Thai Airways profit falls 55% as jet fuel costs soar

Thai Airways profit from operations fell by more than half in the third quarter, as soaring jet fuel prices ate into earnings at Thailand's national flag carrier. Thai Airways International (THAI) said on Thursday that its operating profit for July to September was 3.84 billion baht, down 55% from the same period last year, the Bangkok Post reported.

The airline blamed the sharp fall on jet fuel prices that rose almost 60% year on year. Fuel is one of the largest costs for any airline, so a jump of that size quickly shows up in the results.

Key figures from the Thai Airways profit report

• Third-quarter operating profit: 3.84 billion baht, down 55% year on year.
• Operating profit for the first nine months: 21.28 billion baht, down 39%.
• Jet fuel prices: up almost 60% compared with a year earlier.
• Passengers carried this year: almost 12 million, down 3%.
• Fleet size: 91 aircraft.

Operating profit does not include financial costs, taxes and other items that are not related to running the airline. It is a useful measure of how the core flying business is doing, but it is not the same as the company's final net result.

Middle East war drives up fuel costs

According to the International Air Transport Association, cited by the Bangkok Post, aircraft fuel this week costs US$178.95 a barrel, or about 6,000 baht. That is roughly $100 more than a year ago. Most airlines are suffering from the increase, which has been driven by the war in the Middle East.

Energy markets have been volatile for months. Our coverage of sharp swings in oil prices showed how quickly the outlook can change, but for airlines the cost of jet fuel this year has remained far above last year's levels. Carriers can only pass part of this on through higher ticket prices before demand starts to suffer.

Demand still looks strong

Despite the pressure from fuel, THAI expects strong passenger demand at the end of the year. "The passengers advance booking remains satisfactory, reflecting high travelling demands at the end of 2026," the carrier said.

That matters for Thailand's tourism economy. The year-end period is the peak travel season for many international visitors, including those heading to Phuket, Bangkok and Chiang Mai. Strong bookings could help the airline fill seats, even if each flight earns less because of higher costs.

The passenger figures, however, show that traffic has not grown this year. THAI has carried almost 12 million passengers so far, 3% fewer than last year. Fares are also under scrutiny, as seen in our report on airfare caps after a Chiang Mai fare spike.

What it means for travellers and investors

For travellers, high fuel costs usually mean higher fares or fuel surcharges, especially on long-haul routes. Airlines also tend to review less profitable routes when costs rise. THAI has not announced any route cuts in connection with the results.

For investors, the numbers show how exposed the airline is to the oil price. A 55% drop in quarterly operating profit, while demand remains firm, suggests that fuel rather than a lack of passengers is the main problem. If the conflict in the Middle East eases and fuel prices fall, earnings could recover quickly. If prices stay near current levels, margins are likely to stay under pressure.

The airline has had other recent challenges as well, including the incident covered in our story on the Thai Airways data breach. Investors will be watching whether year-end demand is strong enough to offset fuel costs in the final quarter.

Outlook for the Thai Airways profit picture

The coming months will show whether strong year-end bookings can lift results. With nine-month operating profit already down 39%, the full-year figure is likely to be well below last year unless fuel prices fall sharply. For now, the airline is relying on busy holiday travel to soften the impact of jet fuel prices far above last year's level.

Image: A Thai Airways Boeing 787-8 departing Vienna Airport, as rising fuel costs weigh on Thai Airways profit. Photo by Paul Schmid via Wikimedia Commons, licensed under CC BY-SA 4.0.