Thai Airways International: Waiting for clearer skies in 2H26

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Thai Airways International

Waiting for clearer skies in 2H26

Reiterate Rating: NEUTRAL | PO: 7.00 THB | Price: 5.60 THB

Expect slim core profit in 2Q26

03 August 2026

We expect 2Q passenger yield to increase by 18-20% YoY following higher jet fuel

prices. This should lead to passenger volume dropping by 8% YoY due to 4% YoY lower

ASK, while load factor should decline by 6ppts YoY to 72%. Overall, passenger revenue

should grow by 6% YoY. On the cost side, jet fuel expenses should jump by 70-75% YoY.

Meanwhile, non-fuel expenses should increase by 8-10% YoY mainly due to higher

aircraft maintenance costs and higher depreciation. Interest expenses should drop by

13-15% YoY due to debt restructuring. THAI should book tax income of ~Bt1.1bn

following accounting adjusting. This should lead to Bt1.2bn 2Q26 core profit (vs Bt6.8bn

in 2Q25). THAI should book ~Bt0.2bn net FX loss and derivative gain and Bt0.1bn

impairment loss leading to net profit of Bt0.9bn (+103% QoQ, -6% YoY).

Equity

Earnings should improve in 3Q26

We expect profit to improve in 3Q26. The weak demand in 2Q26 should be mainly due

to a sharp decline in long-haul traffic, particularly on the Europe and Australia routes.

However, the decline has moderated in July, and we therefore expect load factor to

improve in 3Q26. Although THAI has reduced ticket fares since July, we expect fares to

remain higher YoY in 3Q26 In addition, THAI has hedged ~40% of its 2H26 jet fuel

consumption, comprising 20% Brent crude hedges put in place before the Middle East

conflict and 20% jet fuel hedges executed during the price dip in May and June.

Cut core profit and PO

We cut our 2026-28E profit by 10-14% to reflect the longer-than-expected impact of

the ME conflict. We raised the jet fuel price assumption to US$132/bbl from US$120

previously. As a result, we cut our PO to Bt7.0, based on 2026E target P/E and

EV/EBITDA of 10.6x (prev. 10.8x) and 4.4x (prev. 4.7x), 30% below regional peers’

average of 15.3x and 6.3x. The discount is due to potential selling pressure from

creditors who converted debt to equity. We reiterate Neutral due to uncertainties from

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