Pi Securities expects Thai Airways International Public Company Limited (SET: THAI) to report a net profit of THB 486 million in the third quarter of 2026, representing a decline of 89% YoY and 68% QoQ. Excluding approximately THB 485 million in flood-related compensation, the airline’s normalized profit is estimated at THB 972 million, down 82% YoY and 20% QoQ.
The weaker performance compared with the same period last year is primarily attributable to higher fuel prices, while the QoQ decline is expected to reflect increased operating expenses despite lower fuel costs.
Revenue from core operations is projected at THB 48.99 billion, up 14% YoY and 4% QoQ. Passenger revenue is expected to reach THB 40.96 billion, increasing 15% YoY and 610% QoQ, supported by approximately 3.97 million passengers, up 2% YoY and 8% QoQ. Average passenger revenue per person is forecast at THB 10,311, rising 12% YoY but declining 2% QoQ.
The annual increase in average fares reflects adjustments to offset higher fuel costs. However, the QoQ decline is attributed to promotional campaigns introduced to improve passenger load factors.
Available seat kilometres are estimated at 17.84 billion, up 1% YoY and 6% QoQ, following the addition of seven aircraft to bring the fleet to 91. Revenue passenger kilometres are projected at 13.65 billion, increasing 1% YoY and 14% QoQ. Consequently, the average passenger load factor is expected to reach 76.5%, remaining broadly unchanged from a year earlier but improving from 72% in the second quarter. Cargo revenue is also expected to increase 14% YoY, supported by higher freight rates.
Core operating costs are projected at THB 46.64 billion, up 30% YoY and 4% QoQ. Fuel expenses are expected to surge 57% YoY, as average jet fuel prices climbed to $150 per barrel from $96 per barrel in the corresponding period last year. Maintenance expenses are also forecast to increase 68% YoY, partly reflecting an unusually low cost base in the previous year.
On a QoQ basis, employee benefit expenses are expected to rise 41% YoY following the implementation of a new salary structure. Nevertheless, staff expenses are projected to account for approximately 11% of passenger revenue, remaining below management’s anticipated ceiling of 13%. Higher maintenance expenses and depreciation costs associated with the expanded aircraft fleet will also contribute to the increase in operating expenses.
Overall, operating profit is estimated at THB 2.36 billion, down 67% YoY but up 8% QoQ. Interest expenses are projected at THB 3.36 billion, increasing 4% YoY and 3% QoQ, while Thai Airways is expected to recognize approximately THB 480 million in tax income during the quarter.
Looking ahead to 4Q26, Pi Securities expects Thai Airways’ capacity to expand further following the fleet additions. However, net profit is likely to face pressure from another sharp increase in jet fuel prices.
Although the airline raised its fuel surcharge effective October 1, the adjustment is unlikely to fully offset higher fuel costs, as most customers had already booked their tickets before the increase took effect. As a result, the brokerage believes its full-year 2026 net profit forecast of THB 18.19 billion may be overly optimistic and plans to revise its estimates following the company’s earnings announcement.
Despite near-term earnings pressure, Pi Securities maintains a positive long-term outlook for Thai Airways, citing its growth potential if oil prices decline. The brokerage therefore reiterates a ‘Buy’ recommendation with a target price of THB 7.70, based on 2x its estimated 2027 price-to-book value, implying approximately 51% upside from the current share price.
