Kiatnakin Phatra Securities (KKPS) has maintained its Neutral rating on Thai Airways International Public Company Limited (SET: THAI) while lowering its price objective to THB 7.00 from THB 8.40. The revision reflects prolonged impacts from Middle East conflicts, elevated jet fuel assumptions, and potential equity selling pressure from creditors following the expiry of share lock-up restrictions on 4 August 2026.
KKPS expects THAI to report a core profit of THB 1.2 billion in 2Q26, down significantly from THB 6.8 billion in 2Q25. Net profit is projected at THB 0.9 billion (+103% QoQ, -6% YoY), which includes approximately THB 0.2 billion in net foreign exchange losses and derivative gains, alongside a THB 0.1 billion impairment loss.
Passenger yield is forecasted to increase by 18–20% YoY as higher fuel costs are passed into fares. However, passenger volume is expected to fall 8% YoY due to a 4% YoY reduction in Available Seat Kilometers (ASK), while the load factor is projected to decline by 6 percentage points YoY to 72%. Overall passenger revenue is anticipated to grow by 6% YoY.
On the expense side, jet fuel costs are expected to surge 70–75% YoY, while non-fuel expenses are projected to rise 8–10% YoY, driven primarily by higher aircraft maintenance costs and depreciation. Conversely, interest expenses should fall 13–15% YoY following debt restructuring. THAI is also expected to record approximately THB 1.1 billion in tax income due to accounting adjustments.
KKPS expects earnings to improve in 3Q26 as weak demand seen during 2Q26—particularly sharp declines in long-haul traffic on European and Australian routes—began moderating in July. Load factors are expected to strengthen in 3Q26. Although THAI reduced ticket fares starting in July, average fares are expected to remain higher YoY.
To mitigate energy price volatility, THAI has hedged roughly 40% of its second-half jet fuel consumption, comprising 20% Brent crude hedges executed prior to the Middle East conflict and 20% jet fuel hedges executed during the May–June price dip.
KKPS cut THAI’s 2026–2028 net profit estimates by 10–14% after raising its average jet fuel price assumption from US$120/bbl to US$132/bbl. The revised target price of THB 7.00 is based on a 2026E target P/E of 10.6x (down from 10.8x) and EV/EBITDA of 4.4x (down from 4.7x). This valuation represents a 30% discount to regional peers’ average multiples of 15.3x P/E and 6.3x EV/EBITDA, reflecting potential selling pressure from creditors who converted debt to equity.
