He says financial experts will know which path is best for Thai to prevent it from making further losses.

“Only the PM and the cabinet can decide on the shareholder issue, but regardless of the restructuring, Thai will survive.”

SOURCE: Bangkok Post

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Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

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Future of Thai department stores is being redefined

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Future of Thai department stores is being redefined | The Thaiger

While department stores have been a familiar destination for Thai people for many decades, CBRE, an international property consultant, is witnessing a decline in popularity and stunted growth, particularly in 2020 when Covid-19 adversely impacted the sector. CBRE believes that to adapt to e-commerce disruption and the changing consumer behaviour, department stores in 2021 (and beyond) will have to fine-tune their business model in terms of customer shopping experience, inventive activities and value-added programmes to continue their status as the second home for Thai shoppers.

Jariya Thumtrongkitkul, Head of Advisory and Transaction Services – Retail, CBRE Thailand explained… “While department stores offer shoppers convenience, saving them time with many varieties of goods grouped in different departments and allowing the shoppers to find and compare products and choose what they want, the traditional department store model does not fit the needs, lifestyle and behaviour of its shoppers anymore, especially the new generations.”

According to CBRE Research, the total retail supply in Bangkok as of Q4 2020 increased to 7.8 million square metres, a 1.16% increase year-on-year. Out of this, only approximately 3% was reported within the department store format. The department store market in Thailand is mainly dominated by two domestic retail giants, with Central Group and The Mall Group holding the largest market shares. They do not only concentrate in Bangkok, but have also opened department stores in many major cities throughout the country which allowed them to build bigger networks and grow their customer base.

In the past few decades, Japanese investors had also shown interest in entering the Thai market and offered local features that are well-known in Japanese department stores: simplicity, premium quality and services. However, with strong competition many Japanese department store operators have ceased their expansion plans. Some have exited the country due to the fierce competition against the local players, their performance in Thailand and the shrinking Japanese department store business, especially in overseas countries.

“The department store concept as a one stop shopping place is still in demand for certain groups of customers. However, with the e-commerce disruption and changing consumer behaviour, department store operators need to adapt their models, offerings and value-added services to their customers to cope with the challenging economic and market conditions.”

Adaptability of department stores can be highlighted into 3 main parts: customer shopping experience, inventive sales and marketing activities, and value-added programmes. While more and more younger generations prefer to shop online to save time and money, the brick-and-mortar store is still believed to be the second home for Thai shoppers. Department stores should be more agile in the era of e-commerce and adopt some technological innovations such as in-store automation and mobile payment solutions to reach the younger crowds.

Design is another aspect that plays an important part in customer shopping experience. Department stores can be more creative in remodelling traditional department store space into some ingenious and interactive space with a great design and right product portfolio mix for their customers.

The Mall Group, for example, has launched its first “Lifestore” concept at The Mall Ngamwongwan at the end of 2020 by redesigning and renovating its traditional department store space to enhance customer shopping experience and enjoyment.

The second part to be considered for the adaptability comprises inventive activities related to sales and marketing. The prices of products being sold in a department store are normally set high to cover the higher establishment and operating costs by operators, narrowing their target to only upper- to high-income customers.

Brand offerings may also no longer meet fast-changing customer needs since today’s shoppers have more choices in buying products online, not to mention the declining footfall due to the growth of e-commerce. CBRE Research has seen domestic players pushing hard to drive sales growth via numerous promotions, marketing campaigns and activities and collaboration with credit card companies during seasonal sales.

The third part consists of value-added programmes such as personal shopper, customer loyalty programme, on-demand solution and service personalisation, which have become a new trend as customers, including the aging population, are now more sophisticated and demanding.

The retail landscape has changed drastically in the past few years from various factors like technological advancement, consumer behaviour and preference as well as Covid-19. Cookie-cutter strategy will be a thing of the past, especially for department stores where the format and offerings have remained the same for decades.

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Can Phuket survive? Interview with Bill Barnett | VIDEO

Bill Barnett

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Can Phuket survive? Interview with Bill Barnett | VIDEO | The Thaiger

Interview with Bill Barnett from c9Hotelworks. Phuket has now been hit with a 3rd major crisis, each one more profound than the long-term effects from the 2004 tsunami. Now the island has new restrictions imposed on arrivals on the southern island, imposed by the Phuket Provincial Authority.

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Coronavirus (Covid-19)

US jobs market stumbles back into decline

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US jobs market stumbles back into decline | The Thaiger

The labour market for the world’s largest economy is heading back into reverse mode after slowly chugging back into gear over the past 8 months, following the March stock crash and initial impacts of the US state lockdown measures.. The December report was the first drop since April figures, providing the strongest evidence of the impact of the huge number of Covid-19 infections weighing on the economy.

“Nonfarm payrolls” in the US fell by 140,000 in December, the data published by the US Bureau of Labour Statistics showed yesterday. This reading follows November’s increase of 336,000 (revised from 245,000) and missed the market expectation of +71,000 by a wide margin.

Further details of the publication revealed that the Unemployment Rate stayed unchanged at 6.7% and the Average Hourly Earnings rose by 0.8% on a monthly basis.

“Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, or non-profit organisation employees.”

The weakness in the US jobs market largely reflects job cuts at restaurants and hospitality venues impacted by revised restrictions.

The President-elect will inherit an economy that’s down almost 10 million jobs compared with before the pandemic. The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery.

Other parts of the US labour market held up in last month’s figures. Retail, professional and business services, construction and manufacturing all posted job gains, indicating much of the economy continues to stagger back to economic health. The number of unemployed Americans who permanently lost a job declined to a four-month low of 3.37 million.

Michael Gapen, chief U.S. economist at Barclays says parts of the US economy continue to show some resilience.

“Outside of consumer-facing sectors the remainder of the economy continues to show resilience. It does show that if we can get control of the pandemic, then we can restore economic activity and labor market conditions over the course of this year. It’s a pandemic-driven number, a pandemic-driven composition.”

“The pace of hiring will be hard-pressed to accelerate until a meaningful portion of the general population is vaccinated, with distribution in the US running slower than planned and potentially holding back the recovery.”

A new viral strain of Covid-19, that led to new or extended lockdowns in the UK and Germany, has now been identified in the US, which risks spurring more restrictions that could hinder hirings over the coming months.

In December, there was an average of 1.5 million new cases per week in the US and Covid-related deaths continued to rise at a record pace, forcing some states to ramp up business restrictions leading to an uptick in layoffs.

Private-sector payrolls, excluding government jobs, decreased by 95,000 last month following a 417,000 gain in November.

SOURCE: Bloomberg | USA Today

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