58 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 In 2022, the Company had net cash generated in operating activities totalling Baht 564.0 million, turning positive again since 2019 mainly due the strong business recovery in the second half of 2022. Net cash used in investing activities was Baht 589.7 million mainly from the payments for maintenance reserves, for leasehold improvement and acquisitions of equipment, and the acquisition of shares to increase the stake in Thai AirAsia to 100%, a total of Baht 14,789.1 million, offset by the proceeds received from the sales of aircraft and equipment, a total of Baht 4,292.2 million. Net cash used in financing activities totalled Baht 4,530.7 million, mainly from the Baht 6,763.6 million net payments for lease agreements including the early termination and the Baht 370.9 million net repayments for debentures and borrowings. This was partially offset by the Baht 3,000.0 million proceeds from the right offering during the period. In summary, the Company had Baht 4,556.4 million net decrease in cash and cash equivalents and had a cash balance of Baht 797.8 million at the end of the period. BUSINESS OUTLOOK The Company anticipates that the strong momentum of the global tourism industry will continue in 2023. According to the World Bank’s forecast, the GDP growth in the East Asia and Pacific region, which constitutes 96 percent of Thai AirAsia’s capacity flown in 2019 (all except South Asia), is expected to increase by 4.3% in 2023, 260 ppts above the average of the global GDP growth forecast. This superior growth is expected to be driven by the reopening of China and the milder inflation severity, which renders the region less susceptible to recession compared to other regions. Moreover, the Bank of Thailand (“BOT”) predicts that Thailand’s GDP growth will be 3.7% in 2023, primarily due to the improvements in tourism and domestic consumption, offset by expected slower exports and some deceleration in investments. The Tourism Authority of Thailand (“TAT”) has recently revised its inbound tourist target to 30 million, up from 25 million in late January, following promising Chinese arrivals. The domestic tourism sector is also expected to remain robust. Thai AirAsia aims to carry 20 million passengers in 2023, compared to its peak of 22.2 million in 2019. Thailand’s Domestic passengers are projected to fully recover to 2019 levels, at approximately 14 million people, while international passengers are expected to quadruple from 2 million in 2022 to 8 million this year, driven by the demand for travelling in ASEAN, a healthy recovery in South Asia, and the resumption of flights to and from China. Thai AirAsia intends to continue leading the domestic market with the most extensive route network and competitive fares while placing more focus on the international market. With the reopening of China, Thai AirAsia plans to resume flights to 11 cities in China by June, accounting for around 73% of weekly flights flown to China in 2019. New international routes will continue to be explored, including potential flights from Don Mueang to Jakarta (Indonesia), Manila (Philippines), and Colombo (Sri Lanka). This is supported by the fleet size of 53 aircraft, all of which are planned to be fully operated in 2H23. As the Company does not have an aircraft delivery order this year, available aircraft within AirAsia Group might be utilised if the travelling demand is justified later in the year. With a positive outlook for the top-line, the Company aims to achieve profitability this year driven by lower operating costs per unit from enhanced aircraft utilisation rate at 12.5 hours/aircraft/day and a stronger load factor of 87 percent. However, several uncontrollable downside risks exist, including the prolonged conflict between Russia and Ukraine, which may exert pressure on fuel prices to remain elevated or decline at a slow pace. As a result, the Company is cautious about hedging the fuel price until the reward-to-risk ratio is justified, while continuing to partially hedge foreign currency exposure and attempt to naturally hedge cash inflows and outflows. In summary, 2023 is expected to mark a return to normalcy as the COVID-19 pandemic is gradually relegated to the past. To capitalise on this trend, Thai AirAsia will maintain its commitment to high service standards reflected in our exceptional OTP and strive to enhance business sustainability through closer collaboration with regulatory bodies and improved communication with passengers. As a participant in CORSIA, Thai AirAsia must monitor and report carbon emissions required by CAAT including participating in carbon offsetting programmes. According to the current flight plans, the carbon credit purchases for 2023, if any, should be immaterial. Despite that, the Company will continue to actively implement the Green Operation programme, including enhancing flight efficiency and exploring the potential use of sustainable aviation fuel (SAF) in the medium term to mitigate our carbon footprint.
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