THAI baulks at Rolls-Royce engine prices

CEO says airline might seek alternatives for new planes it plans to order

SINGAPORE – Thai Airways International is upset with Rolls-Royce for an alleged refusal to offer more favourable terms on aircraft engines, threatening to take its business elsewhere as the carrier prepares to place an order in the coming weeks.

Chief executive officer Chai Eamsiri said Rolls-Royce should reconsider its hard stance. The airline is already a Rolls-Royce customer for its Boeing 787 and Airbus A350 widebody jets, and Mr Chai said it plans to buy new aircraft by the end of the month.

“You should never play hard to your customer,” Mr Chai said on the sidelines of the annual meeting of the Association of Asia Pacific Airlines. “If you play hard, you may win in the short term but lose for the long term.” 

Under new CEO Tufan Erginbilgic, Rolls-Royce has taken a much tougher approach to pricing as it focuses on profit. The company was previously willing to offer steep discounts to win business, hoping to then make a profit through long-term service contracts.

Erginbilgic, by contrast, has signalled that he is prepared to miss out on some deals as he seeks to put Rolls-Royce on a more stable financial footing. 

A Rolls-Royce spokeswoman said the company always looks for “win-win solutions” with customers to build long-term, sustainable relationships and that “their success is at the heart of everything we do”.

THAI has reported reliability issues with its Rolls-Royce Trent 1000 engine powering the 787, a problem that has affected that particular model since before the pandemic. That has left the airline with at least one 787 grounded on a constant basis, Mr Chai said. 

The CEO said Rolls-Royce should be more flexible in its terms, and that as a customer he can choose alternatives. While the A350 is a Rolls-Royce-only aircraft, the 787 also comes with an engine built by General Electric, which is the more popular variant for that jet. 

THAI is set to report third-quarter results on Friday. Mr Chai said the carrier would be profitable, extending its positive run into a fourth consecutive quarter for the first time.

Following a radical restructuring during the pandemic that included a reduction in employee numbers by half, the national carrier is still working through a court-monitored debt restructuring.

THAI is now in the process of rebuilding its operations, with about 65 aircraft in its fleet, compared with 103 pre-pandemic.