Problems loom in wake of sacking at THAI

Thai Airways International Chairman Ampon Kittiampon owes explanation to the general public over the board’s decision on Monday and leaving the press conference to acting president Chokchai Panyayong will only worsen the sentiment.

THAI calls for a press conference today, to reveal the hidden reason behind the premature termination of President Piyasvasti Amranand’s employment contract. Ampon was expected to chair the event, but it was announced later that Chokchai would handle it. A source said that it could involve differing opinions of the board and the management over THAI’s pending acquisition of 38 aircrafts.

It is unfortunate that Ampon, as chairman of the board, avoids meeting the press. Yet, wherever he goes, if Chokchai could not clearly satisfy the media, Ampon would be kept asking these three main questions.

Without the clear answer, he and other 13 directors would remain criticised as political appointees who do not serve state enterprises they supervise. More importantly, without clear answers, they are setting a poor new management standard for state enterprises as a whole.

The press conference will be held after the board unanimously agreed to dismiss Piyasvasti, who would complete his term in less than a year. The premature dismissal resulted in a compensation of Bt5.94 million that THAI must pay to Piyasvasti.

Rumour has it for some time that he would be dismissed after Pheu Thai Party formed the government, but the possibility was in doubt as Piyasvasti took office in October 2009 during the Democrats-led government under a special term to ensure no political meddling. He is entitled to a compensation package worth 6 months of salary in light of premature dismissal, and he is subjected to similar compensation if leaving before the term ends. More importantly, Piyasvasti, the second outsider chief, has won respects from employees and investors over his strategies that financially revived THAI and sustain the airline’s growth amid fierce competition and higher fuel prices.

Given Piyasvasti’s 31-month track record, “Lack of unity in communications with the board” sounded a lame reason to back the board’s decision on Monday. Thus, here is the first question for Ampon: What’s the exact meaning of the reason? Or is this just a reason to back a politically-motivated action?

If it is not to back a politically-motivated action, this will lead to the second question: What’s the weight of “communications with the board” in the key performance index (KPI) for Piyasvasti? Given Ampon’s reason on the day, it seems state enterprises’ bosses now have to take it as a priority to forge efficient communications with the board of directors – mostly constituting of political appointees, rather than the performance.

It is true that state enterprises are set up to implement the government’s policies. State-owned banks are designed to accommodate the government’s grand economic policies. PTT’s mission is to ensure energy security. Set up in 1959, THAI’s objective is to safeguard domestic sky and compete against foreign players in the international skies.

Through the long history, THAI has welcomed 15 presidents. As witnessed, some presidents who answered only to the board not the overall benefits of the airline had led the carrier to the abyss. At one point, without the government’s loan guarantee, THAI could not seek financing for its own aircrafts.

Given the long history of such inefficiency, is Ampon serious in putting “communications with the board” before the airline’s performance? Without clear KPI on how to evaluate the communications efficiency, it seems he is setting a precedent cause for the THAI board in the future as well as the boards of other state enterprises on how to sack capable chiefs.

Lack of explanation led to the third question involving the appropriateness of the board’s decision to sack Piyasvasti and pay him the compensation.

As it seems Piyasvasti displeased only the board of directors, not other stakeholders who range from employees, stock investors and the general public through the 2 years and 7 months in office, why THAI – which also belongs to other stakeholders – have to shoulder the extra cost?

The amount is tiny, compared to the Bt6 billion earning target this year. But if a tiny pay can be made without a good reason, who can guarantee that it would not lead to something bigger? In time, this will ruin THAI’s image. History showed that as THAI leaders were irresponsible for stakeholders’ interests, it was not only them that were punished. When THAI showed losses, other stakeholders including taxpayers suffered.

As Piyasvasti is leaving, the first sign of old bad things at THAI emerged. Agreeing to benefits cuts to assist Piyasvasti’s goal in turning around the airline, the labour union is now pressuring for the return of all benefits. It is not difficult to imagine that without a frugal boss like Piyasvasti, soon we have heard about lavish meals served during the board’s meetings. More are to come when corporate governance is breached.


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