O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT 46 Thai AirAsia has conducted an initial assessment of risk, which encompasses all details of aircraft and engine types, prior to their use. By considering data and each model’s history, it was found that these aircrafts have a high level of safety and cost-effective services for the Company’s flight operations. Moreover, the Company continuously monitors industry news and updates their operations based on the use of these aircrafts in conjunction with other manufacturers and maintenance units. In terms of safety and maintenance operations, the airfield is managed in a systematic and timely manner to prevent or reduce damage that may occur from the aforementioned aircraft models. Regular maintenance checks and inspections are performed according to schedule to ensure the safety and reliability of the aircraft. Moreover, market conditions and the sales potential of the aircraft are evaluated as they reach their end-of-life to maximise the flexibility of the remaining operational aircraft and prevent interruptions in the Company’s normal operations. 2. Thai AirAsia is dependent on automated systems and the internet in its business operation As part of the leading sustainable travel technology company, Thai AirAsia automates its business and improves efficiency through technology adoption connected to the internet, which facilitates passengers and company in many facets of an operation. Online reservation via airasia.com and airasia Super App increased up to 66 percent in 2022. Online technology is another tool to enhance business communication. It can be used to increase effective communication both internally and externally to improve brand awareness, purchase decisions and brand loyalty as well as achieving seamless organisational alignment and operational efficiency. Thai AirAsia continues to improve network performance, accuracy and connectivity in order to satisfy the demands of passengers as the failure of connectivity can be catastrophic to the Company, exposing it to the risks of penalty charge, lost revenue, reduced productivity and customer complaints. In regard to collaboration with AirAsia Group, Thai AirAsia has a standardised review process and measurement of network performance along with backups and business continuity plans against any disruptions. 3. Business operations of Thai AirAsia rely on the Company’s relationship with Capital A Berhad Thai AirAsia received support from Capital A in many ways, including allowing Thai AirAsia to have the exclusive right in Thailand to use the trade name “AirAsia” for the business of Thai AirAsia and access to marketing knowledge, business operations, and customer service. In addition, Thai AirAsia leases aircraft under an operating lease agreement from AirAsia Mauritius (“AAM”), a subsidiary of AAB, who manages aircraft procurement and allocation in each country. Airbus, the manufacturer, does not have a direct contract with Thai AirAsia. The lease overall will expire between 2022 and 2030. The Company also relies on online sales channels from AirAsia Com Travel Sdn Bhd (“AACOM”) and joint support from AirAsia Sea Sdn. Bhd (“AASEA”). In the past year, Thai AirAsia entered into an agreement with Asia Digital Engineering (“ADE”), a subsidiary of AAB, for engineering and maintenance support. Also, Thai AirAsia relies on information technology such as core software systems (centred in Kuala Lumpur) namely [1] NewSkies 4.3, developed by Navitaire, used for management/reservation and ticket sales, [2] Oracle Cloud Application used for financial operations and procurement, [3] Swiss Aviation Software Ltd.’s AMOS used for engineering management, aircraft maintenance and transportation, etc. Doing business reliant on its relationship with Capital A may expose it to operating cost risks if Capital A increases its fees, which the Company may be disqualified if it is unable to bear such costs. In addition, the system developed through Capital A may not be suitable for the environment and market conditions of Thai AirAsia or if the main software system crashes, it may affect the business operations of Thai AirAsia as well. The Company’s senior executives hold regular meetings in order to assess the situation regarding issues of relationship and dependency with Capital A. Also, a contingency plan for the core software systems used by Thai AirAsia was created. Prioritisation of usage of spare parts for the aircraft of Thai AirAsia’s was considered to implement a quick maintenance and repair plan. Financial Risks 1. The risk of sustained losses resulting in negative shareholders’ equity which may affect the ability to repay debt Due to the pandemic of the COVID-19 that has affected the number of trips and the number of passengers greatly reduced together with the suspension of flight services according to government policy, this caused the Company to have insufficient income to cover expenses. As a result, the Company continued operating losses since 2019 causing the Company to have negative shareholders’ equity. The Company solved the problem by increasing capital twice, on 8 December 2021 in the amount of Baht 3,900 million and on 17 February 2022 in the amount of Baht 6,000 million, totaling Baht 9,900 million. As of 31 December 2022, the Company still had negative shareholders’ equity of Baht 12,904.9 million. Control costs and expenses continued to be performed in order to return to profit from operations and to clear accumulated losses in the future
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