THAI : Annual Report 2007

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Contents

Message from the Chairman

2

Message from the President

4

Achievements in Fiscal year 2007

6

Financial Highlights

10

Operations of the Company and its Subsidiaries-The Policies of Associated Companies

12

Revenue Structure

15

The Company’s Operating Results

17

Subsidiaries and Affiliated Companies

47

Adherence to Official Information Act, B.E. 2540

50

Status of the Commercial Airline Industry and Competition

52

Risk Factors

54

Shareholder and Management Structure

57

Good Corporate Governance Committee Report

71

Good Corporate Governance

73

Audit Fee and Related Expenses

92

Other Factors that May Affect Investment Decision

92

Related Parties

95

Management’s Discussion and Analysis

102

Corporate Direction and Strategy

112

Five-year Review

114

Board of Directors’ Duties on Financial Disclosure

116

Audit Committee’s Report

117

Financial Statements

120

Notes to the Financial Statements

128

General Information

158

Board of Directors

160

Management Team

164

Message from the Chairman

The year 2007 is a year of great pride and joy for the Thai people as His Majesty the King is celebrating His 80th Birthday Anniversary on December 5, 2007. In honor of His Majesty, Thai Airways International Plc. undertook various activities in deference to His Majesty including the “Plook Cheevit Hai Pandin” reforestation project and supported the “Phorn Jak Fah, Phorn Por Piang” (Blessing from the sky Blessing of sufficiency) seminars on the subject of His Majesty’s Sufficiency Economy held in the United States of America, in Asia and Europe. Another event that took place which will be recorded in the history of Thai Airways International Plc. is the Royal Charity Flight “Sai Yai Rak Haeng Khrobkhrua” (Family Bonds) in which His Royal Highness The Crown Prince Maha Vajiralongkorn was in command. The money raised went to helping those who have been adversely impacted by floods and acquiring medical equipment for hospitals in the three troubled southern provinces of Thailand.

September 2007 marked the end of THAI’s 47th year of successful operations and also marked the first full year of operations at Suvarnabhumi Airport since its opening on September 28, 2006. In support of the Government’s policy, THAI recommenced its domestic services at Don Muang Airport to facilitate domestic passengers in traveling throughout Thailand. In the midst of increasing competition in the commercial airline industry, the impact from rising cost of aviation fuel, the fluctuation in currency exchange, THAI

2

Annual Report 2007

has been successful in overcoming these challenges through its ability to adjust its strategy with the changing operating environment. To achieve THAI’s vision of being the First Choice Carrier with Touches of Thai, the area of emphasis has been to ensure the highest level of security and safety for THAI’s passengers benchmarked to international safety standards.

Other areas of development include ongoing modernizing of the aircraft fleet and improving service quality, adjusting the route network and increasing cooperation with business alliances to enhance competitive advantage along with streamlining of the organization structure to increase management efficiency and effectiveness. THAI also places great emphasis on environmental conservation and responsibility towards society through holding campaigns and activities for employees to participate and observe THAI’s policies on environment conservation. Activities undertaken by THAI in the area of environmental awareness has earned the Company an award for treatment and recycling of waste from the Ministry of Natural Resources and Environment.

The Board of Directors would like to take this opportunity to express the Board’s gratitude towards THAI’s shareholders, customers, business partners and all other related parties for the ongoing support for the Company. For the trust bestowed upon the Company, the Board of Directors would like to reiterate its commitment to manage the Company based on the principles of good corporate governance to provide the highest benefit for all stakeholders and continue to improve on its operations for sustainable long-term growth.

ACM Chalit Pukbhasuk Chairman of the Board of Directors

Thai Airways International Public Company Limited

3

Message from the President

Fiscal year 2007 was another year of solid performance

by Thai Airways International Public Company Limited as it posted its 43rd consecutive year of profitability. The success was in spite of the many challenges faced by the Company specifically, the increased level of competition within the commercial airline industry. Other risks bearing direct impact on THAI’s performance include the record level aviation fuel cost, the fluctuation in exchange rate, the impact of natural disasters, the lingering concern over terrorism and the political instability.

In the past year, THAI continued to strengthen its competitive edge through emphasizing Smooth as Silk service with Touches of Thai by enhancing passengers’ experience at every customer touch point to increase overall customer satisfaction. Changes in THAI’s strategy include the decommissioning of THAI’s older aircraft, increasing the hour of utilization of each aircraft to increase production and thus revenue, minimizing operating expense, reducing funding burden on aircraft purchases, making changes to the route network by limiting new route expansion, reducing capacity and flight frequency on loss making routes while increasing capacity and flight frequency on profitable ones.

Proactive marketing strategies have been implemented emphasizing markets with potential along with retaining of existing customers and expanding the customer base. THAI is utilizing new channels of distribution to penetrate markets,

4

Annual Report 2007

emphasizing network sales including greater cooperation with partner airlines and related business partners while offering a broader variety of domestic and international Royal Orchid Holiday (ROH) packages to meet customer needs and provides customers with greater value to use ROH’s services.

Customer service and maximizing shareholders’ benefits are two key factors determining THAI’s corporate development. Transparency in management, fairness under the principles of good corporate governance, comprehensive risk management processes minimizing potential adverse impact of internal and external risk factors on the Company, organization restructuring through elimination of redundant tasks to facilitate flexibility and effectiveness of operations and ongoing human resource development are key to improving THAI’s development. A new corporate culture “THAI Spirit” is being fostered focusing on “Teamwork” - increasing cooperation to create competitive advantage; “Happiness” - focusing on employee’s well-being and happiness at work; “Awakening” - enlivening with enthusiasm to welcome new experiences and developments; “Inspiration” - feeling of being a part of the organization and the desire to succeed “Customer Focus” - delivering unsurpassed quality service while also being socially and environmentally responsible.

THAI’s success is the culmination of effort and hard work by the Company’s Board of Directors, management and employees along with the support received from the Government and THAI’s shareholders. On behalf of the Company’s management, I would like to take this opportunity to show my appreciation and gratitude for your unwavering support.

Flying Officer Apinan Sumanaseni President

Thai Airways International Public Company Limited

5

Achievements in Fiscal Year 2007

Sponsored the Royal Charity flight commanded by His Royal Highness the Crown Prince Maha Vajiralongkorn to Chiang Mai to raise funds in support of those that have suffered from natural disasters and to donate medical equipment and supplies to hospitals in the 3 troubled southern provinces.

Launched flights to Hyderabad, Bodhgaya and Varanasi beginning October 30, 2006 to meet tourist demand and those seeking to go on pilgrimage for merit making.

Launched direct services from Bangkok - Johannesburg on October 31, 2006 - TG 703.

Re-established domestic flights from Don Muang Airport beginning March 25, 2007 with 30 daily flights.

Launched the THAI City Air Terminal to provide an alternative check-in point for domestic passengers without flight connections flying out of Don Muang Airport. Passengers are ferried between the City Terminal and Don Muang Airport and the City Terminal where passengers can connect to the mass transit system.

THAI signed an agreement with Scandinavian Airlines System (SAS) to provide code share service for THAI’s passengers traveling to various destinations in Scandinavia and for SAS to code share with THAI for passengers traveling to destinations for which THAI flies in Asia.

To celebrate the 10th anniversary of the establishment of Star Alliance where THAI was among the founding members, THAI along with Star Alliance and Asia News Network sponsored the largest ever airline forum “Asia forum 2007 : The Future of Aviation” held at the Shangri La Hotel in Bangkok.

THAI was entrusted by the Royal Thai Government to cater meals for collegiate athletes and staff participating in the 24 th “Summer World Collegiate Athletic Competition” sponsored by the International University Sports Federation and Thammasat University during May of 2007.

Launched the Puff & Pie Supreme Bakery Delight where THAI’s catering put on display the new Puff & Pie wholesale concept along with putting on display the range of quality bakery from THAI’s catering.

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Annual Report 2007

Awards Received in Fiscal Year 2007 Received the Best First-Class Lounge award at the World Airline Awards with ranking determined by customer preference through Skytrax customer census.

Received second place among the most preferred airlines of the world from assessment conducted

by Skytrax (Airline of the Year 2007 Awards).

Received the Best Single In-flight Audio Program from Avion Awards and was among the top 5 airlines from a total of 250 candidates to be awarded for in-flight entertainment by the World Airlines Entertainment Association (WAEA).

THAI was awarded the Best Intercontinental Airline for the fifth consecutive year at the Danish Travel Awards 2006.

Received the ISO 9001 : 2000 certification from the Bureau Veritas Quality International (BVQI) for in-flight customer services including in-flight entertainment, food & beverage and cabin crew management.

Received recognition for initiatives for conserving energy and the environment from the Department of Environmental Quality Promotion, Ministry of Natural Resources and the Environment for the Company’s various projects at Suvarnabhumi Airport including :

-

Development of “Biodiesel Project” of Thai’s Catering Services Unit.

Environmental awareness award for “Ground Support Equipment Repair for Environmental Friendliness Project” of the Ground Support Equipment Services Unit.

-

Recognized for “Organic Fertilizer Project” at the Company’s Operations Center.

Recognized for “Waste Water Treatment Project” conducted by Technical Services Unit.

Recognized for the innovative “Wheel Suspension Project for Aviation Equipment” by Aviation Service Unit.

Thai Airways International Public Company Limited

7

Activities in Deference to His Majesty the King THAI, as the country’s national flag carrier undertook the following activities in deference to His Majesty the King in celebrating His Majesty’s 80th Birthday on December 5, 2007.

1. Sponsored a talk in deference to His Majesty on the subject of Self Sufficiency Economy held in Los Angeles and Seattle in the United States of America along with talks held in Munich, Germany; Tokyo, Japan; Sydney, Australia; Dubai, United Arab Emirates. The talks were held by Dr. Sumet Tantivejkul, Member and Secretary-General of the Chaipattana Foundation to provide insight into His Majesty the King’s philosophy of Sufficiency Economy. The purpose is to instill conscience of sufficiency into the hearts of Thais living abroad to observe in conducting their daily lives. THAI received support and cooperation from the Thai Embassies and Consulates in the various countries in inviting Thais living in the respective countries to attend the talks.

2. Supported His Majesty’s reforestation project “Karnbinthai Plook Chiwit Hai Pan Din” at Huay Sai Royal Development Study Center in Cha-am District, Petchburi Province. This project was in celebration of His Majesty the King’s 80th Birthday on December 5, 2007 which is in the interest of forest conservation and environmental protection.

3. Undertook the Miles for Merit program where THAI’s Royal Orchid Plus frequent travelers sponsored the travel of 80 monks on a pilgrimage to India in merit making by donating frequent flyer miles and for which such merit was bestowed up on His Majesty the King on His 80th Birthday.

4. Deference alters were installed along with the posting of Royal pictures of His Majesty the King and the 80th Birthday celebration shield.

5. A part of the revenue generated from the sales of yellow t-shirts with the 80th Birthday celebration shield was donated to the Thai chapter of the Red Cross Society which is under the Royal patronage of His Majesty the King.

6. THAI invited the general public from all walks of life to participate in the recording of reading His Majesty’s edicts, philosophies and doctrines on CDs. A recording room was established at the Company’s head office and another was established in the passenger terminal at Suvarnabhumi Airport, Don Muang Airport, Chiang Mai International Airport and Phuket International Airport.

Mobile recording stations were moved from place to place - BTS stations, department stores and special event venues to enable the general public to participate in this recording. The recorded CDs containing His Majesty’s edicts, philosophies and doctrines were then given to people who are visually impaired, to those that are illiterate, to elders and children to serve as guidance in conducting their daily lives.

8

Annual Report 2007

Social Oriented Activities In addition to activities in deference to His Majesty the King’s 80th Birthday on December 5, 2007, THAI is also proud of its activities benefiting social causes and activities that preserve Thai culture.

1. THAI sponsored a Royal Charity Flight (on THAI’s Boeing 737-400 aircraft) commanded by His Royal Highness The Crown Prince Maha Vajiralongkorn between Bangkok-Chiang Mai-Bangkok on January 5-6, 2007. The 80,993,740 million baht raised in proceeds from the Royal Charity Flight were presented to His Royal Highness which was in turn used to help those that have adversely been affected by floods and acquiring medical equipment for the various hospitals in the 3 troubled southern provinces.

2. On its 47th anniversary, THAI provided donations to supplement general medical treatment for over 300,000 monks and monks in training. Donations were also made for monks to undergo surgery on their knees to obtain artificial knee joints.

3. The Company coordinated with the Border Patrol Police Bureau to distribute children’s school clothes and school supplies received from donations at the Company’s head office to under privileged children in the provinces along the borders of Thailand.

4. Supported air tickets for judges on behalf of the Anandha Mahidol Foundation and the Princess Mother’s Award Foundation to award doctors and nurses internationally for excellence in their profession.

5. THAI participated in the Red Cross charity event held near the Dusit Palace where net proceeds were given as donation to the Red Cross.

6. Facilitated transportation for international attendees of the 2007 annual Buddhist Visaka religious celebration upon arriving at Suvarnabhumi Airport.

7. Supported and sponsored events to protect the environment, reduce pollution from various business activities undertaken by the Company. The event held on “Global Environment Day” recognized various units within the Company that have been active on environmental issues (Award summary provided in the Awards Received Section Pg. 7). All the projects were geared to reduce pollution and protect the environment while maximizing the utilization of available resource.

Thai Airways International Public Company Limited

9

Financial Highlights

Total Assets (Units : million baht)

2007

272,086

2006

249,034

Revenues from the Sale of Goods and the Rendering of Services (Units : million baht)

2007

192,037

2006

178,607

2005

200,000

150,000

100,000

50,000

0

162,488

Net Profits (Units : million baht)

2007

6,342

2006

8,992

Annual Report 2007

6,000

3,000

0

10

9,000

6,777

2005

310,000

230,000

190,000

150,000

0

270,000

231,638

2005

Consolidated 2007

2006

2005

192,037

178,607

162,488

Profit from the Sale of Goods and the Rendering of Services

12,788

8,364

10,824

Profit before Interest and Tax

13,840

17,273

14,235

6,342

8,992

6,777

Total Assets

272,086

249,034

231,638

Total Liabilities

202,858

183,353

172,426

69,228

65,681

59,212

1,698.90

1,698.89

1,698.89

Statements of Income

(Million Baht)

Revenues from the Sale of Goods and the Rendering of Services

Net Profits

Balance Sheets

(Million Baht)

Shareholders’ Equity

Shares Issued and Paid-up Share Capital

(Million Shares)

Par Value

(Baht)

10.00

10.00

10.00

Earnings Per Share

(Baht)

3.73

5.29

4.00

Dividends Per Share

(Baht)

1.80

1.65

1.50

1

Financial Ratios Net Profit on Revenues from the Sale of Goods

(%)

3.3

5.0

4.2

Return on Total Assets

(%)

2.4

3.7

3.2

Return of Equity

(%)

9.4

14.4

11.9

Debt to Equity

(Times)

2.9

2.8

2.9

and the Rendering of Services

Note : 1. The Board of Directors approved on November 26, 2007 and the rate will be brought to the 2007 AGM for resolution on December 27, 2007.

Thai Airways International Public Company Limited

11

Operations of the Company and its Subsidiaries The Policies of Associated Companies

Thai Airways International Plc. is a state enterprise under the jurisdiction of the Ministry of Transport and is Thailand’s national flag carrier flying domestic and international routes. The Company restructured its organization into the following key business units and subsidiaries beginning November 2001.

Aviation Business The Company’s main business is the transport of passengers, cargo and mail on regularly scheduled flights as well as chartered flights to domestic and international destinations.

Operations of Business Units Related to Air Transport Operations supporting air transport need to be managed systematically to ensure timely departures and arrivals, flight safety, quick and convenient services to enhance passengers’ trust and confidence in the Company. The Company’s business units include : Ground Customer Services

-

Reception and check-in service Passenger baggage tracking service Baggage loading service VIP Lounges Transfer of passengers between THAI City Air Terminal and Don Muang Airport

Ground Support Equipment Services Passenger Crew and Baggage Services

-

Transfer of passengers and crew between terminal and aircraft via ramp bus Transfer of passengers’ baggage between terminal and aircraft

Aircraft Services

-

12

Aircraft towing tractor service to and from jet bridge or parking bay Mobile ramp service for passenger boarding and disembarking Aircraft potable water service Aircraft cabin, toilet and galley cleaning service Air conditioning service for aircraft on the ground Power generation service for aircraft on the ground Baggage handling service Cargo transfer service between warehouse and aircraft Transfer of containers to and from aircraft

Annual Report 2007

Maintenance Services

-

Periodic maintenance checks of ground equipment and vehicles Container repair service in accordance with international best practices

Cargo and Mail Commercial Services

-

Cargo and mail reservation service

-

Cargo and mail manifesting service

-

Compilation of shipment documents and submission of reports on inbound and outbound

Space control and load planning for cargo, mail and baggage Warehouse storage service Cargo and mail weighing service Cargo and mail sorting service Cargo and mail loading and transfer service Cargo and mail documentation service

aircraft to the Customs Department

-

Cargo tracing service

-

Provide tracking information on package and cargo delivery via the internet

-

Perishable services area to enhance the quality and freshness of cargo

Transfer of electronic information to customer airlines and overseas stations Import and export statistics and data service Unit load device control service

Catering Services

-

Food and beverage preparation for in-flight services for THAI and customer airlines Restaurant and snack bar operations at Suvarnabhumi, Chiang Mai, Phuket, Chiang Rai and Krabi airports

-

Internal and external banquet services as well as the operation of “Puff & Pie� bakery outlets at state institutions and government agencies

-

Food and beverage preparation for meetings at the Company’s head office Meal box service for special occasions Food preparation at staff canteens at the head office, maintenance buildings, crew center and OPC building at Suvarnabhumi Airport

-

Cooking and bakery courses for the general public

Thai Airways International Public Company Limited

13

Technical Services

-

Technical, line and light maintenance checks for aircraft in transit or on overnight stop at Don Muang, Suvarnabhumi Airport (24-hour service at Suvarnabhumi Airport) and at other domestic and overseas airports

-

Heavy maintenance checks (C and D-Check) for Boeing aircraft (B747, B777, B737), Airbus aircraft (A300-600, A330, A340) and for MD-11s as well as ATR 72s

-

Passenger seat retrofitting and installation of new in-flight entertainment systems for Boeing 747-400 and Boeing 777-200 aircraft. These were performed at the Don Muang maintenance center in Bangkok and at the Utapao maintenance center in Rayong

-

Maintenance of General Electric engines, namely CF6-80 and CF6-50 series and other aircraft equipment

-

Maintenance service for Nok Air Company Limited’s fleet, the fleet of the Police Aviation Division and major government agencies

-

Sending aircraft engineers as Company representatives to Toulouse, France and to Everett, U.S.A. to coordinate with Airbus and Boeing companies overseeing the specification requirements of Airbus A340 and Boeing 777-200ER aircraft

Transport Support Activities The goal of the Transport Support Services is to support the Company’s marketing efforts by providing customer convenience and enabling passengers to purchase additional services with ease. Such services include : Dispatch services that provide information about flight routes and weather conditions to ensure safe landing Sale of duty free goods on board Sale of souvenir products at THAI shops

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Annual Report 2007

Revenue Structure

Details of the Company’s total revenue are as follows: 1. Revenue from passengers and excess baggage for each route including charter flights 2. Revenue from freight by weight, category, size and destination 3. Revenue from mail 4. Revenue from business units and support activities 5. Revenue from subsidiaries 6. Other income

2007 MTHB

2006

2005

%

MTHB

%

MTHB

%

12,890

6.64

12,030

6.59

10,581

6.41

Freight

384

0.20

397

0.22

378

0.23

Mail

-

-

9

0.01

Revenue from domestic transportation Passengers and excess baggage

8

-

Revenue from other activities - domestic Business Units Supporting Total operating revenue - domestic

7,870

4.05

7,388

4.05

6,667

4.04

820

0.42

772

0.42

686

0.41

21,964

11.31

20,595

11.28

18,321

11.10

143,368

73.84

131,372

71.96 118,653

71.89

25,353

13.06

25,252

13.83

24,041

14.57

992

0.51

1,028

0.56

1,070

0.65

86.35 143,764

87.11

Revenue from international transportation Passengers and excess baggage Freight Mail Total operating revenue - international

169,713

87.41 157,652

Revenue from subsidiary Thai-Amadeus Southeast Asia Co., Ltd. Total operating revenue

360 192,037

0.19

360

98.91 178,607

0.20

403

0.24

97.83 162,488

98.45

Other income Share of profit from associated companies

123

0.06

256

0.14

127

0.08

Interest income

621

0.32

317

0.17

362

0.22

1,382

0.71

3,388

1.86

2,071

1.25

2,126

1.09

3,961

2.17

2,560

1.55

194,163 100.00 182,568 100.00 165,048

100.00

Others Total other income Total revenue

Note : The Company has a contract with Traveler Corporation of Japan as distributor of THAI’s In-Flight Duty Free goods, a supporting activity.

Thai Airways International Public Company Limited

15

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Annual Report 2007

The Company’s Operating Results

It is expected that going forward, competition in the commercial airline business is likely to intensify, especially within Asia as the region will be experiencing the highest level of economic growth. Adding to the intensity of competition is the ongoing open skies policy that will enable greater freedom for all airlines to fly into Thailand. Other factors posing to be challenges include the dual airport operations of Suvarnabhumi Airport and Don Muang Airport along with the rising aviation fuel price are factors bearing direct impact on THAI’s operating performance.

To proactively mitigate the adverse impact of the above factors, THAI changed its operating strategy by putting effort towards increasing network sales. This is in addition to the change in marketing and pricing strategy adopted by targeting preferred passengers - the business community, entrepreneurs, large institutions and leisure travel. Furthering the Company’s efforts in attracting preferred customers, THAI is continually upgrading its aircraft fleet. In fiscal year 2007, THAI sold 3 of its older aircraft - 2 Airbus A300-600 and 1 Boeing 747-300. There is one more Boeing 747-300 that has been decommissioned and is pending sales. However, THAI also took delivery of 5 new aircraft - 4 Boeing 777-200ER and 1 Airbus A340-500. To maximize revenue and profitability, flight frequencies were added to destinations contributing the highest level of profitability while reducing or discontinuing loss making flights.

New developments and efficiency improvements in all areas of operations have been undertaken which has not only increased the Company’s competitiveness but has also enabled the Company to weather many adversities and maintain profitability. These improvements have also enabled THAI to successfully operate flights from both Suvarnabhumi Airport and Don Muang Airport to relieve congestion being experienced at Suvarnabhumi Airport.

Core Business Aircraft Fleet Aircraft Type

Number of Aircraft 2007

2006

Boeing 747-400

18

18

Boeing 747-300

1

2

Boeing 777-300

6

6

Boeing 777-200

8

8

Boeing 777-200ER

5

-

Boeing 737-400

10

10

Airbus A340-600

5

5

Airbus A340-500

4

3

Airbus A330-300

12

12

Airbus A300-600

19

21

2

2

90

87

ATR 72 Total

Thai Airways International Public Company Limited

17

THAI’s aircraft fleet currently totals 90 with the additions of 5 new Boeing 777-200ERs, 2 of which were received in November, another 2 were received in December of 2006 and the last was received in September 2007, used for additional services to Europe and Australia. Another Airbus A340-500 was received in May 2007 enabling THAI to increase its flights to North America. As part of an ongoing effort to enhance product quality, THAI decommissioned 4 aircraft in fiscal year 2007 - 2 Airbus A300-600 and 2 Boeing 747-300.

Of the Company’s aircraft fleet, 5 have been leased to THAI’s sister low cost carrier “Nok Air” which includes 4 Boeing 737-400 and 1 ATR 72. As at the end of September 2007, the aircraft fleet used by THAI totaled 84 with 1 decommissioned aircraft pending sales.

In fiscal year 2007, THAI began its retrofitting program for its Boeing 777-300 by installing new and more comfortable seats with on demand in-flight entertainment system. The retrofitting program is likely to be completed by November 2008.

THAI expects to receive 1 new Boeing 777-200ER in October 2007 and another Airbus A340-600 in October 2008 to further expand its operations to Europe and Australia. Another 2 new Airbus A330-300 will also be joining the fleet in November and December of 2008 to support regional demand.

18

Annual Report 2007

Routing and Destination Development Proactive steps were taken in fiscal year 2007 in regards to its routing and destination development to enhance THAI’s competitiveness. Additional intercontinental and regional flights were added to destinations determined to have the most potential, which were mostly business centers and tourist destinations around the world. Flight times and frequencies were also adjusted to better meet passengers’ preference while coordinating with partner airlines to enhance connectivity.

THAI’s reach currently spans 62 destinations in 35 countries around the world and provides services to 11 intriguing destinations within the Kingdom of Thailand.

North American Routes THAI’s frequency of non-stop flights to North America from Bangkok was increased for both Los Angeles and New York to daily flights providing passengers with flexibility and accommodating the strong demand for air travel on these routes. The two U.S.A. destinations serve as points of connectivity for passengers traveling to other destinations within North America via the Star Alliance network. There are 8 major destinations within the U.S.A. from which passengers mostly connect from New York, these include Chicago, San Francisco, Dallas, Washington D.C., Atlanta, Miami, Denver and Seattle. Pacific flights to Los Angeles are code share flights with United Airlines with passengers connecting to points beyond including Chicago, San Francisco, New York, Denver, Seattle and Washington D.C. Code shares are also made with Air Canada from THAI’s European destinations Frankfurt and London to Toronto, Montreal and Vancouver in Canada.

Thai Airways International Public Company Limited

19

European Routes Additional flights were initiated to Munich and Stockholm from 5 weekly flights to daily. Because of the strong passenger demand, an additional flight was added to the Bangkok-Milan route for the 2007 summer traffic program, making it 4 weekly flights.

THAI has also put much effort into the development and cooperation with members of Star Alliance that have their operating base in Europe which includes Lufthansa in Frankfurt and Munich; Bristish Midland Airways (BMI) in London; and Austrian Airlines in Vienna to enhance connectivity and increase points of destination of choice for passengers where THAI does not fly. The cooperation expands THAI’s reach to 9 key destinations in Europe - Amsterdam, Geneva, Vienna, Brussels, Barcelona, Lisbon, Budapest, Prague and Warsaw.

THAI is now also able to reach 7 major destinations in Germany namely Nuremberg, Dusseldorf, Cologne, Berlin, Stuttgart, Hamburg and Hanover. To Austria, THAI can now reach 5 major destinations including Graz, Innsbruck, Klagenfurt, Linz and Salzburg. In England, THAI’s reach spans 7 destinations in Ireland and Scotland - Dublin, Glasgow, Edinburgh, Belfast, Leeds, Manchester and Tees Side.

African Routes THAI currently provides 3 weekly flights on its Airbus A340-600 to the beautiful city of Johannesburg in South Africa and cooperates with South African Airways to provide service for passengers wanting to travel to Cape Town and other major tourist destinations in South Africa.

Australian and New Zealand Routes To meet the growing travel demand of passengers into Australia, THAI increased its direct flights to Sydney from Bangkok to 14 weekly flights and will increase that to 19 weekly flights ending October 2007 with ongoing service to Brisbane to 7 weekly flights. For direct flights to Melbourne, flight frequency was increased to 12 per week.

As a member of Star Alliance, THAI code shares with Air New Zealand to carry passengers to key tourist destinations in New Zealand. On the same basis, Air New Zealand code shares with THAI for passengers who need to connect to Europe and other regional destinations within Asia.

Regional Routes THAI’s route network has been designed to make Thailand a regional hub for air travel for which THAI currently serves 42 destinations in Asia. Changes in flight schedules and flight frequencies were made to destinations in China, Japan, Korea, India and the Middle East experiencing the high levels of growth in travel. This is in addition to the increased cooperation with members of Star Alliance to build travel traffic into the region.

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Annual Report 2007

Northern Routes Flight frequency to the city of Seoul in The Republic of Korea has been increased to 32 weekly flights from 28. The same has been done for flights to Busan where the frequency has been increased to 6 weekly flights from 4. For China, flight frequency to Beijing will be increased to 14 weekly flights from the existing 10 by end of October 2007.

Western and Eastern Routes THAI is looking to increase its flight frequency to Pakistan as per the given rights by the end of October 2007 to the 3 cities that THAI currently serves - Karachi, Lahore and Islamabad. Aircraft type adjustment has been made for flights into the Middle East - Muscat, Dubai, Kuwait and Bangalore in India, to match the growing traffic volume and to compete with Middle East airlines. New sales approaches and techniques have been employed to attract travelers to visit and relax in Thailand.

Southern Routes THAI is holding its frequency of service to the south steady while aircraft type has been changed to match market demand and demand generated from THAI’s alliance network to better compete with low cost carriers that have increased their presence in the region.

Indochina Routes For fiscal year 2007 services to Ho Chi Minh City was increased to 16 from 15 weekly flights using Airbus A300-600 and that frequency will be increased to 17 by October 2007.

Domestic Routes To reduce the level of traffic congestion being experienced at Suvarnabhumi Airport, THAI began its domestic services from Don Muang Airport since March 25, 2007. However, the main tourist destinations Chiang Mai, Chiang Rai, Phuket and Krabi are also being served from Suvarnabhumi Airport for connectivity with international flights.

THAI currently serves 11 domestic destinations in various parts of Thailand. To the north, THAI serves Chiang Mai, Chiang Rai, Maehongson and Phitsanulok. To the northeast, THAI serves Udon Thani, Ubon Ratchathani and Khon Kaen. To the south, THAI serves Phuket, Krabi, Hat Yai, and Surat Thani. THAI also has direct flights between Chiang Mai - Phuket and Chiang Mai - Maehongson. The number of domestic flights per week totals 296 with 175 of the flights departing from Don Muang Airport, from Suvarnabhumi Airport 100 flights and 21 flights between Chiang Mai - Maehongson and Chiang Mai - Phuket. Ending October 2007, total domestic operations will increase to 317 flights per week with 168 flights from Don Muang Airport, 121 flights from Suvarnabhumi Airport and 28 flights between Chiang Mai - Maehongson and Chiang Mai - Phuket.

For domestic services, THAI has a code sharing arrangement with PB Air to provincial destinations such as Lampang, Nan, Sakon Nakhon, Nakhon Phanom and Roi Et to provide international passengers with greater flexibility in connection to these smaller provinces in Thailand.

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Star Alliance A strategy for which THAI has utilized to mitigate the impact of increasing competition in the commercial airline industry has been the ongoing development and cooperation with members of Star Alliance for which THAI was among the founding members launched on May 14, 1997. Today, Star Alliance is the largest air travel alliance with 17 member airlines, and 3 European regional carriers. The Alliance network spans 855 airports in 155 countries with overall flights of over 16,000 per day. By December 2007, there will be 2 additional members including Air China and Shanghai Airlines. The exponential growth in economic interdependence amongst countries around the world in the course of the past ten years confirms THAI’s vision in jointly establishing this premier alliance.

The growing cooperation amongst member airlines has led to the realization of both tangible and intangible benefits. THAI’s global image reflected through the membership of Star Alliance is an invaluable intangible benefit. Revenue growth for member airlines along with the number of member airlines within Star Alliance and the sheer number of Network Traffic or the increased number of passengers generated by the network effect are some of the key tangible benefits. In fiscal year 2007, revenue contributed by network traffic to THAI’s top-line revenue increased by 3.1% year on year to 10,000 million baht.

The joint exercise amongst Star Alliance members in the Global Connectivity Improvement Project and the Bangkok Hub Project, a 2 year cooperation amongst alliance members which started from April 2005 and ended in March 2007, to promote Bangkok as the connecting hub yielded an increase of 60,665 travelers or a contribution of approximately 931 million baht.

Cooperation has also been extended in various areas to support each member’s operations, standardize certain operations and venues for knowledge and experience sharing to better control operating cost. At the same time, the synergy encompasses utilization of the latest technology and knowhow to develop products and services to better meet the demands of customers in a changing environment.

The marking of the 10th Anniversary of Star Alliance has brought on new marketing techniques and tools to meet the changing customer demands within the commercial airline industry. Much of these changes are the result of technological developments for which THAI and Star Alliance have embraced in addition to delivering unsurpassed service quality.

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Commercial Department To enhance the Company’s ability to compete in an ever increasingly competitive operating environment for the commercial airline industry stemming from open skies policy and external uncontrollable factors such as the ever increasing price of aviation fuel, in fiscal year 2007, a proactive marketing approach was adopted to increase the Company’s overall revenue and increase market share. Part of the strategy was to ensure customer retention while looking for opportunities targeting new markets especially the more affluent population. The objective was also to increase the proportion of the Company’s premium class passengers by building a larger corporate client base and attracting premium passengers with packages targeting such niche. Products were also developed geared towards attracting passengers for the economy class.

Being a full network airline, THAI used its positioning to develop and increase passenger volume through pushing to increase network sales in conjunction with members of Star Alliance and THAI’s other Partner Airlines. This strategy was in addition to THAI’s ongoing effort to modernize its aircraft fleet and adjusting aircraft type and flight frequency to increase its competitive position in the respective markets.

Attention was also given to niche marketing to further enhance the Company’s revenue and the number of passengers especially during the seasonally low period while protecting the Company’s market share. The Summer Super Early Bird Promotion was launched for Frankfurt and Munich while the Touch Down Fare was launched for Lahore. The Star Alliance Thailand Airpass, THAI Value Card and THAI Value Plus Card were pre-paid tickets of attractive prices which could be used as gifts for friends and family. Seasonality products were also launched especially for the low season during the months of April through June.

To broaden the customer base, THAI entered into cooperation with Total Access Communications Plc. (DTAC) and Krungthai Card Plc. to co-promote travel through a larger combined customer base.

For value added service, Royal Orchid Holidays (ROH) vacation packages were diversified to encompass a larger selection of destinations and preferences for both domestic and international travel. Packages offered for fiscal year 2007 totaled 800 encompassing 35 countries and 110 cities.

The Reservations Booking Designator Guideline System (RBD) was utilized to assist in setting airfares for each booking class to maximize overall revenue and to ensure efficient and effective seat booking.

The Revenue Management System (RMS) was also utilized to maximize efficiency in optimizing revenue generation. Furthering efforts to grow revenue, THAI re-assessed its routes and made necessary changes to ensure that the routing suites customers’ travel preference and increasing travel demand on THAI. The Centralized Intelligent Fares System (CIF) and the CIF Online Fare Filing System were used to assist in effectively and efficiently establishing fares for network sales and providing faster reservation service for passengers. The systems also helped to minimize the possibility of overbooking and overflow of passengers during peak seasons.

Enhancing customer ease in making bookings, the Flex Pricer program has been introduced to

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enable passengers to book their seats online and make payment via the online Automatic e-Payment system.

The online payment system enables passengers to immediately know their completed payment. The online reservation system will enable online bookings from abroad beginning late 2007. The system allows passengers to book seats 24 hours before flight time versus the previous requirement of 72 hours with the manual process. THAI is making a conscientious effort to reign in cost and to be more environmentally friendly.

E-tickets have been issued for all domestic flights and now tickets sold for partner airline flights have begun to be in e-Ticket form.

THAI is better utilizing customer information for competitive purposes to not only improve products offered but also to improve services delivered to passengers globally. The Company has and continues to actively seek to foster closer cooperation with members of Star Alliance and is currently studying the benefits of utilizing passenger information on the Star Common Platform. To this end, THAI launched the Star Alliance Thailand Airpass/Visit Asian Airpass to promote travel into Thailand and Asia while also adopting a more flexible term and pricing policy for travel as part of Star Alliance around the world.

Customer Service Customer service is at the heart of the commercial airline business for which THAI has and continues to develop and improve its service quality to deliver the highest level of satisfaction to its customers. The aligned strategies and goals focusing on customers are based on the concept of providing unsurpassed service quality at every touch point based on the concept of the Magic Service Ring. Being committed to meet the guidelines of the Magic Service Ring will lead to consistency in service excellence and thus enhance THAI’s competitiveness, which will translate into stronger revenue growth.

THAI has and continues to emphasize improvement in service quality through managing every customer touch point based on internationally accepted standards with Thai touch. The benefit derived from the effort put forth in managing customer touch points and meeting customers’ needs is customer satisfaction and return patronage to ensure robust earnings for the Company in the longer term.

THAI integrates the inherent beauty and friendliness of Thai culture into providing service to its passengers from the first point of contact to the end of the customer’s journey. The goal is to provide comprehensive quality, efficient, smooth and quick service not only just on the ground but also in the air.

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The in-flight products have also been enhanced to improve passengers’ experience including the cabin ambience, seats and in-flight entertainment to increase THAI’s product competitiveness. Of the Company’s aircraft fleet, 12 of its Boeing 747-400 have undergone refurbishment from 2006 and have been completed in fiscal year 2007. Another 8 of its Boeing 777-200 aircraft have also undergone refurbishment during the same period. The remaining refurbishments to be completed by fiscal year 2008 are its 6 Boeing 777-300 aircraft which will be configured exactly the same as its 5 newly received Boeing 777-200ER. Both refurbished and newly received aircraft are decorated with the Company’s new striking and modern looking Corporate Identity with emphasis of touches of Thai. New luxuriously spacious and comfortable seats have been installed along with personal entertainment monitors with interactive on-demand entertainment on all seats of THAI’s new aircraft.

In THAI’s quest to achieve the objective of being the First Choice Carrier, another aspect of service that cannot be overlooked is its in-flight food and beverage service. A testament to the level of dedication to THAI’s onboard food and beverage service is the Meal of the Week award earned in 2007 for its first class meal on the Bangkok-Hong Kong flight. This prestigious award was bestowed on THAI by its customers who voted through the www.airlinemeals.net. The Japanese Newsweek magazine also commended THAI’s in-flight meal on its Tokyo-Bangkok flights. Another award bestowed on the Company in conjunction with 6 of its peers is the Best White Wine award provided by Best Traveler magazine. The Best in Test award was also given to THAI in March 2007 by a major Swedish newspaper “Expressen” for its long-haul service in comparison with all other airlines flying out of Stockholm.

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To further enhance the travel experience of our passengers, THAI introduced the Route Localization strategy where authentic food and beverage of the country of destination has been incorporated into the menu. For 2007, Pakistani dishes for Karachi, Lahor and Islamabad were the feature dishes.

In consideration of passenger comfort in traveling, much consideration was made in regards to the selection of in-flight equipment and supplies for which is most suitable to enable cabin crew to execute their tasks most efficiently. THAI actively makes changes to its in-flight cabin equipment and dining wear to ensure the highest level of ergonomics for passengers. The latest in technological development in light weight drink/meal cart was acquired to not only facilitate quality service by the cabin crew for THAI’s passengers but also reflects THAI’s environmental awareness where less weight carried in-flight translates into reduced fuel consumption. Head sets for in-flight entertainment for economy class have been designed for one-way use and a mini comfort set is provided for passengers in Premium Economy class.

All new developments and improvements in product and services undertaken by the Company reflect our customers’ feedback via the THAI Customer Satisfaction Survey for all flight destinations that THAI serves. The survey covers pre-flight, in-flight and post-flight concerns and the results are benchmarked against results of customer feedback on service of peer airlines. THAI has also put in place a process that monitors and assesses the quality of product and service provided to its customers. The information is used to make

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further improvements to THAI’s products and services. THAI utilizes the Customer Relationship Management Program in its effort to provide unsurpassed service quality and has empowered its staff at each customer touch point to provide the highest standard of service with authority to make on the spot decisions to assist in resolving problems passengers may have.

Flight Operations The ultimate concern for the Company is the ability to provide the highest level of safety in providing transport services for passengers, cargo and mail benchmarked to that of internationally accepted standards.

Safety guidelines for which the Company strictly adheres to are that of Thailand’s Department of Civil Aviation (DCA), the International Civil Aviation Organization of United Nations (ICAO), the Joint Aviation Authorities of Europe (JAA), the United States’ Federal Aviation Administration (FAA) and the guidelines of IATA’s Operational Safety Audit (IOSA) Program.

Factors in which the Company emphasizes to enhance overall safety in operations include the policy on selecting the most qualified cockpit crew. Physical, mental, knowledge, skills and behavior are among factors the Company assesses on each of its pilots. A third party expert from Sweden has also been commissioned to undertake aptitude and aviation psychology assessments on the cockpit crew.

THAI has not only qualified training personnel but also has the latest in training equipment to support the development of pilot skills. Training emphasizes a multitude of on the spot problem solving related to weather effects, technical difficulties, engine problems, fires and emergency landing under various emergencies. Every six months, each pilot has to undergo a skills refresher and development course in the Company’s flight simulators. THAI has simulators spanning the range of its aircraft types and have the latest in software capability enabling very realistic situational simulation.

To ensure the highest level of safety training and the most efficient and rapid response to emergencies, joint training of the cockpit and cabin crews were undertaken. The training was to enhance in-flight cooperation and ultimately to ensure the highest level of safety standard for which THAI’s passengers expect.

Safety enhancement plans have been developed for different functions throughout the Company.

Research and studies on safety have been undertaken including Flight Operational Trend Analysis (FOTA), VR, FOR, ATIR, Deficiency/Hazard Reports and Bird Strike Reports to find ways to prevent the occurrence and resolve such problems if and when they occur. Trend analysis reports are also generated to provide information for management decision making on the various aspects of safety. THAI coordinates and regularly participates in domestic and international functions held by ICAO, Association of Asia Pacific Airlines (AAPA), International Aviation Transportation Association, DCA, AEROTHAI (Aeronautical Radio of Thailand) and meetings with the Airports of Thailand Public Company Limited (AOT) on issues pertaining to enhancing safety standards.

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THAI’s e-Learning system has been developed to enable pilots to review and enhance their knowledge on technology that is constantly changing in the aeronautical industry. The Flight Instructor Training Program (FIT) has been developed to facilitate flight instructor skills, the Airline Transition Training (ATT) program is for training of new pilots and Conversion Training for pilots converting to a different aircraft type. Other training include flight management skills and team work development.

To ensure operational efficiency, THAI used its knowledge management system to store case studies to efficiently and effectively find ways to resolve problems using Risk Reduction Program. The handbook and operating guidelines of its aircraft fleet are kept current with ongoing updates.

At the same time, THAI has implemented a very effective fuel consumption management system which has been an ongoing project for the Company since fiscal year 2005.

In addition to adhering to the highest level of safety standards the Company emphasizes providing unsurpassed service quality to its passengers through its Smooth as Silk Travel Experience with Touches of Thai. Ongoing training of cabin staff has been in the areas of service quality, enhancing staff capability and instilling positive attitude to ensure service quality that is of international standard for all classes of service and for all destinations. The Cabin Simulator was used to train cabin crew on flight safety equipment to provide passengers with the highest level of confidence in safety procedures with the highest quality of service.

A proud achievement for this past year was for THAI to have received recognition by Skytrax, the renowned English based independent research institute, as the 2nd best airline in its annual Airline of The Year 2007 review. The ranking reflects customer feedback, which is a major boost for THAI’s pride in being recognized for the Company’s efforts to improve its products and services.

Security and Operational Safety A key part of the Company’s responsibility as the National flag carrier has been to continue to strengthen and uphold security and operational safety at par with that of international standards. The high standard of security and operational safety is applicable to flight related operations, passenger service and the environment to enhance confidence that the products and services delivered by THAI’s operating units are of the highest standards of security and safety for its customers, employees and relevant persons. The standard upheld complies with all applicable standards and legal guidelines related to the Company’s business operations. THAI has clear job processes, clear standard of operations, designated training and an encompassing information system, which complies with internationally accepted standards. To ensure the highest security and safety standards, THAI has in place a clear review, assessment and evaluation process at all levels throughout the organization.

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In fiscal year 2007, THAI’s certification of security and operational safety received from the IATA Operational Safety Audit (IOSA) was a testament to the international standard of security and operational safety achieved by THAI. Since the certification was presented by the International Air Transport Association (IATA), a high level of comfort can be derived from knowing that measures taken by THAI on security and operational safety is comprehensive and provides the highest level of safety for THAI’s passengers.

Regular monthly meetings of the Company Safety Committee (CSC) have been held to review and assess the effectiveness of security and operational safety measures that have been undertaken. Attending the meetings were representatives from the various departments and the resolutions reached at these meetings were implemented to enhance security and operational safety standards.

THAI commenced its Corporate Safety Information System (CSIS) mid 2007 with its staff undergoing training to enhance their ability to use the system to improve the effectiveness in utilizing the Safety Management System (SMS), which means that the accident preventive system will be more effective.

In addition to ensuring safety, THAI puts a high priority on managing Aviation Security as the concern for terrorism still lingers. With stringent security measures being implemented at various airports throughout the world, the Company is vigilant about new developments in security measure and making sure that THAI’s own security and safety measures are updated on a regular basis in THAI’s handbook on security and operational safety. Regular emergency response drills in cooperation with state emergency units along with constant update and assessment of news serves as basis for devising the most appropriate emergency response and ensuring efficient flight operations.

In recognizing the importance of hygiene and the safety of its employees, THAI established a policy on issues of employee occupational health and safety. In compliance with legal requirement, a Committee was appointed to oversee the issues of occupational health, safety and the environment throughout the Company.

In regards to standard of quality, the Company devised strategies, purposes and goals including action plans to enhance quality and service standards. Having earned the ISO 9001 certification for its ground and in-flight services, THAI will continue to uphold its quality of service and to provide customers with the highest level of customer satisfaction.

THAI has in place emergency procedures to ensure that there will be uninterrupted operations in case of emergencies through its Crisis Management Operations Center (CMOC) at THAI’s new Operations Center at Suvarnabhumi Airport. This CMOC office is the second of its kind similar to the one located at the Company’s head office. The Board Chairman, the Company President, Executive Vice President of the Standards Assurance and Risk Management Department and the CMOC Director have the responsibility of managing the crisis, resolving problems and providing support in anyway possible. There are numerous plans and training scenarios,

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training on use of the systems developed to enhance the skills and experience of those responsible for handling crises. A system of quick information display is installed to ensure information integrity, speed and access to information database of the various departments to enhance the ability to access current information for immediate decision making. The information system also has the ability to connect to related external parties.

THAI will continue to improve on its security procedures and enhance its operational safety through keeping track of changing safety standards and guidelines of the various organizations specializing in safety measures and standards. THAI continues to assess its operating environment and maintain vigilance on potential terrorism. A key safety measure for which THAI is placing emphasis on development is the Safety Management System (SMS) that complies with ICAO’s standards.

Information Technology Information technology is ever becoming an integral part to the Company’s operations as it enhances overall efficiency and used properly, generate additional revenue for the Company and reduce operating expense. Full ongoing support has been given to improving and enhancing the Company’s information technology capability. Emphasis has been geared towards developing a strong backbone system and developing systems to support the various business functions of the Company to ensure competitive advantage in terms of cost, efficiency, accuracy, quality assurance and diversity in products and services. An annual review is held amongst management to identify key trends and make appropriate changes to the overall corporate IT master plan for which the budget is to be allocated for development. The planning session enables a concerted effort on IT development while reducing redundant projects and efforts while ensuring that necessary changes are made with changing technology and the changing business environment.

In committing to its Magic Service Ring concept, further developments have been made in the area of e-Services for fiscal year 2007. As customers are at the core of the Magic Service Ring, the effort has been to utilize the latest IT channels to provide service to customers while improving on quality of service. Royal Orchid Plus (ROP) members are now able to redeem rewards online for domestic air tickets and hotel vouchers through THAI’s web site www.thaiairways.com. Air tickets can be printed from the computer whereby enhancing convenience and flexibility for ROP members. Passengers can also make payment for e-Tickets via the e-Payment system while plans are being developed to enable multi-currency payment capability for purchase of air tickets.

IT support for flight operations include the Network Management System which enabled management to efficiently analyze route performance and make timely adjustments to the routing strategy. Sensitivity 30

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analysis run by changing variables such as aircraft type, passenger and cargo demands and cost related to flight operations provides management with optimized operating results thus determining the strategy for flight routes. The Ground Operations Control Center System has also been developed to support the operations of the Ground Operations Control Center, the decision making process and operations control at Suvarnabhumi Airport to ensure effectiveness of ground operations management. The System receives data from the various points of operations and if there is a problem or an irregularity, the system employed will warn decision makers so that immediate corrective actions can be taken.

THAI is currently looking to invest in the Project Portfolio Management tool to be used in the process of developing IT related strategies and IT Project Management within the Company. This centralized system will enable users of every level to manage and track not only persons responsible for each project but also the progress and expense related to each project. The Business Service Management system is responsible for assessing the efficiency of each IT process on an end to end performance basis, which is used to uphold the service level agreement with the user department. The tool can also assist in running diagnostics to determine problems with customer’s systems. To also ensure effective communications throughout the organization along with THAI’s customers and business partners, THAI provides direct access to its information base from anywhere using a hard token security system.

For human resources development, e-Learning has been incorporated into the learning regiment for which knowledge development for THAI staff can be done remotely. The purpose has been to support not only knowledge development but also to develop technical skills to better perform tasks and improve service for

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THAI’s customers and to achieve the Company’s overall objectives. The program was enhanced for cockpit crew training enabling pilots to have easy remote access to preferred information on demand. The cockpit program will serve as blueprint for the program that is being developed for the cabin crew and also for IT training in general.

In support of the re-opening of Don Muang Airport, THAI successfully installed the necessary network communication systems and connectivity of remote computers at Don Muang Airport to the Company’s various information systems as planned and on time for the re-opening.

Human Resources Development and Management In setting the Company’s vision as “The First Choice Carrier with Touches of Thai” and creating the highest level of customer satisfaction, THAI’s human resources development and management strategy emphasized the enhancement of management in leadership skills and fostering team work. A system of performance-based compensation has also been adopted while ongoing skills and knowledge development have been provided for staff at all levels to enhance and broaden their capabilities. The above initiatives serve as tools towards achieving the Company’s overall objectives.

THAI’s human resources development and management strategy reflects the changing environment for which the commercial airline industry is undergoing to ensure the Company’s long-term competitive advantage. In fiscal year 2007, the Company undertook an assessment and restructuring of the organization to streamline operations and improve communications. Assessment and adjustments were made on job value with respect to compensation and ensuring appropriate and equitable benefit for all employees while a review of the ongoing job valuation process was also made to ensure integrity and appropriateness of each job position versus pay. Assessment of manpower requirement was also made to ensure adequate support to execute assigned tasks. THAI is not only concerned about the employee’s productivity but also their health and ensures them a working environment that is conducive for learning and performing their duties. The Company is currently in the process of developing a Performance Management System that measures individual performance with transparency and justice and determines the corresponding level of compensation. Such system is expected to not only incentives star performers but also serve as a means to retain them. The system will also be used to set guidelines in the process of succession planning where qualified managerial staff are well-prepared to ensure smooth transition and sustained growth for the Company.

A Competency Model has been implemented for competent personnel selection process. The selection criteria will serve as guideline for staff competency enhancement in career path development. General training courses and courses designed to correspond to the Company’s Core Competencies and Managerial Competencies in order to provide its staff a broad knowledge base and enhance management skills.

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The Competency Computer - Based Testing (CCBT) system is being developed to assess the competency of each employee and serves to enhance planning and customizing training requirements enhancing individual’s capability and benefitting the Company overall.

In addition, courses were designed and integrated into the Training Roadmap for each functional position to develop functional competency for all staff levels encompassing areas of ground and air passenger services, cargo services, safety, marketing and sales, foreign languages and cultural development.

In the push to put the Company at the forefront of the industry regionally, the “TG Ambassador” program was launched to raise awareness of THAI’s products and services for its frontline staff. In doing so, the program is designed so that as a Company representative, THAI’s frontline staff will be able to better recommend products and services to support customers’ needs. Foreign language development and cultural awareness form part of the Company’s overall strategy to better serve its passengers. Chinese, Japanese, French, German and Korean are the predominant languages for which the program will first emphasize. This serves as team-building strategies to create the staff’s multi-skills (multi-skilled workforce).

For optimum efficiency and effectiveness in staff operations, ground services training emphasizes issues of safety, quality and security as the topics encompass legal guidelines, the Ministry of Transport’s guidelines along with that of International Air Transport Association (IATA) and International Civil Aviation Organization (ICAO)’s rules and regulations for management and executive level staff.

An e-Learning software “Tell-me-More” has been launched to facilitate teaching of the 7 foreign languages for all departments. The e-Courseware and the e-Library are currently being developed for the library to become the information and news center.

Cooperation with both local and international professional and educational institutions has led to the interactive exchange of professional experience and knowledge. Course work under the Executive Program and ongoing seminars of relevant topics have been undertaken to hone the senior executives’ knowledge and skills.

To promote staff’s attitude, value, and corporate culture, THAI’s core values have been reiterated and engrained into staff’s mindset at each and every training session. The “THAI Spirit” (Teamwork, Happiness, Awakening and Inspirations) forms the heart of THAI’s operating culture.

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Business Units Ground Customer Service THAI continues its tradition of providing quick and unsurpassed Thai style quality products and services emphasizing convenience to maximize passenger comfort and exceed customers’ expectations.

To ensure the utmost comfort and luxuries for our premium class passengers, the most modern of luxuries have been installed at the premium class lounges at Suvarnabhumi Airport, which began operations in September 2006. Services provided to THAI’s premium class passengers include a curbside service with porters handling passengers’ luggage and a separate “Royal First Check-in Lounge” and a separate “Royal Orchid Premium” check-in section for Royal Silk Class passengers. A separate fast track immigrations channel is also provided for THAI’s premium class passengers. An A-la-carte Restaurant Concept is also provided in the Royal Orchid Premium Lounges. A spa with sauna and a steam room is available at our premium class passenger lounge.

Private entertainment/family rooms along with a kids’ corner are some of the amenities provided for family travel. A one-stop service is also provided to passengers in making flight reservations, checking travel information, arranging special assistance for children, the elderly, physically impaired, first time travelers along with arrangements serving between the THAI City Air Terminal (TCAT) and Don Muang Airport.

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As part of THAI’s commitment to quality passenger service under its Magic Service Ring quality commitment, a total IT solution approach has been implemented at Suvarnabhumi Airport to enable comprehensive and seamless service for its passengers. Such services include the iCheck-in or the online internet check-in service, self-service check-in and check-in via telephone.

To expedite communication and enhance the overall service experience of our passengers, THAI introduced the use of the Mobile Information Communication System and the Personal Digital Assistance (PDA) for ground staff. Further facilitating customer convenience, THAI opened its remote advance check-in site called the “THAI City Air Terminal : TCAT” located at the Ladphrao subway station where passengers can check-in and be transported to Don Muang Airport.

In the quest to be the First Choice Carrier with premier ground customer service, creative value added services have been initiated. In addition to value added services, the drivers for success have been related to THAI’s frontline staff. Clear and comprehensive job process has been established for each job function and at the heart of it all is the ongoing development of staff capability.

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Ground Support Equipment Services With the vision to be the First Choice Ground Support Equipment Services, THAI continues to deliver unsurpassed quality of service to not only THAI aircraft but also that of its clients. Of the current 76 airlines giving THAI a 69% of the ground support and equipment services market. The parking area of coverage at Suvarnabhumi Airport spans 876,541 square meters with 120 parking bays.

The key to THAI’s success has been providing a comprehensive one-stop service to its clients with emphasis placed on three areas. The first is ensuring internationally accepted standards of service quality with attention paid to every service detail. Second is to ensure the highest level of safety for which THAI’s customers expect. Last is the observance of timeliness of service to ensure ontime departure of flights. To deliver such level of quality of service, THAI ensured that its staff are well trained and are supported by the latest in tools and equipment. The combination of quality staff and latest equipment has resulted in the level of confidence entrusted upon THAI’s Ground Support Equipment Services by client airlines.

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Ground Support Equipment Services rendered at Suvarnabhumi Airport this past year totaled more than 200,000 flights both that of THAI and that of customer airlines. A new Baggage Reconciliation System (BRS) was installed at Suvarnabhumi Airport to work with the Baggage Handling System (BHS) installed by the Airports Authority of Thailand Plc. (AOT) to automatically check, sort and send passenger baggage to the respective aircraft.

The BRS is currently being used to handle customer airlines’ passenger baggage and the ultimate purpose has been to minimize errors while enhancing customer satisfaction and peace of mind.

THAI’s Ground Support Equipment Services is by far the largest at Don Muang Airport serving approximately 2,000 flights per month including other airlines other than THAI’s own flights. The Ground Support Equipment Services also provides ground service for other airlines flying into the various regional airports other than that of THAI’s own flights. Revenue generated from provincial airports including Phuket, Chiang Mai, Hat Yai and Utapao has earned THAI over 150 million baht in the past fiscal year.

THAI seeks to continuously improve its services to meet the changing needs and higher customer standards through a management process that reflects ISO 9001 : 2000 quality as certified by TUV-NORD for which THAI has received such accolade for a decade. In regards to health and safety in the working environment, THAI observes all of AOT’s legal and operating guidelines. THAI also strictly adheres to parking area safety guidelines as stipulated by IATA. International safety standards are strictly observed under the Company’s Ground Damage Prevention Program (GDPP), safety measures undertaken at every point of THAI’s ground operations reflects a unified effort to provide the highest level of safety in providing services for customer aircraft. Safety measures and procedures are designed to avert risks from international terrorism.

Closed Circuit Television (CCTV) and biometric access control systems have been installed in critical areas of operations. Adding to technological systems integrated to screen and limit access to sensitive areas of operations, each member of THAI’s aircraft cleaning team has been trained to be observant of foreign objects and people working in and around the aircraft of any abnormal behavior under the Secure Clean approach, a British standard. This safety standard has been in place for over 4 years and has provided THAI’s customers with a high level of satisfaction. This level of security awareness on the part of THAI’s staff has added to the level of safety of THAI’s own air service which is a reflection of the commitment to high standards of service and safety, which has consistently earned safety certification for THAI from IATA’s Operational Safety Audit (IOSA).

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Cargo and Mail Commercial Services With the vision to be the First Choice Air Cargo and Mail Service including Cargo Storage Services, THAI invested heavily in its cargo facilities to ensure the highest quality of products and services. Emphasis in quality service has been made at every service process to enhance overall customer satisfaction under the “THAI Cargo Thai Care” slogan. This slogan is at the heart of the most important value, “customers are at the heart of service” where such service is sprinkled with Thai touch. Operational emphasis is placed on the Value Chain, operational safety and hygiene. Attention has also been placed on the working space and the working environment while utilizing the latest in technology to ensure quick, reliable and efficient customer service.

Air Freight and Mail Services To ensure that clients understand THAI’s standard of service, direct media communication was made through commercial and public relations to support sales at each brand contact point. Participating in various domestic and international exhibitions along with the launch of various promotional packages not only increased THAI’s product and service exposure but also attracted new clients and retained existing customers. The latest in information technology has also been integrated in the service process to facilitate customers - recipients, senders, cargo agents and other interested parties in tracking the location and status of their packages globally. In addition to the above information, aircraft timetables have also been provided on the www.thaicargo.com web site on a twenty-four seven basis. Online reservations (e-Reservation) for cargo space can also be made via the web site to facilitate customer service. General Sales Agents (GSA) have been appointed for destinations with strong market potential but THAI does not currently serve (off-line stations) to facilitate the cargo and mail business.

To enhance its revenue, THAI targeted to attract premium products that commands the most handsome return including fresh produce under the TGFresh service, time sensitive products under TGForce, door-to-door delivery under the name Thai Express Cargo (TEC) with the cooperation of domestic shipping companies and small shipment deliverers. The plan going forward is to launch new markets for time sensitive cargo to encompass more stations for which THAI serves.

Because THAI does not have a dedicated fleet of freighter aircraft, the Company cooperated with other airlines by using their belly space either through a Special Prorate Agreement (SPA) or a Blocked Space Agreement (BSA). Such blocked space can be for cargo space on Star Alliance member aircraft or with sufficient cargo volume, THAI leases an aircraft for the season. To further expand its market reach, THAI has teamed up with Global Forwarding Agents to increase the freight factor on all THAI flights around the world utilizing Thailand as the hub.

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Warehouse Services In anticipation of the growth in imports, exports and transit cargo volume, much emphasis has been put on efficiency to enhance service competitiveness which has earned THAI the ISO 9001 : 2000 quality standard certification. THAI’s Cargo Terminal in the Custom Free Zone at Suvarnabhumi Airport spans 152,000 square meters. Of the total available space, 17,601 square meters has been allocated for domestic cargo with handling capacity of around 88,500 tons of cargo per annum. The space for international cargo totals 95,284 square meters and can handle approximately 1,260,000 tons of cargo per annum. The available space is divided into 4 main sections. The first section of 30,000 square meters is dedicated for THAI and partner airline use while another 25,000 square meters have been allocated for customer airlines’ cargo. Express cargo covers 5,952 square meters of space while the Perishable Center section spans 10,000 square meters.

Preparation has been made for an expansion of another 6,450 square meters of space for international cargo for which the current space serves 77 customer airlines and other airlines that may seek THAI’s service.

Preferred customers requiring express import cargo service can contact THAI’s Express Cargo Center for which their customs formalities will be processed via the Customs EDI Service. On the export side, a special express lane has been provided to customers who have registered with the Customs Department for express export products.

The Perishable Center’s area is temperature controlled with cold storage rooms able to adjust temperature to suit each product requirement. The emphasis is to ensure product quality and freshness through ensuring continuous control of temperature (Cool Chain). Beginning from the point of receiving the products through the shipment process to ensure that agricultural products, special products and products requiring temperature controlled environment including pharmaceutical and medical supplies. There are among items that require strict adherence to temperature control.

Under the Excellent Cargo Care Project, THAI facilitates customs process for its key import clients and target customer groups utilizing its e-Paperless system. Such system enabled clients to forward the required information electronically to the Customs Department, shortening the customs process.

To enhance customers’ experience and for THAI to earn additional revenue, THAI plans to provide services instead of cargo agents for those that do not have the expertise or access to the free trade area.

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Catering In the pursuit of being at the forefront of the commercial airline industry, THAI continues to enhance its capabilities and standards of its catering services as demand for catering services has grown dramatically with the rapid increase in international flights into and out of Thailand. The success has enabled THAI to expand its catering capacity at 3 different locations preparing 75,000 meals per day for over 50 customer airlines including that of THAI’s own flights. Total meals prepared for fiscal year 2007 totaled 18.8 million sets.

The greatest effort for THAI has been to ensure customer satisfaction through emphasis of the highest level of quality and hygiene. Ongoing development and improvement has been sought for all areas of operations with the emphasis placed on “meeting customers’ needs with integrity, ethics and duty”. All the while ensuring hygiene and safety of meal production through a controlled environment ensuring freshness. The production process has earned THAI the ISO 9001, Good Manufacturing Practice (GMP) System and Hazard Analysis and Critical Control Point (HACCP) into the production process upholding Quality, Hygiene and Safety (QHS).

Utilized the Cooking Process Management System enabling quality control in food production and the utilization of the Ware Washing and Material Handling System, which is the latest in technology for cleaning and storing of cook ware. The systems enhance overall accuracy, efficiency and effectiveness while reducing labor requirement and better managing the environment. The Vacuum Waste Handling System has been installed to dispose of waste through pressurized tubes instead of manually removing waste thus reducing overhead cost and is more environmentally friendly.

Ongoing emphasis has been placed on not only creativity but also food presentation and taste by our 17 Thai and foreign Executive Chefs, Executive Sous Chefs and Chefs. In terms of taste, THAI’s policy has been to ensure that the meals served on specific sectors are as authentic in taste as possible. Building variety is a must as every 15 days a new menu is served and as part of building variety THAI is also cooperating

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with Star Alliance undertaking a chef exchange program to share knowledge and technique. THAI is also cooperating with Chulalongkorn University’s Halal Food Research Department in preparation for launching THAI’s Halal Kitchen at THAI’s new catering facility at Suvarnabhumi Airport. THAI was the first to receive the Halal-GMP/HACCP (Halal-Q) certification in Thailand on September 1, 2007.

In addition to providing in-flight catering service, THAI also undertakes other ground based services including THAI Puff & Pie bakery business for which there are currently 39 branches located throughout Bangkok. The wholesale bakery business under the Puff & Pie Supreme Bakery Delight brand was launched on March 1, 2007 which received a high level of interest and is expected to have 20 branches by the end of 2007. THAI has been entrusted by not only the private sector but also by the Royal Thai Government to provide catering services for events at the international level such as the Royal Flora Ratchaphruck 2006 International Horticultural Exposition for His Majesty the King that was held in Chiang Mai during the period of November 1, 2006 through January 31, 2007. THAI’s services were also sought to provide catering services for the 24th Universiade that was held during August 8-18, 2007. The successes reflect the level of THAI’s catering efficiency. Such efficiency has translated into generating total revenues of over 7,200 million baht in fiscal year 2007 from its in-flight catering services, restaurant and lounge services (Suvarnabhumi Airport, Chiang Mai, Chiang Rai, Phuket and Krabi), Puff & Pie Bakery (39 branches), Puff & Pie Supreme Bakery Delight (20 branches), special event catering services and operating 5 canteens across the country.

THAI’s Catering is not only concerned with producing the highest quality of food, it is also concerned about the environment. THAI’s Catering has been successful in producing biodiesel fuel from used cooking vegetable oil at its newly constructed facility at Suvarnabhumi Airport. Production of biodiesel fuel from 9,000 liters of used vegetable oil began July 1, 2007 which is currently being used to fuel the hot water heater. For such an undertaking, the Company received an environmental conservation award from the Department of Ministry of Natural Resources and Environment on June 4, 2007. The ability to recycle used cooking oil helps to alleviate the energy crisis and supports the Government’s national agenda of alternative fuel.

Aircraft Maintenance THAI has put forth great effort in ensuring the highest level of safety along with the constant push to enhance overall efficiency to improve overall quality. The level of safety as concerned by THAI meets not only the guidelines of The Department of Civil Aviation (DCA) of Thailand but also that of the Federal Aviation Administration (FAA), the European Aviation Safety Agency (EASA) and the safety guidelines of the governing body of the respective client’s country. As a result of its track record on quality as reflected by its ISO 9001 : 2000 certification and its efforts to protect the environment earning its ISO 14001 : 1996 certification in fiscal year 2007, THAI was entrusted by 50 airlines around the world to service their aircraft.

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Statistical maintenance data for fiscal year 2007 for the various levels of service : Light/Line Maintenance (SBA) A-Checks

71,326 times

47,826 for THAI

23,500 for clients

22 for clients

713 times

Heavy Maintenance C & D-Checks

63 times

41 for THAI

CF6-80C2 Engines

36 times

36 for THAI

RR Trent 800 Engines

20 times

20 for THAI

CF6-50C2

10 times

10 for clients

In the process of upgrading the Company’s product, THAI installed new seats, livery and entertainment system for most of THAI’s long-haul aircraft during the time in which these aircraft were undergoing their heavy maintenance checks to reduce the aircraft turnaround time. The last of the 6 Boeing 777-300 aircraft will be completed in fiscal year 2008.

In emphasizing 3 service points on work performed on client aircraft - quality of work done, quickness in work completion (turnaround time) and competitive pricing, for the past 10 years has resulted in ongoing confidence by client airlines in repeat business for THAI. There has and continues to be strong demand for THAI’s service for heavy maintenance by both renowned Japanese and European airliners because of service quality and cost competitiveness to European maintenance service providers. Post the move from its operating hub at Don Muang Airport to Suvarnabhumi Airport, THAI has budgeted 556 million baht for investment to Increase Maintenance Capacity (ICM) Project at Don Muang Airport to provide heavy maintenance service to third party which will be completed by year-end 2008.

Hand in hand with growing the maintenance business is the issue of cost of service and supplies management to ensure the highest level of safety and quality of service. In terms of service quality, the Company signed a MoU with GE Engine Services Incorporated (GEES) for THAI’s maintenance facilities to be a Center of Excellence in providing maintenance service for GE’s CF6-80 and CF6-50 series aircraft engines. Under the agreement, GEES supports THAI with over 151 spare parts worth over 42 million baht, enabling THAI to provide faster engine maintenance service with a lower cost of acquiring and maintaining spare parts inventory. As for engines such as the PW4000 series, the terms were altered to be on time and material basis. The newly negotiated agreement is a warranty spanning the engines’ life or “Maintenance Cost Guarantee” (MCG) and ensures that there is a facility to provide such maintenance service for THAI’s PW4000 series engines. Such agreement allows THAI to limit its exposure on maintenance cost to a pre-set ceiling. The Integrated Materials Management Program (IMM) contract has also been signed with Boeing where under this contract, Boeing is responsible for ensuring sufficient expendable spare parts or IMM parts in THAI’s supplies warehouse. As these parts belong to Boeing or its certified supplier, THAI is burdened with less inventory cost.

Balanced Scorecards have been implemented and cascaded down through the various operating units to ensure efficiency in managing maintenance operations. The Balance Scorecards provide guidelines for which the entire organization will strive towards achieving the same goals. The Enterprise Resource Planning

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System (ERP) will go live on October 6, 2007 to maximize management efficiency which also complements the Six Sigma program which has been in effect for 7 years helping to better manage investment requirements and manage expense on an ongoing basis.

Operations at Suvarnabhumi Airport As the national flag carrier, THAI has embraced the Government’s policy of making Suvarnabhumi Airport a major hub in Southeast Asia, substantial infrastructure was invested by THAI along with the luxuries of comfort of international standard. THAI’s investments at Suvarnabhumi Airport include : Aircraft Maintenance Center (ACM) Ground Support Equipment Services (GSE) Ground Customer Services (CUS) Catering Services Cargo and Mail Commercial Services (CGO) Operations Center (OPC) Since the inauguration of Suvarnabhumi Airport on September 28, 2006, all of THAI’s facilities have been operational in providing comprehensive services. However, the teething problems caused by the size of Suvarnabhumi Airport which is much larger than that of Don Muang Airport resulted in inconveniences to passengers and those who provide passenger services at the outset of commencing operations. Congestion at the ticketing counters and luggage carrousels, problems with the baggage handling system along with the problems of not being able to operate the international cargo facility as a custom free zone contributed to the disruption of services to passengers and customers. In anticipation of such problems, THAI coordinated with the Airports of Thailand Plc. (AOT) and received strong support from AOT to rectify problems experienced by THAI which enabled normalized operations.

Other actions taken to improve overall efficiency in providing unsurpassed quality service to our passengers at Suvarnabhumi Airport include : Increased 2 additional remote parking bays to increase maintenance capacity.

Closed circuit television (CCTV) were installed to enhance security and safely along with the installation of Video Analytics System to assess and analyze pictures.

Installed the automated Material Handling Bin System to increase efficiency and speed in food preparation services of the Catering Services.

Increased efficiency in the cargo warehouse by increasing space for storage of empty ULD/Pallets.

Provided separate group check-in counters to enhance service to passengers.

Amenities provided to enhance passenger experience include air purifier units for smoking rooms and hair dryers in the shower rooms for Royal Silk and Premium Economy Class lounge.

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Operations at Don Muang Airport Post commencing international and domestic flight operations at Suvarnabhumi Airport, to maximize utilization of airport facilities, the Royal Thai Government decided to also commence domestic flight services from Don Muang Airport. Since March 25, 2007, THAI re-launched its services to domestic destinations from Don Muang Airport with 30 daily flights. THAI’s service at Don Muang Airport provides non-connecting passengers easy access and increased frequency of flights to destinations within Thailand. This 2 airport strategy lends to THAI’s ability to further bolster its domestic market share where other competitors do not have the flexibility to operate from 2 airports. THAI’s facilities remain at the old domestic terminal with a business class passenger lounge and a ticketing office providing customers comfort and flexibility to alter their travel plans.

To avoid causing confusion for passengers as to which airport the designated flight would be serviced from, a 4 digit flight code beginning with the number “1” was implemented to denote service from Don Muang Airport e.g. TG 1203.

THAI continues to provide 11 daily connecting service to Thailand’s major tourist destinations - Chiang Mai, Chiang Rai, Phuket and Krabi from Suvarnabhumi Airport. The flight code is the same as all other THAI flights operating out of Suvarnabhumi Airport using a 3 digit code e.g. TG 201.

The Launching of the THAI City Air Terminal Check-in Center located at the Subway station on Lat Phrao THAI launched its THAI City Air Terminal located on the first floor of the subway’s parking building at Lat Phrao station. This office provides remote check-in service for domestic passengers flying out of Don Muang Airport commuting via the subway (BMTS) and the sky train (BTS).

Passengers utilizing the remote check-in service at the THAI City Air Terminal may do so up till 2 hours prior to the scheduled departure time of the designated flight. A free bus service shuttles passengers between the City Air Terminal and Don Muang Airport. Other services provided at the remote terminal include a pre-check-in service and can issue boarding pass one day ahead of the departure date while the baggages are to be security checked at the airport.

In addition THAI also provides a pre-check-in service at THAI City Air Terminal where the boarding pass can be issued one day before the flight departure date for the convenience of passengers traveling in groups (for flight departure from Don Muang and Suvarnabhumi Airport).

Environmental Protection THAI is concerned and aware of environmental issues and has consistently been undertaking activities to improve the environment. To this end, THAI’s Aircraft Maintenance Center received the ISO 14001 certification on environmental management at Don Muang, Utapao and Suvarnabhumi Airports. THAI has received the ISO 14001 certification for its head office, Lak Si office, Larn Luang office and the Operations Center at Suvarnabhumi Airport. The certification requirements include having a clear environmental

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policy, adhering to all legal environmental guidelines, having a clear purpose and goal on environmental issues, having action plans on managing environmental issues, managing operations to minimize impact on the environment, assessing and evaluating effectiveness of actions and reviewing policies on managing environmental issues on an ongoing basis. For its efforts on environmental issues, THAI has received recognition at the annual State Enterprise Awards 2007 by the Ministry of Finance’s State Enterprise Policy Office.

Projects geared towards addressing environmental concerns include the plan to conserve power consumption; optimize water consumption; waste water treatment and the recycling of waste water for use at the head office; use recycled paper and separating waste paper for recycling; phasing out CFC and halon gas based equipment; optimal management of aviation fuel consumption; instilling staff with awareness of environmental concerns along with the Reforestation Program are all activities geared towards reducing impact on the environment directly and indirectly.

Each and every investment of THAI made at Suvarnabhumi Airport including THAI’s aircraft maintenance facility, the Ground Support Equipment Services Maintenance facility, Catering facility, Operations Center and other facilities were designed with environmental concerns in mind. Each facility was designed to meet the ISO 14001 guidelines emphasizing environmental and energy conservation and to benefit from natural ventilation while glass windows and doors were insulated with double glazing and has an external Low E reflection coating keeping the inside cool and a noise reduction layer to minimize external sound.

Minimizing power consumption was at the heart of designing the new facilities at Suvarnabhumi Airport.

Entry and exit points or public areas were grouped into a single zone, high quality construction materials were used and the use of extended external horizontal blinds blocks the sun’s rays until 4 p.m. Such design enabled a greater amount of natural light to illuminate inside the building while minimizing the need for the use of curtains and window blinds. Landscaping was also utilized to reduce the impact of heat while providing a natural view in open areas and protecting the sides of buildings directly exposed to sunlight.

A building automation system has been installed to help effectively manage power consumption.

THAI joined with District Cooling System and Power Plant Co., Ltd. (DCAP) in the co-generation project where THAI’s catering utilizes excess steam for utensil cleaning and also for laundry purposes.

In managing refuse from the various functions of the Company, a clear procedure has been set for collecting used fuel and a separate means of collecting chemicals to be dealt with properly. Both the Catering and Maintenance facilities have their own waste water treatment facilities to ensure environmental safety. Taking conservation to a higher level, THAI’s Catering has been able to process its used vegetable oil into biodiesel.

THAI’s fleet upgrade brings direct benefit to environmental conservation as the technical development of engines have progressed enabling greater power output while consuming less fuel causing less pollution and generating less noise. The new Airbus A330 aircraft will produce less than ICAO’s Chapter 3 requirement of 19 EPNdB of noise while the Airbus A340 aircraft will generate less than 24.5 EPNdB of noise as stipulated in Chapter 3 of ICAO’s requirement.

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Subsidiaries and Affiliated Companies

Thai-Amadeus Southeast Asia Company Limited Thai-Amadeus Southeast Asia Co., Ltd. (Thai-Amadeus) provides leading distribution and technology solutions serving the World’s travel and tourism industry for travel related concerns including air travel reservation, hotel and car rental reservations and also issues air tickets and provides travel insurance. THAI entered into the joint venture to launch Thai-Amadeus Southeast Asia Co., Ltd. with the purpose of complementing and supporting THAI’s core operations of providing air travel service through ease of seat reservation. The company has issued and paid-up share capital worth 15 million baht in which THAI has a shareholding of 55% in this company’s paid-up capital totaling 8 million baht.

Thai-Amadeus Southeast Asia Co., Ltd.’s net profit for the year ending September 30, 2007 totaled 130 million baht.

Royal Orchid Hotel (Thailand) Public Company Limited The Royal Orchid Hotel (Thailand) Plc. was among the founders of the Royal Orchid Sheraton Hotel, a premium hotel providing food and beverage service along with other services related to the hospitality industry. The purpose of entering this joint venture was for THAI to be able to provide its passengers with value added service and enable THAI to be competitive against other airlines by providing its passengers a comprehensive one stop service. The company has issued and paid-up share capital worth 938 million baht. THAI has a shareholding of 24% in this company’s paid-up capital totaling 225 million baht.

The amount of investment by THAI via equity method is 290 million baht.

Net profit earned for the year ending December 31, 2006 by Royal Orchid Hotel (Thailand) Plc. totaled 307 million baht.

Don Muang International Airport Hotel Company Limited The Don Muang International Airport Hotel Company Limited runs a hotel and related services at called the Amari Don Muang Airport Hotel. The company has issued and paid-up share capital of 120 million baht. THAI has a shareholding of 40% in this company’s paid-up capital totaling 48 million baht. The amount of investment by THAI via equity method is 194 million baht. THAI jointly invested in the hotel venture with the purpose of providing passengers the convenience of using the hotel as a transit point and to be used as the designated hotel in case of delays or any flight irregularities. Since moving to Suvarnabhumi Airport, the hotel has been seeking additional revenue from handling conventions and other functions.

Net profit for the year ending December 31, 2006 earned by Don Muang International Airport Hotel Co., Ltd. totaled 71 million baht.

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Bangkok Aviation Fuel Services Public Company Limited (BAFS) The Bangkok Aviation Fuel Services Public Company Limited provides storage service for aviation fuel and provides refueling service at both Don Muang Airport and Suvarnabhumi Airport. The company has issued and paid-up share capital of 510 million baht. THAI has a shareholding of 22.6% in this company’s paid-up capital totaling 115 million baht. The amount of investment by THAI via equity method is 514 million baht.

BAFS earned 461 million baht in net profit for the year ending December 31, 2006.

Phuket Air Catering Company Limited Phuket Air Catering Co., Ltd. provides in-flight meal catering for various airlines on international flights from Phuket Airport. THAI entered this joint venture to provide catering services for THAI’s own flights at Phuket International Airport but the business has expanded to provide catering services for other airlines.

The company has issued and paid-up share capital of 100 million baht. THAI has a shareholding of 30% in this company’s paid-up capital totaling 30 million baht. The amount of investment by THAI via equity method is 54 million baht.

Phuket Air Catering Co., Ltd. earned a net profit totaling 37 million baht for the year ending December 31, 2006.

Suvarnabhumi Airport Hotel Company Limited The joint investment in the Suvarnabhumi Airport Hotel Co., Ltd. was made with the purpose of complementing THAI’s travel services and to enable THAI to provide passengers with an overnight stay should it be a necessity. The hotel provides a complete range of hospitality services for not only THAI but also to the general public. The company has issued and paid-up share capital of 1,018 million baht. THAI has a shareholding of 30% in this company’s paid-up capital totaling 305 million baht. The amount of investment by THAI via equity method is 233 million baht.

As a recent start-up, the hotel is still incurring a slight loss of 134 million baht for the year ending September 30, 2006.

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Nok Air Company Limited THAI’s low cost airline Nok Air was established to enhance THAI’s network and also serve as a fighting brand to protect THAI’s market share of domestic and regional markets especially with the ongoing open skies policy. The lower cost structure of Nok Air and through its competitive pricing has attracted a larger customer base to fly. The company has issued and paid-up share capital of 500 million baht. THAI has a shareholding of 39% in this company’s paid-up capital totaling 195 million baht. The amount of investment

by THAI via equity method is 234 million baht.

As of the year ending December 31, 2006, Nok Air earned a net profit of 135 million baht.

Other than the above investments in subsidiaries and affiliates, other investments for which THAI holds a less than 10% shareholding of the company’s issued and paid-up capital include : -

Aeronautical Radio of Thailand Limited is a non-profit organization with the purpose of providing

aerial surveillance at the airports for which THAI holds 2.6% shareholding of issued and paid up capital totaling 660 million baht.

-

Fuel Pipeline Transportation Limited stores and transports aviation fuel via underground pipes for

which THAI holds a 8.4% of issued and paid-up capital totaling 1,592 million baht.

-

TradeSiam Company Limited runs an Electronic Data Interchange Center with THAI holding 3.5% of

the company’s issued and paid-up capital totaling 50 million baht in value.

-

The Syndicate of Thai Hotels and Tourists Enterprises Ltd. is the company that owns the land for

which has been leased for the development of the Grand Hyatt Erawan Hotel. THAI currently holds 1.25% of the company’s issued and paid-up capital totaling 140 million baht.

-

Star Alliance Services GmbH is a joint investment company of member airlines with the purpose

of developing an encompassing air transport network and the launching of new products and services.

Despite the cooperation, the unique cultures represented by member airlines have been retained to ensure competitive advantage in generating profitability while ensuring efficiency.

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Adherence to Official Information Act, B.E. 2540

THAI understands the importance of information disclosure in this day and age of information technology and taking into consideration the legal guidelines as per the reformation of the Constitution requiring greater participation of the general public in the political process. This is in addition to the Official Information Act, B.E. 2540 giving the general public the right to have access to information regarding the Government’s actions and that of business entities. To this end, THAI launched its news and information center on November 16, 1998 to facilitate the general public in accessing Company related information in accordance with the Official Information Act, B.E. 2540 as a model for other institutions. THAI’s news and information center was selected by the Ministry of Transport and per the Cabinet resolution dated December 29, 1998 as a model in providing information services to the general public in accordance with the Official Information Act. Internal guidelines were drafted to reflect the Official Information Act, B.E. 2540 and put into effect on February 12, 1999 and also appointed a THAI Information Committee (TIC) with the Executive Vice President of the Corporate Secretariat as the Chairperson and the Manager of Public Informative Center was appointed as a member of the Committee and serving as the Committee’s secretary. The Committee is charged with the responsibilities of establishing information disclosure guidelines, establishing disclosure procedures, analyzing information requirement, managing process of disclosure, seeking approval, approving and disclosing Company related information.

Activities undertaken by the Committee for fiscal year 2007 include :

Information Services to the General Public For fiscal year 2007, of the 2,496 requests for the Company to provide relevant information, the Company was not able to respond to 2 requests as the inquiry pertained to issues that were pending decisions and was not subject to Section 15 of the Official Information Act, B.E. 2540.

Internet-Based Information Disclosure To cater to the interests of the general public regarding THAI’s information, a sizeable amount of information has been put in the “About THAI” section of the Company’s web site www.thaiairways.com.

Key information sections include THAI’s key investment projects, destinations of flight and a list of the Company’s senior management. From statistical data obtained from THAI’s web site, in fiscal year 2007 there were an average of 255,000 hits per month.

THAI made it a point to also disclose the results of its vendor selection on its web site. An electronic database system has been employed to manage and enable ease in searching of desired information via a remote computer without the enquirer having to physically come to the Information Center room.

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Enhancing Staff Understanding and Compliance of with the Official Information Act Training and seminar sessions have been provided for members of the THAI’s Information Committee, representatives from the different departments and the Company’s staff to enhance their understanding of and complying with the Official Information Act. Speakers from the Office of the Official Information Commision (O.I.C.), Office of the Permanent Secretary Government House have been invited to speak to and provide knowledge to THAI’s staff regarding the legislation. An internal web site has also been developed to disclose information and activities related to the legislation. News and activity updates are also distributed to THAI’s staff via print media to enable everyone to better understand the legislation including the Company’s guideline related to the Official Information Act and the legislation related to personal information and resolutions reached by the Company.

Enhancing Information Quality and Distribution Capability of Company Information as per the Legislation Over the past year, THAI undertook a corporate restructuring and renamed a number of the various departments. As a result, a new corporate guideline was drafted in regards to the legislation to be printed on the government gazette.

Information regarding the Company’s history has also been sent to the National Archives of Thailand, the Fine Arts Department for safe keeping and reference. These documents include the Company’s annual report, the Company’s investment plans at Suvarnabhumi Airport, the Royal Charity Flight which was initiated to raise funds for helping those who have been adversely impacted by floods and providing medical equipment for hospitals in the 3 troubled southern provinces and activities of social benefit.

Visitations to the THAI Public Information Center For the fiscal year 2007, visits to the THAI Public Information Center by government bodies were as follows : In the capacity as the Chairman of the Official Information Commission, Dr. Thirapat Serirangsan, Ministers Attached to the Prime Minister’s Office and his team visited THAI’s Public Information Center and provided insight to the plans and policies for which the Committee is currently considering in regards to information disclosure.

Representatives from the Port Authority of Thailand visited THAI’s Public Information Center and took the opportunity to share thoughts and experiences on the issue of development of data in electronic format, developing an information index, storage of information including the process of determining the guideline and process for which information is to be disclosed.

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Status of the Commercial Airline Industry and Competition

Over the past 5 years, the commercial airline industry has faced a multitude of trials and challenges including the tragedy of nine eleven, measures implemented to counter terrorism, the Bali bombing, the Iraq War, the SARS epidemic and natural disasters but the operating environment for the commercial airline industry has begun to stabilize. It is also expected that demand for travel will continue to grow with the rapid rate of globalization. With greater ease of access to air travel and with geographic boundaries becoming a thing of the past, growth in air travel is growing to new levels. The ongoing growth in the global economy and for the most part, a stronger and a more rapid rate of economic growth in Asia especially China, India, Russia and the Middle East is leading the economic boom. With competition within the commercial airline industry likely to tighten from the expansion of operations by low cost carriers and the increasing cost of fuel, THAI’s performance is likely to be directly impacted. The Company has taken actions to ensure its ability to compete on pricing while controlling its operating cost. In addition to implementing measures to control fuel consumption and partially hedging its fuel requirements, measures have been implemented to enhance staff efficiency and the use of electronic tools to improve communications and reduce operating cost.

Passenger Travel Industry Global passenger travel during the first 9 months of 2007 saw a 7.3% growth with the Middle East leading with a 18.2% growth, which is the fastest resulting from the dramatic economic growth within the region due to high levels of investments derived from petroleum money. On top of the economic growth, commercial airlines from the Middle East have added a large amount of aircraft capacity resulting in a high level of growth in the number of flights to various destinations around the world.

Thailand continued to see strong international travel for the first 8 months with 21.8 million people or a 6.2% increase as compared to the previous year resulting from continued economic growth and the expansion of low cost carrier. THAI served 8.7 million passengers, which is an increase of 8.2% over the previous year. THAI’s rate of growth was higher than the growth of Thailand’s number of international passengers which is credited to THAI’s ongoing efforts to enhance its products and service quality, enhancing its marketing and sales channels and enhancing its seat reservation system to better facilitate customer service and meet customers’ increasing needs.

Air Freight Industry Despite the cost of aviation fuel remaining high in fiscal year 2007, the air freight industry saw a 4.0% growth for the first 9 months of 2007 with the highest rate of growth of 9.6% coming from the Middle East, followed by Africa, Asia Pacific and Europe experiencing 8.7%, 7.6% and 5.9% growth, respectively.

However, Thailand’s air freight industry saw only a slight growth in exports of 0.9% during the first 8 months while imports dropped by 1.8% for the same period as compared to the previous year. Key markets for Thailand’s air freight in the region include Hong Kong; Taiwan; Tokyo, Japan; Singapore and Seoul, Korea while intercontinental destinations include Frankfurt, Germany and Paris, France.

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Domestic Competition With the commencement of low cost carrier operations in Thailand beginning 2004, there has been a dramatic increase in the number of people who have switched to air travel. Currently there are 6 airlines serving domestic routes with 3 being low cost carriers. Despite the increase in competition, THAI remains the dominant player in the domestic air travel market.

By increasing its domestic air fares in December 2006, THAI enhanced its marketing flexibility to maximize benefits for the Company resulting in improved operating performance on THAI’s domestic services. At the end of August 2007, THAI’s share of domestic operations constituted approximately 32.2% while THAI’s sister company, Nok Air, commands another 20.2% of the domestic market.

International Competition In moving towards a more liberal policy in regards to open skies to attract business development and travel to Thailand by the Royal Thai Government, many airlines around the world have geared up their flight frequency to Thailand. THAI is therefore not only subject to direct competition from increased frequencies from traditional airlines but is now having to face new players especially airlines from the Middle East, China and India. Added competition also being confronted by THAI is the growing low cost airline industry within the region and seasonal scheduled chartered flights have also increased in traffic to Thailand. As of August 2007, there were 89 airlines providing air travel service into Thailand carrying a total of 21.8 million passengers. Of the total, THAI served 8.7 million passengers constituting about 39.8% of the market share, which was an increase from last year’s 39.1%. Despite the increased competition from low cost carriers in the region, THAI has been able to hold its market share at 35.7%. For intercontinental flights, THAI increased its flight frequencies for its Australian and North American routes, increasing its proportion of intercontinental market share from 52.4% to 54.3% over the previous year. For the past year, IATA statistics indicate that THAI’s international operations is the 11th largest in the world and is the 3rd largest regionally.

In anticipation of further tightening of competition within the commercial airline industry, THAI is rapidly moving to upgrade its in-flight products which include new passenger seats along with amenities providing convenience and improving in-flight services. These changes have been geared towards ensuring THAI’s capability to continue to grow its revenue through unsurpassed quality of service.

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Risk Factors

To weather the changing operating environment in the commercial airline industry along with other external factors including the fluctuation in exchange rates and rising aviation fuel, THAI needs to have in place measures to manage such risks posed to the Company to ensure THAI’s ability to compete in a rapidly changing environment.

THAI is aware of its internal and external risks and is placing emphasis in managing those risks in order to raise shareholder and stakeholder confidence in the Company. As such, the major areas of risk have been identified and prioritized in importance so that plans can be put in place that would provide the most effective measures benchmarked against international standards in preventing and controlling such risks.

To achieve the Company’s goal of strong internal risk management, all functions within the Company utilize risk management as the overarching guideline in daily operations is being instilled into the corporate culture. The outcome derived from a strong risk management culture is transparency and equality which can be audited and will maximize benefits for all related parties. A strong risk management culture represents a company also possessing a comprehensive good corporate governance guideline.

The Risk Management Committee was appointed to ensure that THAI has an effective and comprehensive risk management system. The Committee is charged with establishing risk management policies, operating guidelines and overseeing the internal risk management process. At the operating level, department managers are tasked with utilizing risk-based management to develop measures to control and manage corporate risks and intrinsic risks in each functional unit within an acceptable level or at a level where the potential adverse impact will be minimal. Updates on key risks are provided to the Executive Management Meeting (EMM), Business Units Executive Board (BEM), Executive Board and the Company’s Board of Directors on a regular basis to ensure comprehensive risk management and provides a channel for progress reports. The regular updates serves to ensure active risk management and assess the effectiveness of risk control measures in achieving the established purpose and goals.

Risks Potentially Bearing Significant Impact on THAI 1. Risk in Fluctuation in the Number of Tourists to Thailand As Thailand is among the most attractive tourist destinations around the world, the health of the Thai tourism industry bears a high correlation to THAI’s operations. The risk to THAI’s operations is the potential softening of the tourism demand to Thailand should there be an event that bears direct impact on Thailand’s attractiveness as a tourist destination. Some of these risks include global economic stability, Thailand’s own economic health, politics, natural disasters, the strengthening of the baht against major currencies, the tourists’ negative attitude about Thailand, the increase of airport charges, the unrest in the 3 southern provinces of Thailand, the SARS concern, the bird flue scare or other similar events that may occur in

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the region bears direct adverse impact on demand for tourism and thus demand for air travel into Thailand.

THAI is aware of the potential risks and is vigilant about its operating environment. For risks that THAI is able to take actions to mitigate the potential impact, action plans have been drawn and quickly implemented which not only serves to strengthen THAI’s image but also the confidence of THAI’s passengers.

2. Risk from Rising Cost of Aviation Fuel Being the largest proportion of THAI’s operating expense, the rising cost of aviation fuel bears direct impact on the Company’s financial performance. For fiscal year 2007, cost of fuel constituted 23.80% of THAI’s total operating expense. To better manage this risk, THAI’s policy enables the hedging of fuel price up to 50% of full year’s demand for aviation fuel. For the past year, the fluctuation in aviation fuel price was high. The average fuel price hedging was 21.34%, 29.34%, 22.34% and 12.00% for the first, second, third and fourth quarter, respectively. The fuel impact assessment along with the review of measures and guidelines in regards to fuel management are on an ongoing basis. Computer software has also been utilized to assist in determining and collecting the appropriate level of fuel surcharge which is on the rates charged by peers in the respective flight sectors. The surcharge also serves to reduce the impact of the rising aviation fuel cost.

3. Risk from Fluctuation in Currency Exchange The Company earns revenue in more than 40 foreign currencies constituting 68.00% of total revenues.

The largest proportion of revenue earned are in Euros (EUR) and Baht (THB) while THAI’s operating expense and debt are mostly in 4 main currencies which are US Dollars (USD), Yen (JPY), Euros and Baht. To mitigate THAI’s exposure to fluctuations in currency value, THAI has adopted a natural hedging policy where operating expense, is to the best of ability, matched with the currency in which revenue is earned. The debt structure is managed so that it best matches the Company’s net cash position generated from net operating cash flow.

The ability to do so is a result of thorough planning for sources of funding and the use of financial tools such as the Cross Currency Swaps (CCS) to make necessary adjustments when it is beneficial for the Company. As of September 30, 2007, THAI’s debt by currency including CCS and aircraft leases were 12.4 : 50.0 : 14.0 : 23.6 in USD : EUR : JPY : THB terms, respectively.

4. Risk from Open Skies Policy The Royal Thai Government looking to implement the open skies policy to boost tourism to Thailand and to promote Bangkok as a regional hub has enabled unlimited flight frequency and capacity for 3rd and 4th freedom traffic rights. With respect to 5th freedom traffic rights, the government has enabled airlines around the world to an extent, compete on all routes served by Thai carriers with potential liberalization in the longer term.

Thailand currently has signed unlimited flight frequencies for 3rd, 4th and 5th freedom traffic rights with United Arab Emirates, Qatar, Sri Lanka, Bahrain, Yemen and Switzerland. As a result, a full exercise of these

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rights by the various airlines from the above countries could bear impact on THAI’s operations from higher competition on routes which THAI also serves.

To mitigate the risk of higher competition resulting from the open skies policy, THAI’s strategy has been to increase its cooperation with Star Alliance and greater cooperation with other non-Star Alliance airlines along with launching pro-active marketing strategies.

5. Risk from Competition from Low Cost Carriers To strengthen its ability to compete in areas served by low cost carriers, THAI has launched its own low cost sister airline Nok Air Company Limited with a 39% shareholding as a fighting brand in the low cost airline industry. THAI tracks Nok Air’s operations and coordinates with its sister airline to maximize benefits for both companies. For THAI’s operations, there has been ongoing enhancement in THAI’s product offerings from the Commercial Department, service quality and facilitating convenience for THAI’s passengers with every aspect of operations. Greater cooperation with partner airlines, the pitch adjustment for in-flight seats and the increased flight frequencies resulted in more than satisfactory results. THAI remains vigilant of the low cost airline industry while reviewing and ensuring that the available capacity matches with that of demand.

Other than the above measures, THAI has also increased its efforts towards network sales with Bangkok as the hub for connectivity instead of the previous strategy of point to point traffic. The strategy provides traditional airlines with network capability a competitive edge through its ability to provide global connectivity. By moving to Suvarnabhumi Airport, the facilities lends to enhancing the network capability. In March of 2007, the re-openning of Don Muang Airport for service in tandem with the operations of Suvarnabhumi Airport forced the Company to adjust its route network strategy and have an ongoing assessment process. Proactive marketing includes the popular Prepaid Value Card - Our Beloved King series, providing our frequent flyers with a discount for domestic travel. THAI has also been pushing ticket sales via the internet and cooperating with various financial institutions in providing extended payment plans including extra miles earned on the rewards program and receiving extra baggage weight on these domestic flights.

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Shareholder and Management Structure

Shareholders The names of major shareholders, number of shares held and percentage of shareholding as of the January 10, 2007 Share Register Book closure date are as follows:

Ranking

Name of Shareholders

Number of Shares

Percentage

1

Ministry of Finance

913,407,726

53.76

2

Vayupak Fund 1 by MFC Asset Management Public Company Limited

130,289,400

7.67

3

Vayupak Fund 1 by Krung Thai Asset Management

130,289,400

7.67

Public Company Limited 4

Chase Nominees Limited 1

65,486,200

3.85

5

Littledown Nominees Limited 5

27,251,100

1.60

6

Thai NVDR Company Limited

26,390,590

1.55

7

Vayupak Fund 1 by MFC Asset Management Public Company Limited

24,599,300

1.45

8

Vayupak Fund 1 by Krung Thai Asset Management

24,599,300

1.45

Public Company Limited 9

Nortrust Nominees Ltd.

19,555,761

1.15

10

Investors Bank and Trust Company

18,809,600

1.11

11

Other Shareholders

318,222,573

18.74

Total paid up capital

1,698,900,950

100.00

Thai Shareholders

1,379,317,956

81.19

319,582,994

18.81

Foreign Shareholders Note :

Information on current shareholders can be accessed via the Company’s web site www.thaiairways.com prior to the Annual General Shareholders’ Meeting.

As of September 30, 2007, the Ministry of Finance holds a 53.76% stake in THAI and as such, THAI remains a state enterprise and must comply with the following guidelines: 1. THAI must obtain approval from the Cabinet for investments of significant value.

2. The Office of the Auditor General is responsible for auditing the Company’s financial statements.

Dividend Policy THAI’s dividend policy is to pay an annual dividend of not less than 25% of profit before consideration of gain/loss from foreign currency exchange and is subject to future investment plans and other relevant factors.

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57

Organization Chart

President

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Annual Report 2007

Audit Committee

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59

Management Structure Board of Directors As of September 30, 2007 the Company’s Board of Directors consist of the following members: 1. ACM Chalit

Pukbhasuk

Chairman

2. Mr. Suparut

Kawatkul

Vice Chairman

3. Mr. Chaisawasd

Kittipornpaiboon

Vice Chairman

4. Mr. Chartsiri

Sophonpanich

Independent Director

5. Mr. Borwornsak

Uwanno

Independent Director

6. Gen. Pairoj

Panichsamai

Independent Director

7. Gen. Ruengroj

Mahasaranond

Independent Director

8. Mr. Sivaporn

Dardarananda

Independent Director

9. Khun Pornthip

Jala

Independent Director

10. Mr. Chaisak

Saeng-Xuto

Director

11. Mr. Pichai

Chunhavajira

Director

12. Mr. Wisudhi

Srisuphan

Director

13. Mr. Wichit

Na-Ranong

Director

14. Mr. Aviruth

Wongbuddhapitak

Director

15. Flg. Off. Apinan

Sumanaseni

Director

Directors Authorized to Sign Legal and Binding Contracts on the Company’s Behalf ACM Chalit Pukbhasuk, Chairman of the Board of Directors and another Board member may sign legal and binding contracts on the Company’s behalf and such document must be stamped with the Company seal or any three of the Board members may sign legal and binding contracts and such document must be stamped with the Company seal.

Scope of Authority and Responsibilities of Board of Directors Members of the Board of Directors (BoD) are required to perform their duties in compliance with legal and Company objectives and to execute resolutions as reached at the Ordinary Shareholders’ Meeting.

The BoD may appoint a person to run the Company’s operations but such person must report to the BoD. The BoD may provide a proxy to persons to act on behalf of the Company in accordance with the stipulation and within the given time frame as deemed appropriate by the BoD but the BoD has the power to nullify, rescind, modify or change in part or in whole the proxy in which such appointed person is to act on behalf of the Company.

The Company’s Board of Directors met in total 19 times in fiscal year 2007. During the fiscal year, a number of Committees were appointed to undertake specific tasks which include the following:

Audit Committee To ensure abidance with policies on good corporate governance as stipulated by the Ministry of Finance and the Stock Exchange of Thailand to increase shareholder and investor confidence, the Company’s Board of Directors appointed an Audit Committee consisting of non-executive Board members.

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Annual Report 2007

1. Khun Pornthip

Jala

Chairman

2. Mr. Sivaporn

Dardarananda

Member

3. Mr. Chartsiri

Sophonpanich

Member

4. Vice President

Secretary

Office of the Internal Audit Mrs. Keseree Narongdej served as advisor to the Audit Committee Audit Committee’s Authority and Responsibilities 1. Ensure the integrity of the Company’s financial statements including the correct and complete disclosure of related party transactions or transactions that have conflicts of interest.

2. Ensure that the Company has an adequate, appropriate and efficient internal control and internal audit process.

3. Ensure strict abidance with the Stock Exchange of Thailand’s guidelines, commitments to third party entities and related legal guidelines.

4. Screen and choose the Company’s financial auditor and establish compensation rate to be submitted for shareholders approval.

5. Appoint sub-committees and working groups as necessary.

6. Execute other matters as assigned by the Board of Directors.

The Audit Committee met a total of 8 times during fiscal year 2007 and provided progress reports to the Company’s Board of Directors.

Independent Committee To ensure that THAI meets the principles of good corporate governance as stipulated by the Ministry of Finance, the Stock Exchange of Thailand, the guidelines for which the Company is assessed on an annual basis and to be at par with internationally accepted standards, the Board of Directors appointed the following persons to the Independent Committee : 1. Mr. Chartsiri

Sophonpanich

Member

2. Mr. Borwornsak

Uwanno

Member

3. Gen. Pairoj

Panichsamai

Member

4. Gen. Ruengroj

Mahasaranond

Member

5. Mr. Sivaporn

Dardarananda

Member

6. Khun Pornthip

Jala

Member

Independent Committee’s Authority and Responsibilities 1. Freely provide comments/suggestions and/or provide progress reports on undertakings as assigned by the Board of Directors to ensure that the Company has a robust good corporate governance system, which complies with the Ministry of Finance and the Stock Exchange of Thailand’s guidelines and guidelines for which the Company is evaluated annually including international best practices.

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61

2. The Committee has the authority to obtain documents and summon relevant persons to provide information in regards to assigned task(s).

3. Execute other matters as assigned by the Board of Directors.

In fiscal year 2007, this Committee performed its duties by providing independent thoughts and comments while ensuring equal benefits for all shareholders.

Good Corporate Governance Committee To ensure integrity of the Company’s operations with respect to the good corporate governance principles as stipulated by both the Ministry of Finance and the Stock Exchange of Thailand which is in line with international best practices, the Company’s Board of Directors appointed the following persons to the Good Corporate Governance Committee along with appointing a Committee secretary along with an assistant secretary : 1. Mr. Borwornsak Uwanno Chairman 2. Gen. Pairoj Panichsamai Member 3. Mr. Wisudhi Srisuphan Member 4. Mr. Sivaporn Dardarananda Member 5. Mr. Thosaporn Sirisumphand Member 6. Mr. Tummasak Chutiwong Member 7. Mrs. Ngamnit Sombutpibool Member 8. Executive Vice President Member and Secretary Corporate Secretariat 9. Director of the Compliance Department Assistant Secretary Good Corporate Governance Committee’s Authority and Responsibities 1. Audit and make recommendations to the Board of Directors to enhance good corporate governance policies in accordance with the guidelines of the Ministry of Finance and that of the Stock Exchange of Thailand along with international best practices.

2. Is authorized to coordinate and request information from the Audit Committee, Risk Management Committee, other Committees and working groups as deemed necessary.

3. The Committee has the authority to obtain documents and summon relevant persons to provide information in regards to assigned task(s).

4. If necessary, the Committee may propose to commission consultants/ specialists to assist in the process as deemed necessary.

5. Execute other matters as assigned by the Board of Directors.

The Committee met in total 7 times in fiscal year 2007 and provided progress reports to the Company’s Board of Directors.

Nomination, Remuneration and Human Resource Development Committee Following the good corporate governance principles of both the Ministry of Finance, that of the Stock Exchange of Thailand and international best practices, the Company’s Board of Directors appointed the following members to the Nomination, Remuneration and Human Resource Development Committee : 62

Annual Report 2007

1. ACM Chalit

Pukbhasuk

Chairman

2. Mr. Suparut

Kawatkul

Member

3. Mr. Chaisawasd

Kittipornpaiboon

Member

4. Gen. Pairoj

Panichsamai

Member

5. Flg. Off. Apinan

Sumanaseni

Member

Nomination, Remuneration and Human Resource Development Committee’s Authority and Responsibities 1. The Committee is charged with the obligation to establish a selection and appointment process for the Company’s Board members along with the Company’s senior management and the Company’s human resource development. Such process must be ethical and comply with the good corporate governance principles as stipulated by the Ministry of Finance and the Stock Exchange of Thailand and conforms to international best practices. Such process must reflect the latest approach in human resource management to acquire persons with the highest qualification and quality to sit on the Company’s Board of Directors and senior management posts. The selection process must be fair, just, transparent and is subject to audit.

2. The Committee is also responsible for determining the appropriate level of compensation for members of the Board of Directors, Sub-Committees, the Company’s management and outsiders who have been commissioned to perform tasks on the Company’s behalf. The compensation scheme should be comparable to companies within the industry but must be sufficient to attract and retain persons possessing desired qualities. Board members who have been assigned additional tasks and responsibilities are also appropriately compensated for their extra effort and commitment. For members of the Board with management responsibilities and that of the Company’s senior management, compensation is tied to the Company’s overall performance and each individual’s effort and contribution. Such guidelines reflect the Company’s efforts in fulfilling the good corporate governance guidelines stipulated by both the Ministry of Finance and the Stock Exchange of Thailand while observing international best practices.

3. The Committee has the authority to obtain documents and summon relevant persons to provide information in regards to assigned task(s).

4. Execute other matters as assigned by the Board of Directors.

In fiscal year 2007, the Committee met a total of 4 times and provided progress reports to the Company’s Board of Directors.

Risk Management Committee To ensure that the Company has a robust risk management system that not only conforms to the Ministry of Finance and the Stock Exchange of Thailand’s good corporate governance guidelines and meeting international best practices, the Risk Management Committee was established to ensure adherence to the stipulated guidelines as it forms part of the Company’s annual performance assessment. The Company’s Board of Directors appointed the following persons to the Risk Management Committee :

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63

1. Mr. Borwornsak 2.

3.

4.

5.

Uwanno

Mr. Pichai Chunhavajira Flg. Off. Norahuch Ployyai Mrs. Ngamnit Sombutpibool Vice President Risk Management Department

Chairman Member Member Member Secretary

Risk Management Committee’s Authority and Responsibilities 1. Provide advice and counseling on risk issues and the management of such risks spanning all areas of the Company’s operations.

2. Has the authority to summon and procure relevant persons and documents to clarify matters under consideration.

3. Execute other matters as assigned by the Board of Directors.

In fiscal year 2007, the Risk Management Committee met a total of 2 times and provided progress reports to the Company’s Board of Directors.

Executive Board The Executive Board consisting of the persons below were appointed and given the responsibility to ensure that the Company is run with maximum efficiency and to be able to meet the challenges of a dynamic operating environment while ensuring maximum benefit to the Company.

1. Mr. Chaisak Saeng-Xuto Chairman 2. Mr. Pichai Chunhavajira Member 3. Gen. Pairoj Panichsamai Member 4. Mr. Wichit Na-Ranong Member 5. Flg. Off. Apinan Sumanaseni Member The Executive Board’s Authority and Responsibilities 1. Oversee the various aspects of the Company’s operations to ensure abidance with the corporate policies, corporate plans and that of the Company’s Board of Directors.

2. Screen issues to be submitted for the Board of Directors’ consideration.

3. Provide suggestions as in regards to approach and measures to improve and effectiveness and efficiency in the Company’s operations.

4. Approve purchases within budget approved by the Board of Directors, which comply to the Board resolution and the Company’s charter as follows : - Company’s procurement policies - Company’s human resource management policies - Company’s financial guidelines - Company’s other regulations within the powers bestowed upon the Board of Directors and has the authority to approve payments of up to 500 million baht.

5. Has the authority to approve non-budgeted investments of more than 1 million baht and less than 50 million baht and must report such authorizations to the Board of Directors.

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6. Has the authority to summon and procure relevant staff and documents to clarify matters under consideration.

7. Has the authority to appoint Sub-Committees and Working Groups as deemed appropriate.

8. Execute other matters as assigned by the Board of Directors.

9. In case of necessity, the Executive Board may propose for Board of Directors to approve hiring of consultants to perform tasks on the Company’s behalf.

In fiscal year 2007, the Executive Board met a total of 24 times and provided progress reports of undertakings to the Board of Directors.

The Board of Directors also appointed various committees and sub-committees including the Sub-Committee overseeing the purchase of aviation fuel and the Legal Sub-Committee.

Note : All Committees, Sub-Committees and Working Groups appointed by the Board of Directors will continue to function through the end of the 2007 Annual General Shareholders’ Meeting

THAI Management Executives As of September 30, 2007, the Company had 15 Senior Management positions : President - 1, Special Activities Advisor Senior Executive Vice President Level - 1, Executive Vice Presidents - 10, Vice Presidents - 3, comprising : 1. Flg. Off. Apinan Sumanaseni President 2. Wg. Cdr. Supachai Limpisvasti Special Activities Advisor, Technical Senior Executive Vice President Level 3. ACM Narongsak Sangapong Executive Vice President Corporate Secretariat Department 4. Flt. Lt. Pisal Chayakula Executive Vice President Corporate Planning and Information Technology Services Department 5. Mr. Wallop Bhukkanasut Executive Vice President Commercial Department 6. Mrs. Ngamnit Sombutpibool Executive Vice President Finance and Accounting Department Acting Vice President, Management Accounting and Budget Department 7. Flg. Off. Chinawut Naressaenee Executive Vice President Corporate General Administration Department 8. Flt. Lt. Prasart Khoon-In Executive Vice President Operations Department 9. Flg. Off. Norahuch Ployyai Executive Vice President Standards Assurance and Risk Management Department 10. Mr. Chanchai Singtoroj Executive Vice President Human Resources Development and Management Department

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65

11. Mr. Tummasak

Chutiwong

Managing Director, Technical Department Executive Vice President Level

12. Mr. Kaweepan

Raungpaka

Executive Vice President Office of the President

13. Mr. Thongchai

Singhakul

Vice President Financial Accounting Department

14. Mr. Pichait

Riengvattanasuk

Vice President Corporate Finance Department

Note: “Management Executives” are as per the definition of “Management” denoted by the Securities and Exchange Commission

The President’s Authority and Responsibilities The President’s authority and responsibilities as stipulated by the Company’s guidelines include: 1. Authority and duties stated in the “Policies of Thai Airways International Plc.” under the General Administration Section B.E. 2540.

The President is responsible for managing the Company’s operations and to achieve corporate objectives as set by the Board of Directors. The President oversees the Company’s management and staff and is subject to the Company’s guidelines or directives as mandated by the Company’s Board of Directors.

2. Authority and duties under the Procurement Guideline - B.E. 2546.

In accordance with corporate guidelines, the President is responsible for upholding Company guidelines and has the authority to approve or enter into binding contracts on behalf of the Company with regard to procurement or disposal of supplies. This includes procurement of supplies, hiring, leasing of or to lease supplies to others. The President may issue orders as per the given guidelines that refer to the President’s authority in approving such transactions subject to authorized limits per the stipulated guidelines.

-

Contracts to obtain consultant services - up to 15 million baht

-

Contracts or transactions related to supplies procurement through special process - up to

25 million baht -

Contracts or transactions related to supplies procurement through normal procedures - up to

50 million baht -

Contracts or transactions related to procuring aviation fuel, equipment and advertising

and promotion products, procuring insurance for other assets, purchase of pre-packaged food and beverage, services and merchandising at the various service stations in the provinces or abroad, leasing of office space and staff housing (within 1 year duration), ad hoc and planned procurement of aviation fuel for a period not exceeding a year - up to 100 million baht -

Procurement of aviation fuel with better terms - up to 200 million baht

-

Aircraft and/or passenger insurance - up to 500 million baht

-

Emergency procurement of aviation fuel - no pre-set limit

Transaction value exceeding the President’s authorized limit must be submitted to the Board of Directors for approval.

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Annual Report 2007

3. Authority and duties under the Company’s Financial Authority and Duties B.E. 2549.

The President has the authority to enter financial contracts and approve financial undertakings as per the guidelines approved by the Board of Directors and contracts related to the Company’s operations must also observe the Company’s stipulated guidelines.

The President may not approve or enter into transactions beyond the pre-approved guidelines.

According to the Board meeting resolution 14/2002 on November 27, 2002, the Company’s Board of Directors entrusts the President to handle all routine matters but does not enable the President to undertake transactions in which involves the President or persons that may be considered to have conflicts of interest (these include : (A) a Company executive, (B) Company’s major shareholder, (C) persons with management control, (D) a direct family member, a spouse or someone legally registered with (A), (B) or (C) such as parents, spouse, children or a close relative and (E) a legal entity in which (A), (B) or (C) holds shares, controls or has direct or indirect vested interest or a person stipulated by the Securities and Exchange Commission). Persons that may have vested interest or may have any conflicts of interest with the Company or its subsidiaries are also prohibited.

Appointment of the Board of Directors and Management Executives The Company’s Board of Directors Per the Company’s rules and regulations, the Board of Directors must comprise of at least 5 and a maximum of 15 members for which the number is to be decided upon at the Annual General Shareholders’ Meeting. At least half of the Board members must reside in Thailand and each person must possess the appropriate qualifications and is not subject to any legal prohibitions.

Directors are appointed by majority vote at the Annual General Shareholders’ Meeting in accordance with the following guidelines and procedures: 1. Each shareholder shall have one vote for each share held.

2. Shareholders must vote all votes by selecting one or several persons as Directors but the votes may not be divided.

3. The person(s) receiving the most votes in descending order will be appointed as Directors according to the number of Directors to be elected. In the case that there is a tie for the last Directorship, a lottery is to be drawn to choose the last member.

In the case that a Board seat becomes vacant other than due to term completion, the Company’s Board of Directors shall elect any person who has the qualifications and is not subject to legal prohibitions to fill the vacant seat at the next Board Meeting. The inducted Board member must receive at least a 75% vote from the remaining Board members. Unless the remaining term of the outgoing Board member is less than 2 months, the inducted Board member will remain part of the Board for the remaining duration of the outgoing Board member’s term.

Board members can be voted out by no less than three fourths of eligible votes in attendance. The number of shares shall not be less than one-half of shares held by shareholders present and eligible to vote.

At every Annual General Shareholders Meeting, one-third of the Directors shall retire from office.

The names of Directors to retire during the first and second year after the Company’s listing will be drawn by

Thai Airways International Public Company Limited

67

lots. Subsequent retirements are based on length of service but Directors retiring by term can be re-appointed (Corporate regulation No.17).

Other Committees Other Committees established by the Company’s Board of Directors include the Audit Committee, the Independent Committee, the Good Corporate Governance Committee, the Nomination, Remuneration and Human Resource Development Committee, the Risk Management Committee and the Executive Board.

The Scope and Limitations of Independent Directors include the following: 1. Independent Directors are able to freely perform duties, express opinions and submit reports as assigned by the Board of Directors. Performance of duties must be based on a clean conscience and without being under the influence of an individual or group and must be free from pressures preventing independent assessment and freedom of expression and opinion.

2. Must hold less than 5% of the Company’s, subsidiaries, affiliates and partner companies’ paid-up capital which includes persons related to the Independent Director.

3. Must not hold a management position within the Company, its subsidiaries, affiliates, partner companies or major shareholders of the Company. The Independent Director must not be an employee, staff or a consultant that receives monthly compensation from the Company, its subsidiaries, its affiliates, partner companies or the Company’s major shareholders.

4. Must not have vested interest either direct or indirect in terms of financial benefits and in terms of management control of the Company, its subsidiaries, its affiliates or major shareholders of the Company.

Independent Directors must not have such vested interest 1 year prior to being inducted as an Independent Director unless the Company’s Board of Directors deems such benefits to have no bearing on the Independent Director’s ability to perform his/her duties independently.

5. Neither being involved nor related to executives or major shareholders of the Company as per the legal definition stated under the Regulations for Civil Service and Governance.

6. Not appointed to represent or safeguard the interests of the Company’s Board of Directors, major shareholders or shareholders who are related to the Company’s major shareholders.

The term “Related Parties” refers to people with relationships or connections to the Company that does not enable them to think and act independently such as suppliers, customers, creditors, debtors or companies that have business relationships with THAI. Management Executives In appointing the Company’s President, the Board of Directors must appoint a Nominating Committee comprising the Permanent Secretary of the Ministry of Finance, the Secretary General of the National Economic and Social Development Board (NESDB), the Permanent Secretary of the Ministry of Transport, 1 representative from the State Enterprise Labor Relations Committee and 1 representative from the Board of Directors. This Committee draws up qualifications and screens candidates according to the Act of Standard Qualifications of the State Enterprise Directors and Staff B.E. 2518 (amended in B.E. 2543).

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Annual Report 2007

The Nominating Committee will submit for a majority vote by the Company’s Board of Directors persons whose qualifications meet the minimum requirements.

For other members of management, the Board of Directors has mandated the Nomination, Remuneration and Human Resource Development to select the most appropriate candidate to fill each available position.

Remuneration for Members of the Board of Directors The resolution reached on the issue of remuneration for members of the Board are as proposed by the Remuneration Committee and the Board of Directors for shareholder approval.

Monetary Remuneration -

Each Board member receives a fixed 20,000 baht monthly remuneration and a monthly allowance of no more than 30,000 baht for Board Meeting attendance. The Chairman and the Vice Chairman receive meeting allowance that is 25% and 12.5% higher than other Board members, respectively.

-

Members of the Audit Committee receive a monthly remuneration equivalent to that of meeting allowance of Board members whether or not a meeting is called.

-

Upon being appointed by the Board or the Chairman of the Board to a Committee, a Sub-Committee or a Working Group, the Director receives an additional 10,000 baht per meeting attendance.

However, the maximum allowance paid is 10,000 baht no matter how many meetings are called.

Bonus: Paid at the rate of 0.5% of dividend paid.

Board member remuneration for fiscal year 2007 ending September 30, 2007 Unit : Million Baht Number of Persons

Remuneration including allowance and bonus

29

22.62

Audit Committee

6

1.03

Other Committees

16

1.75

Company’s Board of Directors

Note : One Board member also holds a Management position

Other Benefits Air Ticket Benefits Each Board Director and one accompanying person are entitled to 15 domestic and 15 international free round trip tickets on the highest class of service as long as such individual remains a member of the Board.

If the ticket allowance has been fully utilized, the Director may purchase bookable tickets at 25% of the normal rate fare in the desired class of travel with the exception of domestic travel.

-

The one named companion will have the same ticket privileges as the Director. In case when

traveling together is not possible, the named companion will have the same ticket privileges.

-

Former members of the Board and a named companion are entitled to receive 12 international

and 6 domestic round trip tickets at 25% of the normal rate fare of the preferred class of travel.

The President has the authority to approve such ticket requisitions, however the Executive Vice President, Commercial Department may be entrusted to approve such tickets on the President’s behalf.

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Remuneration for Management Executives Monetary Remuneration Compensation for Executive Management for fiscal year 2007 ending September 30, 2007 Unit : Million Baht Number of Persons Executive Management

Compensation including salary, bonus & benefits

14

82.17

Other Compensation Air Ticket Benefits Company Executive Officers, their spouse and children receive bookable air tickets at no charge while the parents of such officers are entitled to air tickets at discounts similar to staff rates.

Per the resolution reached at the Extraordinary Shareholders’ Meeting 1/2002 held on August 30, 2002, Company Executive Officers and staff received the same benefits from the Employee Securities Option Plan (ESOP).

Benefits received from both the provident fund and the pension fund for Executive Officers are the same as that of other staff.

Provident Fund - The Company’s Provident Fund was registered on June 26, 1992, for which contributions are made by both staff and the Company. A 9% contribution is made to the fund by the Company for staff whose tenure is less than 20 years while those with tenures greater than 20 years receive a 10% contribution.

Each employee is required to make contributions not less than 2% of monthly salary and no more than the Company’s contribution.

Pension Fund - The Company established a staff pension fund with a policy of contributing 10% of staff’s salary for which the funds are invested and earn interest. Should there be a shortfall of available funds against its liabilities the Company will make a one-time contribution to the fund to match its liabilities.

Staff must have worked for the Company at 3 years before being eligible to receive payment upon resignation, retirement or death. Staff hired post the inception of the provident fund in June of 1992 are only allowed to participate in the Staff Provident Fund. As a result, no new members have been added to the Pension Fund since June 1992.

Total contribution made to Executive Management’s provident fund and pension fund for fiscal year 2007 Unit : Million Baht Number of Persons Executive Management

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12

Total Amount 3.09

Good Corporate Governance Committee Report

The importance of corporate management based on the principles of good corporate governance benchmarked to international best practices is well understood as it enhances efficiency, effectiveness and competitiveness resulting in greater shareholder, investor, customer, stakeholder including employees’ confidence in the Company. The transparent nature of operations, the ability to be audited and ensuring equitable treatment of all parties while being socially responsible are key drivers for the Company’s stable growth providing long-term sustainable returns to both the Company and the country.

The Company’s Good Corporate Governance Committee established a framework and pushed for the principles of good corporate governance to be adopted as the Company’s operating policy. Continued emphasis will be placed on developing good corporate governance benchmarked against international best practices and provide ongoing support for activities geared towards development of such principles. For the principles of good corporate governance to be deeply rooted in the corporate culture, senior management and employees alike need to understand the importance of these principles. The key to developing such understanding is ensuring ongoing internal communication. To further promote a culture of good corporate governance within, the Committee has been pushing to raise the awareness of employee responsibility in executing their tasks in accordance with Thai Airways International’s code of ethics.

The Good Corporate Governance Committee appointed 4 sub-committees to assist in overseeing the Company’s code of conduct, good corporate governance and the review of the Company’s internal work processes making sure that they comply with the principles of Good Corporate Governance. The sub-committees are expected to also provide thoughtful suggestions, insights and coordinate with relevant parties to improve the Company’s good corporate governance rating, which will be beneficial for the Company upon being assessed on its performance.

The Committee was tasked by the Company’s Board of Directors to ensure good corporate governance and compliance with the principles as stipulated by the Ministry of Finance and the Stock Exchange of Thailand and that of international best practices.

In fiscal year 2007, the Good Corporate Governance Committee met a total of 7 times. Important actions undertaken as per the given authority were as follows : - Recommended that shareholders be given the opportunity to propose issues and to nominate persons to be considered for the Company’s directorship at the Annual General Shareholders’ Meeting.

The Committee’s recommendation is in line with the principles of good corporate governance and will be effective at the 2007 Annual General Shareholders Meeting. Shareholders have been notified through the posting of this notification on the Company’s website.

- Determined that the Royal Decree on Good Governance should be implemented within the Company, which will lead to enhanced good corporate governance. Section 53 of the Royal Decree on Good Governance states that State Enterprise should possess guidelines in managing good corporate governance in accordance with this Royal Decree.

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- Promoted and supported the Company’s efforts for social events in accordance with the Corporate Social Responsibility (CSR) guidelines. THAI is currently in the process of establishing a CSR program for the Company.

- A Self-Assessment Form, a Cross Evaluation Form and a Group Assessment Form have been developed for the Board of Directors for assessing the Board’s effectiveness in managing the Company. The assessment lends to good corporate governance which will be an important impetus in enhancing the Company’s transparency and credibility, which also conforms to the good corporate governance principles of both the Ministry of Finance and the Stock Exchange of Thailand.

- Held seminars to establish guidelines to promote corporate ethics and aggregated thoughts from the various sub-committees, employees and related persons to analyze ethics related risks within the Company.

The Committee also developed strategies to promote enduring ethical practices within the Company.

By actively promoting good corporate governance within the Company, THAI has been given a “Very Good” rating, by the Thai Institute of Directors Association for fiscal year 2006, which is considered to be high among publicly listed companies.

THAI is confident that the ongoing internal development of good corporate governance will provide THAI with stability and a solid base for which the company will use to transform the Company’s image and continue to build on good corporate governance going forward.

Mr. Borwornsak Uwanno Chairman

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Good Corporate Governance

As a publicly listed company, THAI understands the importance of adopting good corporate governance and diligently observes such principles. To ensure comprehensiveness in observing such principles, the Company’s Board of Directors has appointed a Good Corporate Governance Committee and its various sub-committees, a Corporate Secretariat Department, an Investor Relations Department and a Risk Management Department with mandates to function and observe the principles of good corporate governance. The goal is to instill a culture of good corporate governance to enhance THAI competitiveness leading to long-term sustainable growth and building shareholder value over time. For THAI’s efforts in embracing principles of good corporate governance, THAI was recognized in fiscal year 2005 and 2006 with a rating of “Good” and “Very Good”, respectively.

In 2004, THAI participated in the first rating exercise initiated by the Securities and Exchange Commission (SEC) for which the services of the Thai Rating and Information Services Company Limited (TRIS) was sought to undertake the rating process. The process included analysis and evaluation of THAI’s performance for the period between 2002-2004 obtained from the Company. Information was also obtained through interviews with senior management and staff as well as other credible sources. Observance of Shareholders’ rights, the composition and responsibilities of the Company’s Board of Directors and Executive Management, corporate information disclosure and the good corporate governance culture were all part of the evaluation process. The result of the first ever rating of the Company undertaken yielded a “Good” rating.

In 2005, THAI had the Thai Institute of Directors Association (IOD) prepare a company specific assessment report to be used as an analytical tool to assess the Company. The report served as a handbook to improve on the Company’s good corporate governance policies. The results of the assessment were not only benchmarked against other publicly listed companies but was also used as reference to reflect THAI’s strengths and weaknesses and aggregating constructive suggestions to be used in enhancing the Company’s information disclosure. The assessment also analyzed by groups based on the international standards of the Organization for Economic Cooperation and Development (OECD). The resulting assessment earned THAI a rating of “Very Good” in 2005.

In 2006, THAI acquired the services of the IOD to undertake an assessment of the Company’s good corporate governance policies for the second year running. The resulting assessment was a “Very Good” overall rating and achieving an “Excellent” rating in the area of information disclosure and three “Very Good” ratings for the areas of shareholders’ rights, equitable treatment of shareholders and consideration given to stakeholders. As for the category of Board of Directors’ responsibility, THAI received a rating of “Good”.

Compared to the average of all rating participants, THAI’s rating in each category ranked above the aggregate average.

The results of THAI’s rating for the third consecutive year reflects the commitment of the Company’s Board of Directors, management and employees towards good corporate governance. Providing equitable treatment to all stakeholders will serve to enable the Company to sustain growth in the longer term.

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1.

Policies on Good Corporate Governance THAI is fully committed to the principles of good corporate governance to ensure long-term sustainable

growth for the Company. This commitment is reflected in the Board of Directors’ resolution dated October 28, 2005 to embrace a culture of good corporate governance both in thought and action of members of the Board of Directors, management and employees serving as a strong foundation for improving efficiency and effectiveness in running the Company. The purpose is to ensure equitable treatment of all stakeholders, build confidence in the Company and enable the Company to operate transparently and ethically. All the above is geared towards sustainable long-term growth and to serve as a tool to achieve the Company’s ultimate goal of enhancing value for shareholders, investors and related parties through upholding the Company’s code of ethics including : Adherence to doing things right Appropriate response to stakeholder and shareholder needs Transparency Job responsibility and duty Operational Responsibility Equitable treatment Vision Ethics In addition to emphasis placed on ethics, THAI adheres to the standards and principles of good corporate governance of state enterprises as stipulated by the Ministry of Finance. THAI adheres to 7 important points which conforms to the 15 principles of good corporate governance stipulated for publicly listed companies put into effect in March of 2002, which are in line with international best practices including : 1. Upholding shareholder rights and ensuring equitable treatment 2. Ensuring integrity of structure, role and duties of independent directors 3. Ensuring sufficient information disclosure and transparency 4. Ensuring sufficient internal control and risk management 5. Upholding the Company’s code of conduct 6. Pursuing long-term creation of stakeholder value 7. Promoting best practices The Board of Directors appointed a Good Corporate Governance Committee comprising members of the Board, management and qualified persons charging them with the responsibility of reviewing and advising the Board on good corporate governance practices. The Committee is also responsible for ensuring adherence to such principles as stated by the Ministry of Finance, the Stock Exchange of Thailand and that of international best practices. The Committee may coordinate with the Audit Committee, the Risk Management Committee and other committees as deemed necessary to accomplish their tasks. The Good Corporate Governance Committee is also responsible for devising a comprehensive review process and making necessary adjustments to good corporate governance policies on an ongoing basis. All Board members are encouraged to attend

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seminars provided by IOD and other institutions on relevant topics.

In fiscal year 2007, THAI performed a self assessment in relation to the implementation of good corporate governance policies to enhance the governance process and to ensure that the Company complies with the 2005 good corporate governance principles stipulated for publicly listed companies by the SET. In practice, THAI modified its good corporate governance principles to conform to the 15 principles as stipulated by the SET which is also in line with the 2004 Principles of Corporate Governance as stipulated by the Organization for Economic Cooperation and Development (OECD) and guidelines proposed by the World Bank through their Corporate Governance program. Through the participation of the Corporate Governance program - Reports on the Observance of Standards and Codes, THAI’s Ethics Committee appointed 4 working sub-committees : -

Code of Conduct and Good Corporate Governance Promotion Sub-Committee The Sub-Committee is responsible for improving Company ethics and building understanding of the

good corporate governance concept on an ongoing basis. This past year, the Sub-Committee revised the Company’s code of conduct handbook (THAI’s Code of Conduct) published in print both in Thai and English, spelling out operating guidelines and procedures for conducting business reflecting feedback by employees on these guidelines. Handbooks have been circulated to all Company employees both domestic and abroad while a copy has been posted on the Company’s web site for reference.

The Sub-Committee organized a variety of activities to promote awareness of the importance of good corporate governance among which a quarterly print publication is designed to promote awareness for the Board of Directors, management and THAI’s staff as to the importance of good corporate governance. A group and individual slogan competition, was held during the “Promote Good Corporate Governance Week” for the various departments within THAI along with visiting other organizations to get first hand observation corporate governance in action and developing a PR video, internal audio announcements, posting related information on the intranet, developing a staff questionnaire to obtain staff feedback and is planning to establish a coaching team in the ratio of 1 : 7 to promote corporate ethics and good corporate governance to ensure that every employee receives news updates on a regular basis.

-

The Good Corporate Governance in Work Process Sub-Committee The Sub-Committee is responsible for reviewing the Company’s work processes and making necessary

changes to the selection, appointment and reshuffling process of the Company’s management to better reflect good corporate governance principles. As such, employees and related persons within the Company were given the opportunity to comment and provide feedback via the Company’s internal web site.

-

Sub-Committee to Improve Good Corporate Governance Rating The Sub-Committee is responsible for making recommendations and coordinating with relevant

parties to ensure the Company’s overall good corporate governance rating is maintained at a level that is at par with that of international standards as per the principles stipulated by the Ministry of Finance and the Stock Exchange of Thailand.

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-

Sub-Committee to Integrate the Guidelines of the Royal Decree on Good Governance into Thai

Airways International Plc. The Sub-Committee is responsible for submitting recommendations to the Company’s Board of Directors, Good Corporate Governance Committee and management on issues related to good corporate governance. The Sub-Committee was tasked to support the Company’s management to achieve the stipulated principles on good corporate governance. Another function of the Sub-Committee was to perform ongoing review of such principles through benchmarking with international standards. All recommendations by the Sub-Committee are presented to the Good Corporate Governance Committee prior submitting to the Company’s Board of Directors.

2.

Shareholders : Rights and Equitable Treatment Shareholders’ Rights THAI recognizes the importance of shareholders and their rights. To this end, THAI has implemented

policies to protect the basic rights of its shareholders which include the right to purchase, sell or transfer Company shares, a share in the Company’s profits, receive sufficient and timely Company information, participating in the Annual General Shareholders’ Meeting (AGM), give proxy to vote on shareholder’s behalf, make inquiries during the AGM, take part in making key decisions (Board member selection, approval of important agendas that bear impact on the Company’s long-term direction) and making amendments to Company’s Articles of Association.

Equitable Treatment of All Shareholders THAI’s policy is to facilitate the needs of its shareholders and to ensure equitable and fair treatment which also complies with applicable laws and guidelines protecting shareholders’ basic rights. Voting rights are based on a one vote per share basis with Independent Directors mandated to look after the benefits of minority shareholders. Measures have been taken to prevent insider trading and the misuse of internal information by the Company’s Board members, management including their spouses and their under aged children. Board members and those that have retired from office of no more than 6 months are prohibited from making any transactions in regards to THAI’s shares from 1 month prior and 3 days post disclosure of the Company’s financial performance. The Company’s Board members and its executives are required to disclose their investments in THAI’s shares and reports of their holding must be updated and submitted to the Board of Directors on a regular basis. These measures are to ensure the integrity of members of the Board and that of management.

3.

Stakeholders’ Rights THAI’s main goal is to provide comprehensive air transport services encompassing domestic and

international routes, focusing on safety, convenience and unsurpassed quality service to satisfy its customers and gain their trust. Effective and efficient management at par with international standards combined with satisfactory financial performance serves to maximize shareholders value. To optimize staff effectiveness and

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growth potential, the Company seeks to provide a stable, safe and friendly working environment so that everyone can feel proud to be part of the success story. THAI, in its role as the national carrier, supports the nation through its various charity and social contributions.

To achieve the Company’s objectives, it is important to take into consideration the rights of each of the Company’s internal stakeholders including shareholders, the Company’s Board member and the Company’s staff and external stakeholders including customers, business partners, creditors, competitors, government bodies and other entities for which the Company interacts. THAI’s internal and external interactions are founded on the basis of Corporate Social Responsibility (CSR). Written guidelines in the Thai Airways International Code of Conduct of 2005 lays the ground rules for which Board members, management and staff is expected to abide. Currently the Good Corporate Governance Committee has revised Thai Airways International Code of Conduct to be more encompassing, more precise and better reflecting the current operating environment. The revision process took into consideration constructive feedback from the Company’s employees. Upon completion of the revision, each employee was given their own copy of the code of conduct and the contents were also distributed through THAI’s print circular “TG Update”, video TV and seminars were held to facilitate understanding of the importance of THAI’s code of conduct. The above undertakings took into consideration of stakeholder right were as follows : Shareholders

- Perform duties with honesty, integrity and fairness for the benefit of major and minor shareholders as well as other related parties.

- Manage for stable long-term sustainable growth while maximizing shareholder wealth.

- Knowledgeably execute responsibilities with utmost care and professionalism.

- Safeguarding the Company’s assets.

- Disclose sufficient and accurate financial and non-financial information on a consistent and timely manner reflecting the Company’s operating and financial status.

Customers

- Adopt a positive attitude with emphasis placed on customer care and service, providing service with enthusiasm and courtesy, keeping customer’s personal information confidential and ensure equitable treatment of all customers to provide unsurpassed service quality leaving passengers with an indelible experience.

- Study and understand customers’ needs to develop ensure and the highest standard of service for each customer touch point. To meet customers’ needs it is necessary to regularly assess and make changes to service standards. THAI’s employees are encouraged to keep abreast of the latest in information and build experience through field work to gain expertise and efficiency. The expectation is for THAI’s staff to use their experience to provide unsurpassed service quality and through customer satisfaction, customer retention is achieved.

- Establish a strong working relationship to build customer loyalty. A channel has

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been established enabling customers to provide the Company with constructive feedback on its products and services while having a system that quickly and satisfactorily handle customer complaints.

Business Partners, Creditors and Debtors

- Treat business partners, creditors and debtors equitably and fairly while maximizing Company benefit but on the basis of equality and fairness to partners.

- Avoid conflicts of interest and honor outstanding obligations.

- Disclose accurate and factual information. Resolutions to business problems should be on business terms.

Competitors

- Abide by the framework of fair competition.

- Avoid defamation of competitors through negative information or false accusations.

- Avoid illegal access of competitor’s confidential information.

Suppliers of Products

- Implement transparent procurement and service acquisition process.

and Services

- Strict abidance with terms and conditions stipulated in contracts.

- Make timely payments.

- Provide necessary information to suppliers of products and services.

Employees

- THAI deems its human resource to be an important asset through which the Company is able to achieve its objectives and thus its vision. To be able to achieve the Company’s vision and objectives, the Company seeks to recruit and employ knowledgeable, capable and experienced staff with the required qualifications and in line with the Company’s growth requirements. Ongoing personnel development programs have been provided to supplement staff knowledge, capabilities and enhance skills. A key indicator determining THAI’s commitment to furthering staff’s knowledge and skills is the number of days of training attended by each staff member. Salary adjustments have been made which is now comparable to other in the commercial airline industry. The Company also offers fringe benefits including the establishment of a provident fund and lent support for the launch of the Thai Airways International Club and the Thai Employees’ Savings and Credit Coop Limited.

- THAI has put a high level of importance in the development of its human resource through offering professional development courses to help staff enhance their competencies to improve task execution and thus customer satisfaction. The success is reflected in the plan for personnel development that parallels and supports the stipulated guidelines for state enterprises and the Company’s own policies.

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Society and Community - Undertake activities that are of mutual benefit to the Company and that of the community. Avoid activities that will bring negative impact to the country, adverse impact on natural resources and the environment and that of the general public.

- Provide ongoing support for activities that are beneficial to the general public.

- Instill a culture of being socially responsible for all staff levels.

- Avoid undertaking illegal actions or being accessory to illegal acts.

- Manage the Company free of political agenda.

The Environment

- THAI developed its environmental management system based on international standards ensuring that THAI’s standard of operations meets all legal requirements on environmental issues.

- Continuously improve approach to environmental management for all functions to reduce pollution and impact on the environment through clear objectives, targets, action plans and standardized evaluation processes.

- Consider environmental impact at every step of operations beginning from the planning and designing phase through procurement, service and related activities keeping in mind efficiency and effectiveness in utilizing assets while maximizing benefits to the Company and society.

- Raise awareness and continuously develop staff awareness of environmental concerns to ensure maximum effectiveness in environmental management.

- Support conservation, distribute relevant information, cooperate with staff, customers, government agencies, the private sector and the general public to build a positive corporate image and enable a better understanding of the Company’s efforts towards managing the environmental management.

- Quick, efficient and effective response on situations caused by the Company bearing impact on the environment and community.

4.

Annual General Shareholders’ Meeting The Company held the 2006 Annual General Shareholders’ Meeting in accordance with the guidelines

of the Stock Exchange of Thailand and that of the Securities and Exchange Commission (SEC). The format of the meeting took into consideration recommendations made by the Thai Rating and Information Services Company Limited (TRIS) along with recommendations from the Thai Institute of Directors Association (IOD).

An Annual General Shareholders’ Meeting Checklist was used in preparation of holding the Annual General Shareholders’ Meeting (AGM), which is the basis for which publicly listed companies will be rated for this coming year by the Thai Investors Association and the Securities and Exchange Commission (SEC) to enhance the quality of AGM. Areas of evaluation include the following :

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Date, Time and Place to Hold the Annual General Shareholders’ Meeting At the Board of Directors’ meeting 21/2006 held on September 22, 2006, a resolution was reached to hold the 2006 AGM on December 27, 2006 and posted the relevant information for everyone to see on the SET’s web site beginning September 23, 2006, which complies with the articles of association of Thai Airways International requiring the AGM to be held within 4 months post the fiscal year end. The venue for the AGM was held the Boonyajinda Hall at the Royal Thai Police Club on Vibhavadee Rangsit Road, Bangkok. A total of 1,106 shareholders and proxies attended the meeting representing a total of 1,169,987,367 shares, which was more than one third of the Company’s paid-up capital constituting a quorum.

Prior to the AGM Along with the letter of invitation to attend the AGM, details of the various issues which were to be considered for approval were also included in the information packet as legal requirements, SET guidelines and the Company’s own guidelines require the distribution of such information. Adequate information and details were provided to shareholders on each issue to ensure that shareholders have appropriate and sufficient information to make sound decisions. Clear identification was made for each issue as whether it was just “for your information”, “for approval” or “for consideration”. The Company also provided shareholders with a viewpoint from the Board of Directors on each issue for better insight. Included in the information packet were the minutes to the previous year’s AGM, a copy of the previous fiscal year’s annual report, copies of relevant information and a copy of a proxy along with detailed procedures to be observed.

Day of the Annual General Shareholders’ Meeting Attendance and Registration Information relevant to the AGM was also included in the information packet sent to shareholders along with the letter of invitation to attend the AGM to enable shareholders to have sufficient information to make sound decisions on the various issues proposed for consideration. The time and date of the AGM was clearly disclosed while the meeting location was selected to ensure maximum security for shareholders.

Shareholders and their proxies were expedited through the registration process with a large number of staff on hand to facilitate the process. Registration to attend the AGM began 2 hours prior to the commencement of the meeting and continued through the end of the AGM. A small token of appreciation was also given upon registration and shareholders were treated to snacks and refreshments.

Attendance of Board Members at the Annual General Shareholders’ Meeting Members of the Board of Directors have placed importance in attending the 2006 AGM with the Chairman of the Board of Directors presiding as Chairman of the AGM. A total of 12 Board members attended the AGM including the Chairman of the Board of Directors, Chairman of the Audit Committee, Chairman of the Good Corporate Governance Committee, Chairman of Independent Directors, Chairman of the Risk Management Committee, Chairman of the Nomination and Remuneration Committee, Chairman of the

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Executive Board and representatives from the various departments took note of shareholders’ comments, concerns and answered questions that shareholders may have. Board members attending the AGM include : 1. ACM Chalit

Pukbhasuk

Chairman and Chairman, Nomination and Remuneration Committee

2. Mr. Suparut

Kawatkul

Vice Chairman

3. Mr. Chaisak

Saeng-Xuto

Chairman, Executive Board

4. Mr. Chaisawasd

Kittipornpaiboon

Director

5. Pol. Gen. Nopadol

Somboonsub

Director, Audit Committee and Director, Independent Committee

6. Mr. Sivaporn

Dardarananda

Director, Audit Committee and Director, Independent Committee

7. Gen. Pairoj

Panichsamai

Director, Independent Committee

8. Gen. Ruengroj

Mahasaranond

Director, Independent Committee

9. Mr. Borwornsak

Uwanno

Chairman, Good Corporate Governance Committee and Chairman, Risk Management Committee

10.Mr. Pichai

Chunhavajira

Director

11.Mr. Sirin

Nimmanahaeminda

Director

12.Flg. Off. Apinan

Sumanaseni

Director and President

Senior Management who attended the AGM to hear recommendations and answer shareholder questions include : 1. ACM Narongsak

Sangapong

Executive Vice President Corporate Secretariat Department and Secretary to the Board of Directors

2. Flt. Lt. Pisal

Chayakula

Executive Vice President Corporate Planning and Information Technology Services Department

3. Mr. Wallop

Bhukkanasut

Executive Vice President Commercial Department

4. Mrs. Ngamnit

Sombutpibool

Executive Vice President Finance and Accounting Department

5. Flg. Off. Chinawut

Naressaenee

Executive Vice President Customer Services and General Administration Department

6. Flt. Lt. Prasart

Khoon-In

Executive Vice President Operations Department

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7. Flg. Off. Norahuch

Ployyai

Executive Vice President Standards Assurance and Risk Management Department

8. Mr. Chanchai

Singtoroj

Executive Vice President Human Resources Development and Management Department

9. Mr. Tummasak

Chutiwong

Managing Director Technical Department

Providing Shareholders with the opportunity to ask questions, make comments, vote on resolutions and record the minutes Prior to commencing the AGM, the Company’s Board Chairman presiding over the AGM as Chairman provided the attendees a summary regarding the votes represented at the meeting, explained the voting procedure, vote counting process, the voting process via video TV, the vote collection process, the vote counting process and the summary of votes. The voting documents have been kept for future reference.

During the AGM, shareholders were given sufficient time to pose questions or make suggestions. Detailed and encompassing answers were provided by Board members in response to questions posed by shareholders. In counting votes, the Company abides strictly by its own guideline of one share one vote basis and approval is based on majority vote. The “nay” and “refrain from” votes are kept for future reference. The Company also records detailed minutes of the AGM in the form of video TV and is available for shareholders to review.

Post the Annual General Shareholders’ Meeting Resolutions reached at the AGM are disclosed the following business day to the general public via the Stock Exchange of Thailand’s information channel. Details regarding the approved/disapproved resolution and the vote counts (approve/disapprove/refrain from voting) have been clearly indicated for each issue that was submitted for consideration. The detailed minutes to the AGM containing names of Board members and management attending the meeting along with the resulting resolutions, (approved/disapproved) and the vote count (approve/disapprove/refrain from voting) on issues posed for shareholder consideration along with major issues posed by shareholders and the response made by the Company were submitted to the Stock Exchange of Thailand and other relevant government bodies within 14 days post the AGM. The minutes to the AGM has also been posted on the Company’s web site www.thaiairways.com.

5.

Leadership and Vision THAI’s Board of Directors is made up of knowledgeable and qualified persons of diverse backgrounds

and experience including the areas of commercial airline industry, finance, accounting, legal, executives and high ranking government officials representing the respective Ministries. Each Board member understands their roles and responsibilities enabling a smooth functioning of the Board of Directors. Members of the Board

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actively contribute in various areas of the Company’s operations including the Company’s vision, mission, objectives, strategies goals and approving the Company’s strategic directions and policies. The Board of Directors is also responsible for devising the annual plan and the corresponding budget while overseeing management and ensuring adherence to and the effectiveness in meeting corporate strategies and the established budget. The Board needs to also ensure that all activities undertaken by the Company are in compliance with all legal and regulatory guidelines, the Company’s own regulations and guidelines including those of the respective Ministries overseeing THAI along with the resolutions reached at the AGM. A robust internal audit process must be in place and a comprehensive risk management system must also be in effect to ensure maximum benefit for the Company and for the Company’s stakeholders which complies to the principles of good corporate governance to increase the Company’s economic value and provide shareholders with the greatest level of security.

6.

Conflicts of Interest One aim of the principles of good corporate governance is to prevent conflicts of interest. The Board

of Directors screens transactions based on moral guidelines for transactions that may have conflicts of interest including related party transactions or transactions amongst business units within. It is required of everyone within the Company from Board members down to the Company’s staff to strictly adhere to the guidelines below as stipulated by the SET. A guideline was announced in regards to disclosure of information on related party transactions as per the guidelines and procedures as stipulated by the SET since September 2004 to let members of the Board and management know that information disclosure is a must should there be any relationship that falls within the definition as stipulated by the SEC. Disclosure is made on the person or entity that is related and every time there is a new management appointment, the Company Secretariat sends the “Details of Related Persons Form as per the SEC’s guidelines relating to information disclosure for listed companies on related party transactions, B.E. 2546” for the newly appointed person to fill and sign-off on the integrity of information provided. The document must be returned to the Company’s Secretariat who is responsible for summarizing the information of related persons and business entities for review purposes and send copies to management and persons responsible for tracking related party information in each business unit. The information provided to each business unit serves as reference for screening proposals seeking management or Board of Directors approval. If there is an issue that requires information disclosure, the respective units can prepare the necessary related party documents to be disclosed to the SET. Related party transactions have been disclosed in the Annual Report (form 56-2) and the annual disclosure of the Company’s information (form 56-1).

To improve disclosure on related party transactions and compliance with the Stock Exchange of Thailand’s guidelines and that of accounting standards, THAI released an announcement in January of 2005 on “Transfer Pricing Guidelines for Thai Airways International Plc.” The announcement details the application of non-related party pricing as benchmark but provides flexibility for using conditional pricing for related party transactions. In abidance of the above procedure, THAI is in compliance with SET’s guidelines and meets

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the generally accepted accounting standards.

In addition, at each monthly Board of Directors’ meeting and Management’s meeting, the Company Secretariat prepares a summary on related party transactions which is submitted for both the Board of Directors and management to be aware of these related party transactions on a monthly basis.

7.

Business Morals The Company asserts its commitment to all its stakeholders and takes to heart concerns over

environment and social issues and upholding national interests while conducting ongoing transparent, honest and ethical business undertaking in line with the principles of good corporate governance. The Company regards Thai Airways International Code of Conduct to be very important as it is considered to be an element to THAI’s ongoing success. Revisions were made to the “Thai Airways International Code of Conduct” handbook which was drafted and approved in 2002 to better reflect the changing environment and better serve as guiding principles for THAI employees of all levels to achieve THAI’s vision and goals.

Effort has been put forth in instilling ethics into the corporate culture at THAI by getting employees involved in the process of making changes to Thai Airways International Code of Conduct, participating in a good corporate governance slogan competition and attending seminars on good corporate governance such as the Good Corporate Governance seminars for middle management by the King Prajadhipok’s Institute. Changes in job processes for front line service and supporting functions were undertaken to comply with the principles of good corporate governance and the increased utilization of computers as a means to increase efficiency and effectiveness in operations management benefiting both stakeholders and the nation as a whole.

8.

Balance of Power by Non-Executive Directors The appointment of Board members were approved by the AGM. Candidates were screened by

the Nomination, Remuneration and Human Resource Development Committee and reviewed by the Company’s Board of Directors respectively which is in line with the Company’s guidelines. The Company’s Board of Directors is made up of at least 5 persons but not more than 15. As at September 30, 2007 the Company’s Board of Directors consisted of 15 persons.

- Non-Executive Board Members - 8 - Independent Directors - 6 - Executive Directors - 1 Of the 15 Board members, 93% are Non-Executive Directors and 40% are Independent Directors, which is considered to be sufficient to have a built-in check and balance system. With the current composition of Board members, stakeholders can be rest assured that shareholders’ interests are upheld with an adequate check and balance system.

The Company’s Board of Directors has the responsibility of ensuring that the Company’s operations

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Annual Report 2007

abide by the relevant rules and regulations, purpose and the Company’s regulations including the resolutions reached at the AGM. Board members are expected to execute their responsibilities with honesty and due care in protecting shareholders’ benefits. Each Board member has a fixed tenure as stipulated by the Company’s regulations requiring that at least one third of the existing Board members retire based on the length of tenure at each AGM.

9.

Evaluation of Board Members The Company’s Board of Directors has mandated that there be an annual self-assessment for the

purpose of assessing the effectiveness of its actions and to reflect upon the problems and obstacles faced by the Company over the past year. There are 2 parts to the evaluation. The first part is an individual self assessment and a cross evaluation of Board members and the second is an assessment of the whole Board.

The result of the assessment by the Board is prepared and submitted for Board review. The Board uses the assessment as a guideline for improving Board of effectiveness. The assessment guidelines are in line with the principles of good corporate governance and the duties of the Board.

10. Combined and Segregation of Positions The Chairman of the Board of Directors does not hold a management position within the Company and is not the same person holding the position of Company President. The Chairman of the Board has no relations to other members of the Board or members of Management. There is also a clear written segregation in roles of the Company’s Board of Directors and that of the Company’s Management.

11. Remuneration for Directors and Management The Company’s Board of Directors appointed the Nomination Remuneration and Human Resource Development Committee and tasked the Committee to determine the appropriate level of remuneration for members of the Board, member of various sub-committees and the Company’s management. This also includes setting remuneration for non-company personnel hired to execute tasks for the Company. The remuneration guidelines are clear and transparent while being attractive to retain qualified Board members and is benchmarked against other companies in the industry. Board members who took on additional responsibility were given an appropriate level of extra remuneration. As for Executive Board members and remuneration for management is determined based on the Company’s financial performance along with the performance of each Board member and Senior Executive Management need to be taken into consideration.

To comply with the Ministry of Finance’s good corporate governance principles and that of the SET including internationally accepted guidelines, remuneration for Board members must comply with the amount approved at the AGM. Fiscal year 2007 Board and Executive Management remuneration has been disclosed in the Board and Executive Management Remuneration section.

Thai Airways International Public Company Limited

85

12. Board of Directors Meetings Board meetings have been scheduled ahead for the fiscal year with monthly meetings held on the second Wednesday of the month and special rounds of meetings are called as necessary. Both the agenda and details are provided for each Board member 7 days prior to the Board meeting. There is also a follow-up section in regards to resolutions reached at the previous Board meeting for which the Company Secretariat has been charged to provide progress updates. Prior to the Board meeting, an invitation to attend the meeting along with the supporting documents are submitted 7 days ahead of time for each Board members to review.

In fiscal year 2007, the Board convened 19 times with attendance details for each Board member provided in the Board of Director’s Shareholding and Meeting Attendance for Fiscal Year 2007 section of the 2007 annual report.

The Company Secretariat prepares minutes to each Board meeting and submits the minutes to each Board member for review prior to the ratification of the minutes at the next Board meeting. Agendas approved by the Board are filed and can be reviewed by the Board and other related departments.

13. Sub-Committees The Company’s Board of Directors appointed knowledgeable and experienced Board members to various sub-committees to assist in analyzing and screening of important issues that may require close monitoring in the various areas of operations. The various sub-committees are expected to provide thoughts, comments and recommendations to the Board of Directors for consideration and decision making. The various sub-committees as defined by the principles of Good Corporate Governance, the Company assigned these sub-committees to be responsible for various areas. Information on the sub-committees has been detailed in the Board of Directors and Sub-Committees Section.

14. Internal Control and Internal Audit THAI recognizes the importance of internal control system and has emphasized on establishing a sufficient and appropriate control measures to prevent overall potential losses which may arise out of financial sector and other related operations, risk management and management deficiencies, THAI therefore implemented an internal control system to comply with the 2001 State Audit Commission guidelines. THAI has submitted a yearly internal control assessment report to the State Audit Commission, related authorities and the Audit Committee.

THAI also concerns on internal cooperation, the Internal Control Policy handbook was widely distributed to the management and employees as a guidance. Moreover, in the fiscal year 2006, the Company had introduced the Control Self Assessment (CSA) as a management tool to enhance control on all work/business processes by seeking the consultant service to develop an appropriate Control Self Assessment system on a co-source basis starting on Finance and Accounting Department and Catering Department as the pilot projects and aiming to cover the whole company.

The Company realizes the importance of having a strong internal audit by which the Office of the Internal Audit undertaking the work/business process as well as reviewing the internal control system based on the risk level. The Office of the Internal Audit shall provide recommendation to the management for

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their control improvement to ensure compliance to all rules and regulations and enhancing the efficiency and effectiveness of the company overall operations and presents the audit report to the Audit Committee at least on a quarterly basis with a copy to the line management. The comment and notification on highly significant to loss would be reported by the management of the Office of the Internal Audit to the President for corrective action along with immediate notification to the Audit Committee. In addition, the audit satisfaction survey is regularly given to the auditees to enhance the effectiveness of the auditing process.

The Audit Committee is responsible for determining the adequacy of the internal control system of the company include ensuring the compliance with all laws, rules, regulations and related policies through the reviewing audit performance undertaken by the Office of the Internal Audit and the independent auditor consecutively. Should the Audit Committee has any recommendations or finds any significant flaws, the committee shall report to the Board of Directors for consideration to take further corrective actions. The Audit Committee shall perform under the charter which in line with SET’s guidelines on good corporate governance and guidelines stipulated within the State Enterprise Audit handbook that the Ministry of Finance uses as reference December 2003.

Therefore, the Board of Directors has concurred with the Audit Committee that THAI has sufficient and appropriate internal control system for business operations.

15. Board of Directors’ Report The Board of Directors is responsible for preparing a summary of the Company’s performance and discuss about issues that impacted the Company’s operations during the year. The Board is also responsible for putting in place a strong and effective risk management and internal control process. An Internal Audit Committee was appointed to ensure comprehensive and transparent disclosure of financial information and ensure that the Company has a robust internal control process that is in abidance with generally accepted accounting standards. Both the Board of Directors and the Audit Committee have provided summary statements regarding their respective areas of concern in the annual report.

16. Investor Relations As a publicly listed company on the Stock Exchange of Thailand, THAI supports the investment community in terms of providing information to promote the understanding and knowledge of the Commercial Airline Industry and fostering a strong working relationship with Thai and foreign investors, shareholders, analysts and other related institutions. The Vice President overseeing Investor Relations is the center for disclosing accurate, transparent and timely information relating to the Company’s operations and financial performance for all stakeholders. The Vice President is also responsible for effectively responding to domestic and foreign investor, analyst and shareholder inquiries on an equal, comprehensive and factual basis. The purpose is to build a trust in the Company’s operating results and to enhance THAI’s corporate image as a publicly listed company with strong Good Corporate Governance and a strong Board of Directors that is able to maximize shareholders’ benefits.

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87

Direct and indirect communication channels with the Company’s stakeholders : 1. The Stock Exchange of Thailand (SET) -

Company visits

-

The Annual General Shareholders’ Meeting

2. The Securities and Exchange Commission 3. Ministry of Commerce 4. Meetings with analysts, investors, shareholders and management of other related institutions.

5. Dissemination of information via newsprint, magazines and other print media.

6. Domestic and international non-deal road shows.

7. Communication via e-mail, telephone and facsimile.

Direct Channels - Disclosing information and responding to queries on a regular basis regarding the Company’s information for investors, analysts, fund managers, shareholders, employees and other stakeholders through various channels. Analyst meetings, participated in road shows, held conference calls, participated in SET related activities and one-on-one meetings were some of the direct communication channels used including company visits to the Company’s various business units to provide stakeholders an opportunity to learn about the Company. Activities undertaken by the Investor Relations Department for fiscal year 2007 includes : Activities

Frequency

Domestic Non-deal Road Shows

3 times

International Non-deal Road Shows

7 times

SET Related Activities

2 times

Analyst Briefings

2 times

One-on-one meeting/conference calls Responding to emails & phone calls The Company’s data update/General information update

120 times 3-5 per day 3-6 times per week

Company visits/Site visits

1 time

Indirect Channels - Relevant statistical information, financial statements and notifications to the SET have been provided for easy access through its Investor Relations website www.thaiair.com.

Contact the Investor Relations Department at : http://www.thaiair.com/About_Thai/Investor_Relations/default.htm Contact The Vice President, Investor Relations Department - Telephone : 662-545-2113 Facsimile : 662-545-3971

17. Office of the Secretariat In recognizing the importance of the role of the Company Secretariat and to be in compliance with the guidelines as stipulated by the SEC and the SET, the position of the Company Secretary was established

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Annual Report 2007

to ensure the effective functioning of Board of Directors. The Company Secretary’s key role is to ensure that the undertakings by the Board abide by all legal requirements and guidelines, Company guidelines and resolutions of the AGM along with preparing and filing of information considered in Board meetings, the AGMs and to coordinate with all relevant parties to achieve the Board’s goals and objectives.

The current Company Secretary is ACM Narongsak Sangapong, Executive Vice President Company Secretariat and reports directly to the President and is charged with the responsibility of being the Secretary to the Board of Directors. The Company Secretariat also has the all important responsibility of facilitating functions of the Board of Directors. This includes ensuring that Board decisions and actions comply with all legal regulations, that of the Company’s own Charter and related guidelines. Another role of the Company Secretariat is the support in fostering Good Corporate Governance. The 5 divisions currently under management by the Company Secretariat include : - Compliance Department - Legal Department - Council of the Board Members and Management Meeting Department - Secretariat Management Department - Corporate Strategy Department The Secretariat is charged with the following duties : - Coordinate and manage the various activities of the Board of Directors to ensure compliance with laws and regulations and resolution of the AGMS - Prepare the minutes of the Board and Shareholders’ meetings within a reasonable time - Prepare and file all concerned Board meetings and AGMs’ documents and also coordinate with concerned parties - Serve as consultant and secretary to the Board of Directors - Serve as consultant and coordinator and serve as secretary for the various sub-committees that the Board has established - Oversee good corporate governance issues - Ensure legal compliance and compliance of the Company’s internal guidelines - Coordinate between legal advisor and the financial auditor - Serve as a communications center and provide information to members of the Board, committees and external parties - Provide advice to the Board regarding legal issues and the Company rules and regulations and ensure compliance with such rules and regulations. Report changes or amendments of such rules or regulations to the Board of Directors

18. Policies on Insider Information THAI strictly adheres to and abides by the guidelines of both the SET and the SEC as emphasis is placed on good corporate governance. An internal guideline was announced in 2005 that current Board members and those that have retired from office of less than 6 months are not allowed to buy or sell THAI shares during

Thai Airways International Public Company Limited

89

the period of 1 month prior to and 3 days post the disclosure of the Company’s financial statements. The Company Secretariat is responsible for notifying both the Board of Directors and the Executive Management in regards to the blackout period for which THAI’s shares cannot be traded. A monthly shareholding report is provided to both the Board of Directors and Executive Management summarizing changes in shareholding of THAI shares by persons stipulated by the SET, SEC and the Company’s guidelines. Both the BoD and Executive Management have been notified of ensuing penalties for not complying with the established guidelines within the stipulated time. THAI’s ethics handbook clearly prohibits the use of Company information for personal gains which is also considered to be a breach of discipline.

19. Personal Development for Directors and Senior Executives There has been enhanced interest by stakeholders, investors, shareholders, government’s governing units and listed companies themselves in the role in which directors of publicly listed companies are playing to champion good corporate governance. With the ever increasing important role that members of the Board are taking on, stakeholders are no longer satisfied with just a summary report but are expecting the Board of Directors to successfully steer and guide the Company towards sustainable growth. Growth in itself is a function of employed capital where the mix consists of 2 portions, internally generated capital and that which has been obtained from investors or creditors (other peoples’ money). It is therefore an important role for the Board of Directors to look after the interests of institutional and retail shareholders and to provide such shareholders with the highest rate of return. With the role of Board members becoming increasingly important, broad knowledge and vision are key ingredients for a Company to sustain its growth.

To meet the growing challenges, the Board of Directors mandated that Board members, Executive management and the Corporate Secretary register as members of the Thai Institute of Directors Association (IOD). The benefit of such membership is the wealth of knowledge that can be obtained to expand knowledge and sharpen skills by attending the various courses and seminars provided by IOD - the Director Accreditation Program (DAP), the Director Certification Program (DCP) along with DCP Refresher Courses, the Audit Committee Program (ACP), the Improving the Quality of Financial Reporting (QFR) course, The Role of Chairman Program (RCP/RCM), the Role of Compensation Committee (RCC) program, the Finance for Non-Finance Director (FN) program, the Understanding the Fundamental of Financial Statements (UFS) program, the Company Secretary Program (CSP), the Effective Minute Taking (EMT) course and other courses which are offered by the SET and the Association of Publicly Listed Companies. The Board of Directors and management are given notice of available courses for which they can attend.

Board and Executive Management Training The Company’s Board of Directors has placed great importance in attending seminars on issues related to ongoing knowledge development in regards to executing the Board’s duties. As of September 30, 2007, the Company’s Board of Directors along with the Company’s Executive Management is attending the following seminars provided by the Thai Institute of Directors (IOD) to utilize the knowledge and experience gained to benefit the Company and its subsidiaries : Name Position Course Attended ACM Chalit Pukbhasuk Chairman DAP 64/2007 Mr. Suparut Kawatkul Vice Chairman DAP 45/2005, DCP 72/2006 90

Annual Report 2007

Mr. Chaisawasd Mr. Chartsiri Mr. Borwornsak Gen. Pairoj

Kittipornpaiboon Sophonpanich Uwanno Panichsamai

Vice Chairman Director Director Director

Gen. Ruengroj Mr. Sivaporn Mr. Chaisak Mr. Pichai Mr. Wisudhi Mr. Aviruth Flg. Off. Apinan ACM Narongsak Mrs. Ngamnit Flg. Off. Chinawut Flg. Off. Norahuch Mr. Tummasak

Mahasaranond Dardarananda Saeng-Xuto Chunhavajira Srisuphan Wongbuddhapitak Sumanaseni Sangapong Sombutpibool Naressaenee Ployyai Chutiwong

Director Director Director Director Director Director Director Management Management Management Management Management

DAP 77/2006, DCP 77/2006 DAP 25/2004, RCM 2/2001, DCP 3/2000 DAP 25/2004 DAP 61/2007, DCP 86/2007, ACP 17/2007, FN 34/2007 DAP 63/2007, UFS 10/2007, FN 36/2007 DAP 42/2005, RCP 2/2001 DAP 9/2004 DAP 49/2005 DAP 3/2000, DCP 3/2000, RCP 12/2005 DAP 8/2001, DCP 8/2001, DAP 64/2007 DAP 63/2007 DAP 2/2003, DAP 25/2004 DAP 25/2004, DCP 72/2006 DAP 25/2004 DAP 25/2004 DAP 25/2004, CSP 11/2005, UFS 1/2006

Orientation of New Directors To conform with the principles of Good Corporate Governance in relation to the Board’s responsibilities as per the Company Corporate Governance Assessment Report & Recommendations of the Thai Institute of Directors Association (IOD), the Company held orientations for newly appointed Board members and provided relevant information to facilitate the execution of Board member’s tasks. A briefing was held to provide information relating to the Company and that of its operations. Documents provided to each newly appointed Board member include: 1. THAI’s Director Handbook - 2007 2. Good Corporate Governance Report - 2006 3. Legal guidelines for publicly listed companies 4. Certification from Department of Business Development, Ministry of Commerce and THAI’s Memorandum & Articles of Association 5. Annual timetable for disclosure of the Company important information 6. A list of important disclosures to be made to the Stock Exchange of Thailand 7. THAI’s Ethics Handbook 8. Principles of Good Corporate Governance - 2006 9. Recommendations on information disclosure for publicly listed companies 10.Training courses for THAI’s the Board Director related to executing the duties of a director by IOD. 11.A recorded DVD (visual and sound) and CD (sound) of the previous year’s Annual General Shareholders’ Meeting.

12.A copy of THAI’s 2006 Annual Report on CD. 13.Copies of THAI’s 2006 Annual Report both in Thai and English.

Thai Airways International Public Company Limited

91

Audit Fee and Related Expenses As a state enterprise, Thai Airways International Plc. must comply with the Royal Decree and section 4(4) and 39(2) of the Constitution regarding auditing B.E. 2542 the Company’s financial statements. The audit must be done by the Office of Auditor General. The transfer or changes in individual auditors or officers rests with the Office of Auditor General. For the fiscal year 2007, the audit fee was 2.90 million baht and other audit expenses were 1.78 million baht.

Other Factors That May Affect Investment Decision Inherent to the commercial airline industry is its capital intensive nature and is subject to a multitude of global and domestic factors that are not readily manageable by the airlines but bears direct impact on their financial performance. Such factors include the impact of respective country’s economic growth on travel demand, natural disasters, fluctuations in currency value, capital markets as well as the fluctuation in cost of fuel. Political stability and the changing competitive environment all bear significant impact on the financial performance of commercial airlines and its share price. Despite these uncertainties, THAI’s management and staff are utilizing their experience and knowledge to make sound decisions and to execute duties to their utmost ability to maximize benefits for the Company and its shareholders.

With the range of factors potentially bearing direct impact on the Company’s financial performance, it is highly recommended that investors take the time to study factors affecting the Company’s performance prior to investing in the Company’s shares to maximize shareholders benefits.

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Annual Report 2007

Board of Directors’ Shareholding and Meeting Attendance for Fiscal Year 2007 Board of Directors

Number of Number of Attendance/Total Meeting (times) Shares

Board of Directors

Audit Committee

Period of Time

1. ACM Chalit

Pukbhasuk

Chairman

-

15/20

-

8 Nov 06 - 30 Sep 07

2. Mr. Wanchai

Sarathulthat

Former Chairman

-

1/1

-

17 Dec 04 - 7 Nov 06

3. Mr. Suparut

Kawatkul

1st Vice Chairman

-

20/20

-

17 Dec 04 - 30 Sep 07

4. Mr. Chaisawasd

Kittipornpaiboon

2nd Vice Chairman

-

10/17

-

8 Nov 06 - 30 Sep 07

5. Mr. Chai-Anan

Samudavanija

Former Director

-

-

-

20 Dec 02 - 23 Dec 05

6. Mr. Tirachai

Vutithum

Former Director

-

1/2

-

23 Dec 05 - 7 Nov 06

Former Director

-

4/6

2/2

9 Mar 05 - 27 Dec 06

8. Mr. Pachara

Yutidhammadamrong Former Director

-

2/2

1/1

23 Dec 05 - 7 Nov 06

9. Mr. Prasit

Damrongchai

Former Director

-

-

-

23 Mar 05 - 16 Feb 06

10. Mr. Vichit

Suraphongchai

Former Director

-

-

-

17 Dec 04 - 4 Apr 06

11. Mr. Vudhibhandhu Vichairatana

Former Director

2,000

5/6

2/2

27 Oct 04 - 27 Dec 06

12. Mr. Srisook

Chandrangsu

Former Director

-

-

-

20 Dec 02 - 23 Dec 05

13. Mr. Somchainuk

Engtrakul

Former Director

-

1/2

-

23 Dec 05 - 7 Nov 06

14. Mr. Vikrom

Koompirochana

Former Director

-

1/1

-

10 May 06 - 6 Nov 06

15. Mr. Olarn

Chaipravat

Former Director

-

-

-

17 Dec 04 - 4 Apr 06

16. Mr. Kanok

Abhiradee

Former Director

-

-

-

23 Dec 03 - 2 May 06

17. Mr. Chartsiri

Sophonpanich

Director

-

16/20

7/8

23 Dec 05 - 30 Sep 07

18. Mr. Borwornsak

Uwanno

Director

-

11/20

-

17 Dec 04 - 30 Sep 07

19. Gen. Pairoj

Panichsamai

Director

-

17/17

-

8 Nov 06 - 30 Sep 07

20. Gen. Ruengroj

Mahasaranond

Director

-

13/20

-

10 May 06 - 30 Sep 07

21. Mr. Sivaporn

Dardarananda

Director

200

13/17

9/9

8 Nov 06 - 30 Sep 07

22. Khun Pornthip

Jala

Director

-

11/14

8/8

27 Dec 06 - 30 Sep 07

23. Mr. Chaisak

Saeng-Xuto

Director

-

18/18

-

6 Nov 06 - 30 Sep 07

24. Mr. Pichai

Chunhavajira

Director

-

13/20

-

14 Sep 05 - 30 Sep 07

25. Mr. Wisudhi

Srisuphan

Director

200

11/14

-

27 Dec 06 - 30 Sep 07

26. Mr. Wichit

Na-Ranong

Director

200

10/14

-

27 Dec 06 - 30 Sep 07

27. Mr. Aviruth

Wongbuddhapitak Director

-

4/5

-

16 May 07 - 30 Sep 07

28. Flg. Off. Apinan

Sumanaseni

2,600

20/20

-

10 May 06 - 30 Sep 07

29. Mr. Sirin

Nimmanahaeminda Director

-

7/8

-

8 Nov 06 - 1 Mar 07

7. Pol. Gen. Nopadol Somboonsub

Director

Note : Former Chairman, former Vice Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positions before September 30, 2007

Thai Airways International Public Company Limited

93

Remuneration for the Board of Directors for Fiscal Year 2007 Meeting Allowance Meeting Allowance of Board of of Subsidiaries Directors Committee (Baht) (Baht)

Board of Directors

1. ACM Chalit

Pukbhasuk

Chairman

2. Mr. Wanchai

Sarathulthat

3. Mr. Suparut

Bonus of fiscal year 2006

Total Remuneration (Baht)

705,757.01

1,387,703.01

631,946.00

50,000.00

Former Chairman

57,500.00

-

1,139,503.51

1,197,003.51

Kawatkul

1st Vice Chairman

645,000.00

100,000.00

1,025,553.16

1,770,553.16

4. Mr. Chaisawasd

Kittipornpaiboon

2nd Vice Chairman

474,083.00

20,000.00

-

494,083.00

5. Mr. Chai-Anan

Samudavanija

Former Director

-

-

205,845.80

205,845.80

6. Mr. Tirachai

Vutithum

Former Director

50,000.00

-

911,602.81

961,602.81

7. Pol. Gen. Nopadol Somboonsub

Former Director

150,000.00

20,000.00

911,602.81

1,081,602.81

8. Mr. Pachara

Yutidhammadamrong

Former Director

100,000.00

20,000.00

705,757.01

825,757.01

9. Mr. Prasit

Damrongchai

Former Director

-

-

344,564.16

344,564.16

10. Mr. Vichit

Suraphongchai

Former Director

-

-

463,398.10

463,398.10

11. Mr. Vudhibhandhu Vichairatana

Former Director

150,000.00

10,000.00

911,602.81

1,071,602.81

12. Mr. Srisook

Chandrangsu

Former Director

-

-

205,845.80

205,845.80

13. Mr. Somchainuk

Engtrakul

Former Director

50,000.00

10,000.00

911,602.81

971,602.81

14. Mr. Vikrom

Koompirochana

Former Director

50,000.00

-

357,779.60

407,779.60

15. Mr. Olarn

Chaipravat

Former Director

-

-

463,398.10

463,398.10

16. Mr. Kanok

Abhiradee

Former Director

-

-

534,218.85

534,218.85

17. Mr. Chartsiri

Sophonpanich

Director

600,000.00

110,000.00

911,602.81

1,621,602.81

18. Mr. Borwornsak

Uwanno

Director

510,000.00

120,000.00

911,602.81

1,541,602.81

19. Gen. Pairoj

Panichsamai

Director

545,333.00

160,000.00

-

705,333.00

20. Gen. Ruengroj

Mahasaranond

Director

510,000.00

40,000.00

357,779.60

907,779.60

21. Mr. Sivaporn

Dardarananda

Director

485,333.00

30,000.00

-

515,333.00

22. Khun Pornthip

Jala

Director

450,000.00

-

-

450,000.00

23. Mr. Chaisak

Saeng-Xuto

Director

550,000.00

120,000.00

-

670,000.00

24. Mr. Pichai

Chunhavajira

Director

450,000.00

110,000.00

911,602.81

25. Mr. Wisudhi

Srisuphan

Director

420,000.00

20,000.00

-

440,000.00

26. Mr. Wichit

Na-Ranong

Director

420,000.00

60,000.00

-

480,000.00

27. Mr. Aviruth

Wongbuddhapitak

Director

200,000.00

-

-

200,000.00

28. Flg. Off. Apinan

Sumanaseni

Director

600,000.00

30,000.00

357,779.60

987,779.60

29. Mr. Sirin

Nimmanahaeminda

Director

200,000.00

40,000.00

-

240,000.00

1,471,602.81

Note : Former Chairman, former Vice Chairman and former Directors are member of THAI’s Board of Directors who have resigned from their positions before September 30, 2007

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Annual Report 2007

Related Parties

Name of persons who may have conflicts of interest (1) Ministry of Finance (MOF)

Relationship

(2) • The MOF is a major shareholder of THAI with 53.76% equity interest.

Type of Transaction for the Year Ended 30 September 2007 (3)

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4)

Loans via the MOF are follows : • Long-term Loan - Initial amount : 11,075.42 million baht - Outstanding balance : 4,074.62 million baht - Interest expense : 145.47 million baht • Short-term Loan - Initial amount : 12,121.06 million baht - Outstanding balance : 12,121.06 million baht - Interest expense :

Type of Transaction for the Year Ended 30 September 2006 (5)

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

1. The MOF is the guarantor of The loans bear interest

loans as follows :

rate of 1.70, 7.07% per

• Loans from local financial

annum and are

institutions

repayable in two

- Initial amount :

The loans bear interest rate of 8.80% per annum and are

instalments per year

3,000.00 million baht

over a 7 and 20 year

- Outstanding balance :

instalments per year

150.00 million baht

over a 10 year term.

term.

The loans bear interest rates between 0.60-5.20% per annum and one year of advance interest paid for a year.

365.49 million baht

repayable in two

- Interest expense and accrued : 20.95 million baht 2. Loans via the MOF - Initial amount : 30,510.91 million baht

The loans bear interest rates between 1.13-7.07% per annum

- Outstanding balance :

and are repayable at

17,873.32 million baht

maturity over terms

- Interest expense and accrued : of 5-20 years for 637.50 million baht

long-term loans and within one year for short-term loans.

Thai-Amadeus Southeast Asia Company Limited (Subsidiary Company)

• THAI is a major shareholder with 55% equity interest.

• For the year ended 30

THAI leased to Thai-Amadeus

The Company purchases

THAI leased to Thai-Amadeus

The Company purchases

Southeast Asia Company Limited

goods and services at a

Southeast Asia Company Limited

goods and services

office area, computers and office

market price from related office area, computer and office

September 2007, three of

equipment. THAI also sold tickets parties on normal

THAI’s Executives, Mr. Wallop

to the subsidiary

Bhukkanasut, Mrs. Ngamnit Sombutpibool and Mr. Danuj Bunnag are Chairman and Directors of Thai-Amadeus

- Aggregate amount :

from related parties

equipment. In addition, THAI

on normal commercial

commercial term as

provided the subsidiary with

terms.

unrelated parties.

accounting services and had

30.29 million baht

seconded THAI personnel for its

- Outstanding balance :

operations. THAI also sold tickets to

3.00 million baht

the subsidiary

Southeast Asia Company

- Aggregate amount :

Limited, respectively.

49.12 million baht

• For the year ended 30

- Outstanding balance :

September 2006, three of

10.63 million baht

THAI’s Executives, Mr. Vasing Kittikul, Mr. Kobchai Srivilas, Mr. Wallop Bhukkanasut are Chairman and Directors of Thai-Amadeus Southeast Asia Company Limited, respectively.

Donmuang

• THAI holds 40% equity interest THAI purchased accommodation

International Airport

in Donmuang International

Hotel Company

Airport Hotel Company Limited. Donmuang International Airport

Limited (Associated Company)

• For the year ended 30 September 2007 and 2006, four of THAI’s Executives, Wg.Cdr. Supachai Limpisvasti, Flg.Off. Chinawut Naressaenee,

services for its passengers from Hotel Company Limited - Aggregate amount : 14.76 million baht

The Company purchases

THAI purchased accommodation

goods and services at a

services for its passengers from

The Company purchases goods and services

market price from related Donmuang International Airport

from related parties

parties on normal

on normal commercial

commercial term as unrelated parties.

Hotel Company Limited - Aggregate amount :

terms.

56.00 million baht - Outstanding balance : 0.80 million baht

Mrs. Ngamnit Sombutpibool and Mr. Tummasak Chutiwong are Chairman and Directors of Donmuang International Airport Hotel Company Limited, respectively.

Thai Airways International Public Company Limited

95

Name of persons who may have conflicts of interest (1)

Bangkok Aviation Fuel Services Public Company Limited

Relationship

Type of Transaction for the Year Ended 30 September 2007 (3)

(2)

• THAI holds 22.59% equity interest in BAFS. • For the year ended 30

(BAFS)

September 2007, two of THAI’s

(Associated Company)

Executives, ACM Narongsak Sangapong and Flt.Lt. Pisal Chayakula are Vice Chairman and Director of BAFS, respectively.

• For the year ended 30 September 2006, three of

1. BAF provides fuel services for THAI - Aggregate amount : 405.26 million baht - Outstanding balance : 32.95 million baht

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4)

The Company purchases goods and services at a market price from related parties on normal commercial term as unrelated parties.

2. THAI sold tickets to BAFS

Type of Transaction for the Year Ended 30 September 2006 (5)

1. BAF provides fuel services for THAI - Aggregate amount : 295.30 million baht - Outstanding balance :

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

The Company purchases goods and services from related parties on normal commercial terms.

25.64 million baht 2. THAI sold tickets to BAFS

- Aggregate amount :

- Aggregate amount :

0.03 million baht

0.22 million baht

- Outstanding balance :

- Outstanding balance :

0.01 million baht

0.01 million baht

THAI’s Executives, ACM Narongsak Sangapong, Mr. Kobchai Srivilas and Flt.Lt. Pisal Chayakula are Directors of BAFS. Royal Orchid Hotel

• THAI holds 24% equity interest 1. THAI purchased accommodation The Company purchases

1. THAI purchased accommodation The Company purchases

(Thailand) Public

in Royal Orchid Hotel (Thailand)

services for its passengers

goods and services at a

services for its passengers from

Company Limited

Public Company Limited.

from Royal Orchid Hotel

market price from related

by Royal Orchid Hotel (Thailand)

from related parties

(Thailand) Public Company

parties on normal

Public Company Limited

on normal commercial

Limited

commercial term as

(Associated Company) • For the year ended 30 September 2007, four of THAI’s Executives, Mrs. Ngamnit Sombutpibool,

- Aggregate amount :

unrelated parties.

21.24 million baht

0.83 million baht 2. THAI sold tickets to Royal Orchid

2. THAI sold tickets to Royal Orchid

Mr. Kaweepan Raungpaka are

Hotel (Thailand) Public

Hotel (Thailand) Public Company

Directors of Royal Orchid Hotel

Company Limited

Limited

(Thailand) Public Company Limited.

• For the year ended 30 September 2006, one of

terms.

21.77 million baht - Outstanding balance :

Mr. Wallop Bhukkanasut, Flt.Lt. Pisal Chayakula and

- Aggregate amount :

goods and services

- Aggregate amount :

- Aggregate amount :

0.05 million baht

0.03 million baht

- Outstanding balance :

- Outstanding balance :

0.05 million baht

0.01 million baht

THAI’s Directors, Mr. Somchainuk Engtrakul and three of THAI’s Executives, Mr. Vasing Kittikul, Flt.Lt. Pisal Chayakula and Mr. Kaweepan Raungpaka are Directors of Royal Orchid Hotel (Thailand) Public Company Limited.

Phuket Air Catering Company Limited (Associated Company)

• THAI holds 30% equity interest 1. THAI purchased food and

1. THAI purchased food and

The Company purchases

catering services from Phuket

goods and services at a

catering services from Phuket

goods and services

Company Limited.

Air Catering Company Limited

market price from related

Air Catering Company Limited

from related parties on

• For the year ended 30 September 2007, one of THAI’s Directors, Mr. Wichit Na-Ranong is Director of Phuket Air Catering

96

The Company purchases

in Phuket Air Catering

- Aggregate amount : 3.73 million baht - Outstanding balance : 0.75 million baht 2. THAI sold food and catering

parties on normal commercial term as unrelated parties.

- Aggregate amount : 3.84 million baht - Outstanding balance : 0.45 million baht 2. THAI sold food and catering

Company Limited on behalf of

services to Phuket Air Catering

services to Phuket Air Catering

Pearl Company Limited, and

Company Limited

Company Limited

Annual Report 2007

normal commercial terms.

Name of persons who may have conflicts of interest (1)

Relationship

(2)

Type of Transaction for the Year Ended 30 September 2007 (3)

three of THAI’s Executives,

- Aggregate amount :

Mr. Kaweepan Raungpaka,

6.20 million baht

Mr. Kawin Asawachatroj and Mrs. Pismai Chandrubeksa are

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4)

Type of Transaction for the Year Ended 30 September 2006 (5)

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

- Aggregate amount : 5.67 million baht

- Outstanding balance :

- Outstanding balance :

1.01 million baht

0.29 million baht

Chairman and Directors of Phuket Air Catering Company Limited, respectively.

• For the year ended 30 September 2006, three of THAI’s Executives, Mr. Kaweepan Raungpaka, Mr. Kawin Asawachatroj and Mrs. Pismai Chandrubeksa are Directors of Phuket Air Catering Company Limited.

Suvarnabhumi

• THAI holds 30% equity interest THAI purchased accommodation The Company purchases

Commenced operations

Airport Hotel

in Suvarnabhumi Airport Hotel services for its passengers from

goods and services at a

Company Limited

Company Limited.

market price from related no transactions

(Associated Company) • For the year ended 30 September 2007, three of THAI’s Executives, Mr. Teerapol Chotichanapibal, Flt.Lt. Montree Jumrieng and

Suvarnabhumi Airport Hotel Company Limited - Aggregate amount : 44.00 million baht

-

on 10 September 2006,

parties on normal commercial term as unrelated parties.

- Outstanding balance : 0.55 million baht

Mr.Chokchai Panyayong are Directors of Suvarnabhumi Airport Hotel Company Limited.

• For the year ended 30 September 2006, three of THAI’s Executives, Flg.Off. Norahuch Ployyai, Mr. Wallop Bhukkanasut and Mr. Chokchai Panyayong are Directors of Suvarnabhumi Airport Hotel Company Limited.

Nok Airlines Company Limited

• THAI holds 39% equity interest THAI has been leasing out aircraft The Company purchases in Nok Airlines Company

(Associated Company) Limited.

• For the year ended 30 September 2007, three of THAI’s Directors,

THAI has been leasing out aircraft

The Company purchases

and providing aviation operation

goods and services

and providing aviation operation

goods and services at a

services to Nok Airlines

market price from related services to Nok Airlines Company

Company Limited

parties on normal

- Aggregate amount : 1,806.23 million baht

commercial term as unrelated parties.

Limited - Aggregate amount :

from related parties on normal commercial terms.

1,694.07 million baht

Mr. Somchainuk Engtrakul on

- Outstanding balance :

- Outstanding balance :

behalf of Dhipaya Insurance

116.22 million baht

143.90 million baht

Public Company Limited, ACM Chalit Pukbhasuk, Gen. Pairoj Panichsamai and three of THAI’s Executives, Mr. Wallop Bhukkanasut, Mr. Tummasak Chutiwong and Mrs. Ngamnit Sombutpibool are Directors of Nok Airlines Company Limited.

Thai Airways International Public Company Limited

97

Name of persons who may have conflicts of interest (1)

Relationship

(2)

Type of Transaction for the Year Ended 30 September 2007 (3)

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4)

Type of Transaction for the Year Ended 30 September 2006 (5)

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

Note : Mr. Somchainuk Engtrakul resigned from THAI’s Board of Directors on 7 November 2006 and ACM Chalit Pukbhasuk resigned from Board of Directors of Nok Airline Company Limited on 17 October 2006.

• For the year ended 30 September 2006, one of THAI’s Directors, ACM Chalit Pukbhasuk and three of THAI’s Executives, Mr. Wallop Bhukkanasut, Mr. Tummasak Chutiwong and Mrs. Ngamnit Sombutpibool are Directors of Nok Airlines Company Limited.

THAI purchased fuel transportation The Company purchases

THAI purchased fuel transportation The Company purchases

Transportation

interest in Fuel Pipeline

services from Fuel Pipeline

goods and services at a

services from Fuel Pipeline

Limited

Transportation Limited.

Transportation Limited

market price from related Transportation Limited

Fuel Pipeline

(Joint Venture Company)

• THAI holds 8.35% equity

• For the year ended 30 September 2007, two of THAI’s Executives, Flt.Lt. Pisal Chayakula on

- Aggregate amount : 14.28 million baht - Outstanding balance :

parties on normal commercial term as unrelated parties.

1.91 million baht

- Aggregate amount : 57.32 million baht

goods and services from related parties on normal commercial terms.

- Outstanding balance : 5.24 million baht

behalf of Bangkok Aviation Fuel Service Public Company Limited, and Mr. Prakobkiat Ninnad are Directors of Fuel Pipeline Transportation Limited.

• For the year ended 30 September 2006, one of THAI’s Executives, Mr. Prakobkiat Ninnad is a Director of Fuel Pipeline Transportation Limited.

Aeronautical Radio of • THAI holds 2.56% equity Thailand Limited (AEROTHAI)

interest in AEROTHAI. • The MOF, a major shareholder

(Joint Venture

of THAI, is a major shareholder

Company)

of AEROTHAI. • For the year ended 30 September 2007, two of THAI’s Executives,

equipment from AEROTHAI

market price from related

from AEROTHAI

- Aggregate amount : 1,180.35 million baht - Outstanding balance :

Board of Directors of AEROTHAI on 19 October 2006.

Annual Report 2007

parties on normal commercial term as

- Aggregate amount : 921.72 million baht

unrelated parties.

97.56 million baht 2. THAI sold tickets to AEROTHAI 26.17 million baht

Sangapong resigned from the

The Company purchases

navigation and leased equipment goods and services

behalf of Ministry of Transport are Directors of AEROTHAI.

1. THAI purchased aeronautical

goods and services at a

- Aggregate amount :

Note : ACM Narongsak

The Company purchases

navigation and leased

ACM Narongsak Sangapong on and Flt.Lt. Pravit Shinawatra

98

1. THAI purchased aeronautical

- Outstanding balance : 0.07 million baht

2. THAI sold tickets to AEROTHAI - Aggregate amount : 0.40 million baht - Outstanding balance : 0.08 million baht

from related parties on normal commercial terms.

Name of persons who may have conflicts of interest (1)

Relationship

(2)

Type of Transaction for the Year Ended 30 September 2007 (3)

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4)

Type of Transaction for the Year Ended 30 September 2006 (5)

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

• For the year ended 30 September 2006, one of THAI’s Executives, Captain Kasem Panpat, is a Director of AEROTHAI. PTT Public

The Company purchases

1. THAI purchased fuel for its

Company Limited

• The MOF, a major shareholder 1. THAI purchased fuel for its of THAI, is a major shareholder

aircraft from PTT Public

goods and services at a

aircraft from PTT Public

goods and services

(Related Company)

of PTT Public Company Limited.

Company Limited

market price from related

Company Limited

from related parties on

• For the year ended 30 September 2007, two of

- Aggregate amount : 9,772.61 million baht

THAI’s Directors, Khun Pornthip

- Outstanding balance :

Jala is an Independent Director

888.62 million baht

parties on normal commercial term as unrelated parties.

an Executive of PTT Public Company Limited.

• For the year ended 30 September 2006, two of

8,072.40 million baht

normal commercial terms.

- Outstanding balance : 787.38 million baht

of PTT Public Company Limited 2. THAI sold tickets to PTT and Mr. Pichai Chunhavajira is

- Aggregate amount :

The Company purchases

2. THAI sold tickets to PTT Public

Public Company Limited

Company Limited

- Aggregate amount :

- Aggregate amount :

87.31 million baht

1.00 million baht

- Outstanding balance : 10.53 million baht

THAI’s Directors, Mr. Suparut Kawatkul is a Director and Mr. Pichai Chunhavajira is an Executive of PTT Public Company Limited.

Airports of Thailand

• The MOF, a major shareholder 1. THAI leased land and building

The Company purchases

1. THAI leased land and building at The Company purchases

Public Company

of THAI, is a major shareholder

at Bangkok International

goods and services at a

Bangkok International Airport

goods and services from

Limited (AOT)

of AOT.

Airport and other airports in

market price from related

and other airports in Thailand

related parties on

parties on normal

from AOT

(Related Company)

• For the year ended 30 September 2007, one of THAI’s Directors, Mr. Vudhibhandhu Vichairatana is a Director of AOT and one of THAI’s Executives, ACM Narongsak Sangapong is a Vice Chairman of AOT. Note : Mr. Vudhibhandhu Vichairatana resigned from

Thailand from AOT - Aggregate amount : 2,473.13 million baht

commercial term as unrelated parties.

- Outstanding balance :

- Aggregate amount :

normal commercial terms.

2,158.34 million baht - Outstanding balance :

938.00 million baht

119.29 million baht

2. THAI sold tickets to AOT

2. THAI sold tickets to AOT

- Aggregate amount :

- Aggregate amount :

23.34 million baht

1.19 million baht

- Outstanding balance :

- Outstanding balance :

5.33 million baht

0.08 million baht

THAI’s Board of Directors on 27 December 2006.

• For the year ended 30 September 2006, one of THAI’s Directors, Mr. Vudhibhandhu Vichairatana is a Director of AOT. Bangchak Petroleum • The MOF, a major shareholder THAI purchased fuel from

The Company purchases

THAI purchased fuel from

Public Company

of THAI, is a major shareholder Bangchak Petroleum Public

goods and services at a

Bangchak Petroleum Public

Limited

of Bangchak Petroleum Public Company Limited

market price from related Company Limited

(Related Company)

Company Limited.

• For the year ended 30 September 2007 and 2006, one of THAI’s Directors,

- Aggregate amount : 7,706.35 million baht - Outstanding balance : 674.42 million baht

parties on normal commercial term as unrelated parties.

- Aggregate amount : 8,264.06 million baht

The Company purchases goods and services from related parties on normal commercial terms.

- Outstanding balance : 820.65 million baht

Mr. Pichai Chunhavajira is a Director of Bangchak Petroleum Public Company Limited.

Thai Airways International Public Company Limited

99

Name of persons who may have conflicts of interest (1) Dhipaya Insurance

Relationship

(2)

• The MOF, a major shareholder 1. THAI purchased non-life and

Public Company

of THAI, is a major shareholder

Limited (Dhipaya)

of Dhipaya.

(Related Company)

Type of Transaction for the Year Ended 30 September 2007 (3)

• For the year ended 30 September 2007 and 2006, two of THAI’s Directors, Mr. Somchainuk Engtrakul and Mr. Pichai Chunhavajira are Chairman and Vice Chairman

life insurances from Dhipaya - Aggregate amount : 56.03 million baht 2. THAI sold tickets to Dhipaya - Aggregate amount :

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4) The Company purchases goods and services at a market price from related parties on normal commercial term as unrelated parties.

0.29 million baht

Type of Transaction for the Year Ended 30 September 2006 (5)

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

1. THAI purchased non-life and life

The Company purchases

insurances from Dhipaya - Aggregate amount : 126.52 million baht - Outstanding balance :

goods and services from related parties on normal commercial terms.

0.01 million baht 2. THAI sold tickets to Dhipaya

- Outstanding balance :

- Aggregate amount :

0.01 million baht

0.08 million baht

of Dhipaya, respectively.

Note : Mr. Somchainuk Engtrakul resigned from THAI’s Board of Directors on 7 November 2006.

Civil Aviation

• Civil Aviation Training Center

Training Center

is a state enterprise under

(Related Company)

Ministry of Transport.

• For the year ended

THAI purchased training services

The Company purchases

from Civil Aviation Training Center goods and services at a - Aggregate amount : 12.58 million baht

market price from related parties on normal

30 September 2007, two of

commercial term as

THAI’s Executives,

unrelated parties.

ACM Narongsak Sangapong

1. THAI purchased training services The Company purchases from Civil Aviation Training

goods and services

Center

from related parties

- Aggregate amount : 120.31 million baht

on normal commercial terms.

2. THAI sold tickets to Civil Aviation Training Center

and Flt.Lt. Pravit Shinawatra

- Aggregate amount :

are Directors of Civil Aviation

0.13 million baht

Training Center.

Note : ACM Narongsak Sangapong resigned from Board of Directors of Civil Aviation Training Center on 18 October 2006.

• For the year ended 30 September 2006, one of THAI’s Executives, Captain Kasem Panpat is a Director of Civil Aviation Training Center.

Eastern Water

THAI purchased water for Utapao The Company purchases

THAI purchased water for Utapao

The Company purchases

Resource

• For the year ended 30 September 2007 and 2006,

Maintenance Center from Eastern goods and services at a

maintenance Center from Eastern

goods and services

Development and

one of THAI’s Directors,

Water Resource Development and market price from related Water Resource Development and

Management

Mr. Borwornsak Uwanno is

management PLC.

Public Company

Chairman of Audit Committee

Limited

of Eastern Water Resource

(Related Company)

Development and Management PLC.

- Aggregate amount : 0.25 million baht

parties on normal commercial term as unrelated parties.

- Outstanding balance : 0.02 million baht THAI purchased non-life and life

The Company purchases

30 September 2007, one of

insurances from The Deves

goods and services at a

Limited

THAI’s Directors,

Insurance Public Company

(Related Company)

Mr. Aviruth Wongbuddhapitak, Limited

related parties on normal

is Chairman of the Executive

commercial term as

Deves Insurance Public Company Limited.

100

Annual Report 2007

0.44 million baht

on normal commercial terms.

0.26 million baht 0.02 million baht

Public Company

- Aggregate amount :

- Aggregate amount :

from related parties

- Outstanding balance :

The Deves Insurance • For the year ended

Board and Director of The

management PLC.

market price from

unrelated parties.

Unrelated party

-

Name of persons who may have conflicts of interest (1) Thai British Security Printing Public

Relationship

(2) • For the year ended

Type of Transaction for the Year Ended 30 September 2007 (3) THAI purchased the advertising

Conditions/Pricing Policy for the Year Ended 30 September 2007 (4) The Company purchases

30 September 2007, one of

from Thai British Security Printing goods and services at a

Company Limited

THAI’s Directors,

Public Company Limited

(Related Company)

Mr. Chaisak Seang-xuto is a Director of Thai British Security Printing Public Company Limited.

Advanced Info Service Public

• For the year ended

- Aggregate amount : 14.82 million baht - Outstanding balance :

Conditions/Pricing Policy for the Year Ended 30 September 2006 (6)

Unrelated party

-

Unrelated party

-

Unrelated party

-

Unrelated party

-

market price from related parties on normal commercial term as unrelated parties.

0.02 million baht 1. THAI purchased telephone

The Company purchases

30 September 2007, one of

service from Advanced Info

Company Limited

THAI’s Directors, Mr. Aviruth

Service Public Company Limited market price from related

(Related Company)

Wongbuddhapitak is Chairman of Audit Committee

Type of Transaction for the Year Ended 30 September 2006 (5)

- Aggregate amount : 4.63 million baht

and Independent Director of

2. THAI sold tickets to Advanced

Advanced Info Service Public

Info Service Public Company

Company Limited.

Limited

goods and services at a parties on normal commercial term as unrelated parties.

- Aggregate amount : 0.74 million baht Pearl Company

THAI purchased accommodation

The Company purchases

Limited

• For the year ended 30 September 2007,

services for its passenges from

goods and services at a

(Related Company)

one of THAI’s Directors,

Pearl Company Limited

market price from

Mr. Wichit Na-Ranong is a

- Aggregate amount :

Director of Pearl Company

0.05 million baht

Limited.

Pearl Village

• For the year ended

related parties on normal commercial term as unrelated parties.

THAI purchased accommodation

The Company purchases

Company Limited

30 September 2007, one of

services for its passenges from

goods and services at a

(Related Company)

THAI’s Directors, Mr. Wichit

Pearl Village Company Limited

market price from related

Na-Ranong is a Director of Pearl Village Company Limited.

- Aggregate amount : 0.60 million baht

parties on normal commercial term as unrelated parties.

Necessity and reasonableness of related parties transactions Having scrutinized items on related parties transactions during fiscal year 2007, ending 30 September 2007, the audit committee is of the opinion that the aforementioned items were transacted in accordance with the Company’s regular business practices and in a reasonable manner. The setting of prices, terms and conditions were done in the same manner as those offered to non-related parties. There were no transfer benefits between the Company, subsidiary, joint ventures, associated, related companies and shareholders.

As a major shareholder of THAI, the Company enjoys favorable cost of funds on loans guaranteed by and loans from the Ministry of Finance.

Approval procedures for related parties transactions Related parties transactions were undertaken as per the Company’s regular business procedures and were approved strictly in accordance with the Government and State Enterprise procedures. No director of executive with conflicts of interest in the respective matter has been involved in the approval process.

Policies on future related parties transactions The Audit Committee will oversee future related parties transactions to ensure that transactions are made properly with a fair rate of return and approved in accordance with appropriate processes and procedures. Items and values of related parties transactions with connected persons will be disclosed under the announcement and regulations by the Securities and Exchange Commission, and the Stock Exchange of Thailand.

Thai Airways International Public Company Limited

101

Management’s Discussion and Analysis for Fiscal Year Ending September 30, 2007 for Thai Airways International Public Company Limited and Its Subsidiary

1.

Operating Results For the fiscal year 2007 (Oct 1, 2006 - Sep 30, 2007), the first year of

the Company’s services at Suvarnabhumi Airport, the Company has launched its new destinations to Johannesburg in South Africa as well as Hyderabad, Bodhgaya and Varanasi in India. In addition, the Company has increased and improved its both international and domestic flight frequencies to cope with increase in passenger demand as well as the re-operation of Don Muang Airport for point to point domestic flights.

The Company took the delivery of 6 aircraft - 5 Boeing 777-200ER and 1 Airbus A340-500 and phased out 4 aircraft - 2 Airbus A300-600 and 2 Boeing 747-300. Passenger production (Available Seat - Kilometer : ASK) increased by 7.3% from last year. The Company’s passenger traffic (Revenue Passenger - Kilometer : RPK) increased by 11.7% from last year.

Nevertheless, the Company severely encounters with a highly competitive airline industry such as the Company’s competitive airlines, the rapid growth in low cost airlines, the recession in Thailand and the world’s economy, the effect from natural disaster, the continuing high increase in jet fuel price and especially the fluctuation in currency exchange in the fourth quarter of fiscal year 2007. As a result, the Company has a net profit from its 2007 operation amount of 6,342 million baht, which was 2,650 million baht or 29.5% decrease from the previous year. The earning per share was THB 3.73 lower than THB 5.29 of fiscal year 2006.

The Company’s revenue from the sale of goods and the rendering of services increased by 13,430 million baht or 7.5% from fiscal year 2006 to 192,037 million baht in fiscal year 2007. Operating expense totaled 179,249 million baht, which is an increase of 9,006 million baht or 5.3% over fiscal year 2006, mainly due to production expansion, the moving base of operation from Don Muang Airport to Suvarnabhumi Airport and also the increase in depreciation from the delivery of new aircraft.

102

Annual Report 2007

As a result, profit from the sale of goods and the rendering of service was 12,788 million baht, which is an increase of 4,424 million baht or 52.9% over fiscal year 2006. However, the gain on foreign currency exchange, mostly arising from converting the Company’s outstanding loan into Baht terms at the end of fiscal year 2007 was 4,993 million baht much lower than the year 2006. As a result, the Company’s profit before interest and tax amounted to 13,840 million baht, which is 3,433 million baht or 19.9% lower than the previous year.

Profit before tax was 9,141 million baht, which was a decrease of 3,681 million baht or 28.7% from the previous year.

Summary of operating results for fiscal year 2007 : Units: million baht

2007

% Change

Revenues from the sale of goods and the rendering of services

192,037

+

7.5%

Profit from the sale of goods and the rendering of services

12,788

+ 52.9%

Gain on foreign currency exchange

1,185

- 80.8%

Profit before tax

9,141

- 28.7%

Net profits

6,342

- 29.5%

Earnings per share (Baht)

3.73

-

1.56

Production and Traffic In fiscal year 2007, the Company launched services to new destinations and increased its flight frequencies in order to satisfy the growing demand for air transport. Passenger production (Available Seat - Kilometer) increased by 7.3% from fiscal year 2006. Passenger traffic (Revenue Passenger - Kilometer) increased 11.7%, higher than passenger production. Cabin factor was 78.5% higher than fiscal year 2006. The details are as follows:

Thai Airways International Public Company Limited

103

2007

% Change

Production

(MATK)

11,315

+ 10.2%

Traffic

(MRTK)

7,910

+ 13.0%

Load Factor

(%)

Passenger Production

69.9

+

1.7

(MASK)

76,830

+

7.3%

Passenger Traffic

(MRPK)

60,305

+ 11.7%

Cabin Factor

(%)

Freight Production

(MADTK)

4,401

+ 16.4%

Freight Traffic

(MRFTK)

2,382

+ 16.3%

Freight Load Factor

(%)

78.5

54.1

+

-

3.1

0.1

The number of passengers carried totaled 19.59 million passengers, 5.5% increase from last year. Operating flight hours clocked was 350,644 hours, 8.1% increase from last year. An average of aircraft utilization increased to 11.6 hours per aircraft per day, compare to 10.8 hours per aircraft per day last year.

Revenue In fiscal year 2007, total revenue reached 194,040 million baht, an increase of 11,728 million baht or 6.4% over the previous year.

The details are as follows:

Units: million baht

2007

% Change

Revenue from Transportation Activities - Passenger and Excess Baggage

156,259

+

9.0%

25,737

+

0.3%

992

-

4.2%

Total Revenue from Transportation Activities 182,988

+

7.6%

Revenue from Other Activities

9,049

+

6.2%

192,037

+

7.5%

- Freight - Mail

Total Revenue from the Sale of Goods and the Rendering of Services Other Income Total Revenue

104

Annual Report 2007

2,003 194,040

- 45.9% +

6.4%

Revenue from the sale of goods and the rendering of services for fiscal year 2007 totaled 192,037 million baht, which is an increase of 13,430 million baht or 7.5% over the previous year. Details are as follows: Revenue from transportation activities amounted to 182,988 million baht, an increase of 12,901 million baht or 7.6% over fiscal year 2006 which consists of: - Passenger and excess baggage revenue was 156,259 million baht representing 81.4% of total revenues from the sale of goods and the rendering of services or is an increase of 12,858 million baht or 9% increase over the previous year. The main reason is greater number of passengers than last year. Moreover, fuel surcharge collected from passengers increased by 3,261 million baht due to the adjustment in fuel surcharge rate since July, 15 2007.

- Freight revenue was 25,737 million baht, almost the same as last year. That accounted for 13.4% of total revenues from the sale of goods and the rendering of services.

The Company’s yield excluding insurance and fuel surcharge decreased from fiscal year 2006. The major causes were mainly due to the increase in intensity of competition. As well as a stronger Thai baht, revenue earned in foreign currency was lower after converted to Thai baht. Details are as follows:

2007

% Change

System-wide

(Baht/RTK)

19.87

-

5.7%

Passenger

(Baht/RPK)

2.24

-

3.4%

Freight

(Baht/RFTK)

8.58

- 14.2%

Thai Airways International Public Company Limited

105

Revenue from other activities was 9,049 million baht, an increase of 529 million baht or 6.2% over last year.

- Revenue from business units - Technical Services, Cargo and Mail Commercial, Ground Support Equipment Services, Ground Customer Services, and Catering Services totaled 7,869 million baht, an increase of 481 million baht or 6.5% over the previous year.

- Revenue from Thai-Amadeus Southeast Asia Company Limited, a 55% subsidiary, contributed 360 million baht, which was nearly the same as last year.

- Revenue from other activities totaled 820 million baht, an increase of 48 million baht or 6.2% over the previous year, mainly deriving from the lease of aircraft and providing services to Nok Airlines Company Ltd. Other Income was 2,003 million baht, a decrease of 1,702 million baht or 45.9% from the previous year. This comprised of 621 million baht in interest income, an increase of 304 million baht or 95.9% from the previous year and other income decreased to 1,382 million baht, which is 2,006 million baht or 59.2% lower than the previous year.

This was mainly due to the gain on sales of 2 Airbus A300-600 and 1 Boeing 747-300 aircraft totaling 442 million baht, which is lower than last year gain on sales of 4 MD-11 aircrafts in amount of 2,095 million baht.

Expenses Total operating expenses amounted to 179,249 million baht, which is 9,006 million baht or a 5.3% higher than the previous year.

Details are as follows:

106

Annual Report 2007

Units: million baht

2007

% Change

Operating expenses : Personnel

32,635

+ 6.2%

Fuel and oil

58,893

-

1.8%

Cost of inventories and supplies

9,997

-

2.0%

Lease of aircraft and spare parts

6,768

+ 24.5%

Flight operation

41,557

+ 10.3%

Depreciation

17,751

+ 14.4%

Marketing

3,198

+ 2.6%

Insurance

1,016

- 33.0%

Remuneration to board of directors

25

-

4.0%

Other operating expenses

7,409

+ 22.6%

Total operating expenses

179,249

+ 5.3%

The change in operating expenses can be summarized as follows: - Personnel expense totaled 32,635 million baht, which is an increase of 1,905 million baht or 6.2% over previous year mostly resulting from an annual salary increment.

- Fuel cost was 58,893 million baht, a decrease of 1,106 million baht or 1.8% from the previous year caused by the Thai baht strength partially offset fuel cost that paid in other currencies. Although, average fuel price was almost the same as last year and also fuel consumption has been increased from production expansion.

- Lease aircraft equipment 6,768 million baht, an increase of 1,334 million baht or 24.5% mainly due to leasing of additional cargo block space in order to better serve cargo demand especially on insufficient capacity routes.

- Flight operation expenses, mostly from maintenance and overhaul cost for aircraft and engines, passenger service expense and ground operation expense, totaled 41,557 million baht, which was an increase of 3,897 million baht or 10.3% from last year due to an expansion of production.

- Depreciation was 17,751 million baht, an increase of 2,237 million baht or 14.4% from delivery of new aircrafts. In additional, depreciation of other fixed assets has been increased, resulting from an investment at Suvarnabhumi Airport.

Thai Airways International Public Company Limited

107

- Insurance expense was 1,016 million baht, a decrease of 500 million baht or 33% from the previous year from the reduction in insurance premium.

- Other operating expenses totaled 7,409 million baht, an increase of 1,364 million baht or 22.6% from last year due to the moving base of operation from Don Muang Airport to Suvarnabhumi Airport.

Gain on foreign currency exchange for fiscal year 2007 amounted to 1,185 million baht, which included a gain on foreign currency exchange arising from a risk management of foreign loans during a stronger baht amount of 654 million baht, 4,993 million baht lower than a gain of 6,178 million baht in fiscal year 2006.

Other expenses amounted to 2,157 million baht, which is an increase of 1,003 million baht or 86.9% over the previous year arising from a reserve for obsolete aircraft spare parts to be disposed and impairment of aircraft spare parts.

Share of net profit from associated companies was 123 million baht, a decrease of 133 million baht or 52% from last year due to net loss in Don Muang International Airport Hotel Co., Ltd. The net loss was from a decrease in revenue because of the moving operation of main airport to Suvarnabhumi. Moreover, Suvarnabhumi Airport Hotel Co., Ltd. incurred more loss and also a decrease in profit from Royal Orchid Holiday Hotel (Thailand) Plc. Co., Ltd. Interest expense totaled 4,699 million baht, an increase from last year of 248 million baht or 5.6% mainly due to the increase in loan amount and interest rate. However, the Company has managed an interest rate risk by entering into Interest Rate Swap from floating to fixed interest rate during a downward interest rate. As a result, the Company’s interest expense declined by approximately 540 million baht.

2.

Financial Position Assets At the end of fiscal year 2007 (September 30, 2007), the Company’s total assets were 272,086 million

baht, which was an increase of 23,052 million baht or 9.3% from the end of fiscal year 2006 (September 30, 2006).

Current and non-current assets accounted for 21.9% and 78.1% of total assets, respectively consisting of :

108

Annual Report 2007

September 30, 2007

September 30, 2006

MTHB

MTHB

% of total assets

Current assets Property, plant and equipment-net Other non-current assets

% of total assets

59,499

21.9

45,702

18.4

204,714

75.2

196,031

78.7

7,873

2.9

7,301

2.9

Current assets increased by 13,797 million baht or 30.2% mainly due to an increase in cash and cash equivalent in the amount of 11,409 million baht or 124.3%. Moreover, trade account receivables-net also increased in the amount of 1,371 million baht or 8.3% resulting from increase sales and also inventories and supplies-net amounted to 743 million baht or 14.1% Property, plant and equipment-net increased by 8,683 million baht or 4.4%. The increase was mainly due to the acquisition of 6 new aircraft - 1 Airbus A340-500 and 5 Boeing 777-200ER and also phased out 4 old aircraft - 2 Airbus A300- 600 and 2 Boeing 747-300.

Liabilities The Company has total liabilities as at the end of fiscal year 2007 totaling 202,858 million baht, which is an increase of 19,505 million baht or 10.6% from the end of fiscal year 2006 which consist of :

September 30, 2007

September 30, 2006

MTHB

MTHB

% of total liabilities

Current liabilities

% of total liabilities

73,824

36.4

60,440

33.0

124,262

61.3

118,417

64.6

4,772

2.3

4,496

2.4

(excluding current portion of long-term loans) Long-term debts Staff pension fund

Thai Airways International Public Company Limited

109

Current liability excluding current portion of long-term loans increased from fiscal year-end 2006 by 13,384 million baht or 22.1% due to an increase in short-term loan in the form of Euro Commercial Paper (ECP). This loan was a standby loan during the Company was looking for more appropriate loan. In addition, unearned transportation revenue also increased due to growth sales.

Long-term debt as at September 30, 2007 including the current portion of long-term loans totaled 124,262 million baht increased by 5,845 million baht or 4.9% from fiscal year-end 2006 due to an increase in financial lease for acquiring new aircraft in the amounts of 15,238 million baht while long-term loan and promissory notes decreased by 8,343 million baht and 1,050 million baht, respectively.

Shareholders’ Equity As of fiscal year-end 2007, Shareholders’ Equity totaled 69,228 million baht, which is an increase of 3,547 million baht or 5.4% from the end of fiscal year 2006 resulting from an increase in net operating profit net of dividend payment, which from the result of year 2006.

Capital structure as of September 30, 2007 consisted of total liabilities of 202,858 million baht or 74.6% and shareholders’ equity of 69,228 million baht or 25.4%. Debt to Equity Ratio as of September 30, 2007 was 2.93 times.

Liquidity Cash and cash equivalents as at the end of fiscal year 2007 (September 30, 2007) totaled 20,584 million baht increased from the beginning of fiscal year 2007 (October 1, 2006) amount of 11,409 million baht. Net cash from and used in other activities are as follows : - Net cash from operating activities amounted to 27,524 million baht.

- Net cash used in investing activities amounted to 20,896 million baht mainly from aircraft investment.

- Net cash from financing activities amounted to 4,665 million baht consisting of net acquiring from long-term loans 1,997 million baht and short-term loan 6,567 million baht less dividend payment of 2,845 million baht and repayment of promissory note 1,050 million baht.

For the fiscal year 2007 the Company’s credit rating by Thai Rating and Information Services Co., Ltd. (TRIS) for its promissory notes remained at AA-. This means the Company’s promissory notes and bonds are of investment grade with very low risk and the Company has substantial ability to meet its loan and interest obligation. Credit rating trend is stable.

110

Annual Report 2007

Change in Accounting Policy To comply with the Announcement of Federation of Accounting Profession No. 26/2549 and 32/2549, the Company has changed its accounting policy since October 1, 2006, regarding the investment in subsidiary and associated companies of the Company’s financial statements which formerly recorded by equity method to record by cost method, using historical cost as the original cost. This adjustment caused net profit on the Company income statement to differ from that reported in the Consolidated income statement. This is because the Company’s income statements did not include share of income from investments accounted for under equity method but recognized revenue from investment in subsidiary and associated companies whenever receiving dividend.

After restating, the investment in subsidiary and associated companies in the Company’s financial statements as of September 30, 2007 was 927 million baht which decreased by 908 million baht.

Shareholder’s equity in the Company statements of changes in shareholders’ equity presented under the heading of “Cumulative effect of change in accounting policy for investments by cost method” as at October 1, 2006 and 2005 decreased by 917 million baht and 760 million baht, respectively. Consequently, the Company’s net profit for the year ended September 30, 2007 and 2006 increased by 8 million baht and decreased by 156 million baht, respectively.

This change in accounting policy affected transaction related to the investment in subsidiary and associated of the Company’s financial statements only. Nevertheless, it has no effect on the Consolidated financial statements preparation and also the other factors related to business operation.

Thai Airways International Public Company Limited

111

Corporate Direction and Strategy

The commercial airline industry has seen a dramatic increase in competition from increased flight frequency of traditional airlines, the use of Thailand as a platform for expansion in international traffic by foreign based airlines forming joint ventures within Thailand, the ongoing open skies policy and competition from new low cost carriers and increased frequency of existing low cost carriers that is transforming itself into a low cost network. The next phase of challenge being brought on is the launch of long-haul low cost airlines which is in addition to the ever increasing cost of aviation fuel. In the face of dramatic changes in the operating environment of the commercial airline industry, THAI has also taken dramatic steps to mitigate their effects and ensure the Company’s long-term survivable.

A comprehensive strategic corporate plan has been developed to cope with the changing operating environment and to ensure that THAI retains the necessary competitive advantage through its SWOT (Strength, Weakness, Opportunity and Threat) assessment. At the core of the Company’s operation is its vision to be “The First Choice Carrier with Touches of Thai” to ensure that the Company’s operation increases overall shareholder value.

The balanced scorecard of each and every operating unit, division, department and business unit has been aligned with that of the corporate balanced scorecard. Strategies and performance measures related to financial objectives, customer oriented policies and staff development goals have been established to ensure that everyone is united and working towards the same goals.

Financial Strategies - The goal is to ensure that THAI maintains its financial strength. On the revenue side, the corporate strategic plan is designed to grow passenger revenue and that of its business units by expanding its business into high potential areas and markets while maximizing the utilization of its assets. The other variable in the equation is the ability to be cost effective in its operations. Underlying the Company’s long-term financial health is the Company’s ability to maintain an appropriate capital structure.

Customer Strategies - THAI is using the concept of Ultimate Service Full Network Airline to ensure the highest level of service provided to its passengers. The goal is to provide passengers with the highest level of service on all destinations and a level of safety which is at par with international standards under its “High Service Quality and Safety” concept. THAI’s goal is to ensure at least an 82.5% on time performance for international flights and 92.0% for domestic flights and ensure that its products remain competitive with its peers. In terms of third party rankings, THAI intends to remain among the top in world rankings and to maintain its market share of air travel traffic. All the above goals are designed to target customer retention as a result of customer satisfaction.

112

Annual Report 2007

Internal Process Strategies - THAI has undertaken activities to upgrade its products and services to meet customer demands, provide Smooth as Silk Travel Experience with Touches of Thai to increase its competitiveness against its peers. Ensuring such success will come from greater cooperation with Star Alliance, partner airlines and THAI’s other business partners while reducing unnecessary processes and focus on the results. In addition to process efficiency, using the latest in informationing technology to improve THAI’s own network connectivity and operations all go towards enhancing the Company’s overall operating performance through speed of communication.

Learning and Growth Strategies - To enhance the Company’s competitive advantage, THAI has undertaken various activities to change its culture - improving organization structure to enable management efficiency, improving human resource management and improving teamwork and accountability. To improve staff productivity, the Company has initiated performance-based pay system as well as procedures to fairly and transparently appraise employee performance. Strengthening staff’s skills is another strategy to promote staff professionalism driving the achievement of the Company’s objectives while observing social and environmental responsibilities.

In fiscal year 2007 THAI launched the “Flying Together” - the strategic action plan which encompasses the alignment of aircraft fleet planning, network development planning, customer satisfaction targets, marketing and sales targets, business unit development targets, alliance cooperation initiatives, information technology strategies, human resource management goals, efficiency enhancement and finance and accounting strategies geared towards achieving the Company’s vision.

Thai Airways International Public Company Limited

113

Five-Year Review

2007 Number of Aircraft

2006

2005

2004

2003

84

82

84

83

81

350,644

324,366

304,535

304,325

279,654

Flight Hours

(Block Hours)

Available Ton-Kilometers

(Million)

11,315

10,269

9,791

9,686

8,870

Revenue Ton-Kilometers

(Million)

7,910

7,001

6,565

6,478

5,850

Load Factor

(%)

69.9

68.2

67.1

66.9

66.0

Number of Passengers

(000)

19,586

18,574

18,133

19,540

17,048

Available Seat-Kilometers

(Million)

76,830

71,594

69,843

69,830

63,826

Revenue Passenger-Kilometers

(Million)

60,305

53,989

49,931

50,633

44,396

Cabin Factor

(%)

78.5

75.4

71.5

72.5

69.6

Available Dead Load Ton-Kilometers (Million)

4,401

3,780

3,492

3,401

3,125

Revenue Freight Ton-Kilometers

(Million)

2,382

2,048

1,986

1,839

1,780

Freight Load Factor

(%)

54.1

54.2

56.9

54.1

57.0

Number of Personnel

(People)

26,897

26,488

25,876

25,884

25,531

Profitability (Result before Tax)

(Million Baht)

9,141

12,822

9,906

14,284

17,431

Note : All data shown for fiscal year from 1 October - 30 September, or as at 30 September.

114

Annual Report 2007

Definition of Aviation Terms Available Ton-Kilometers (ATK)

Cabin Factor

Capacity offered for sale expressed as aircraft

Revenue passenger-kilometers expressed as

payload multiplied by flown kilometers.

percentage of available seat-kilometers.

Revenue Ton-Kilometers (RTK)

Available Dead Load Ton-Kilometers (ADTK)

Capacity sold expressed as tons of load carried

Capacity offered of aircraft payload after deduction

multiplied by flown kilometers.

of weight of the load of passengers multiplied by flown kilometers.

Load Factor Revenue ton-kilometers expressed as percentage of

Revenue Freight Ton-Kilometers (RFTK)

available ton-kilometers.

Freight capacity sold expressed as tons of freight carried multiplied by flown kilometers.

Available Seat-Kilometers (ASK) Passenger capacity offered for sale expressed as

Freight Load Factor

number of seats multiplied by flown kilometers.

Revenue freight-kilometers expressed as percentage of available dead load ton-kilometers.

Revenue Passenger-Kilometers (RPK) Passenger capacity sold expressed as number of

Aircraft Payload

passengers multiplied by flown kilometers.

Weight of the load of passengers, cargo and other load carried on a fully loaded aircraft using the average density of cargo.

Thai Airways International Public Company Limited

115

Board of Directors’ Duties on Financial Disclosure

The Board of Directors of Thai Airways International Public Company Limited understands the responsibility of ensuring integrity, sufficient, relevant and transparent disclosure of the Company’s fiscal year 2007 financial statements. Such disclosure abides by the generally accepted accounting principles, ensuring the integrity of the Company’s operations. Appropriate accounting policies have been put in place and adhered to on a consistent basis while due consideration has been placed on the process of preparing the Company’s and the consolidated fiscal year 2007 financial statements including other information that have been included in this year’s annual report.

To enhance stakeholder trust, the Board appointed an Audit Committee comprising of Independent Directors with qualifications as stipulated by the guidelines of the Stock Exchange of Thailand to ensure that the Company provides sufficient, transparent, correct and appropriate financial disclosure along with information regarding related party transactions is a key function of the Committee. Ensuring appropriate, sufficient and effective risk management guidelines, appropriate internal control procedures along with a robust internal audit processes are also the functions of the Committee. Legal compliance is at the forefront of the Board’s concerns therefore the Committee is also charged with ensuring that the Company’s operations adheres to all relevant external and internal legal guidelines and policies.

The Board of Directors believes that the Company and the Company’s consolidated fiscal year 2007 financial statements ending 30 September 2007, which has been reviewed by the Audit Committee, management and the Company’s financial auditor to be correct, complete, appropriate, in compliance with generally accepted accounting practices and employs appropriate accounting policies on a consistent basis.

The financial disclosure is deemed to be transparent, provides an appropriate level of disclosure and is in compliance with all the relevant legal guidelines and policies.

116

ACM Chalit Pukbhasuk

Flg. Off. Apinan Sumanaseni

Chairman of the Board of Directors

President

Annual Report 2007

Audit Committee’s Report

To Shareholders, The Audit Committee of Thai Airways International Public Company Limited is comprised of three Independent Directors. None of which are executive directors, employees or advisors of the Company. The Audit Committee members are : 1. Khun Pornthip Jala

Chairman

2. Mr. Sivaporn

Dardarananda

Member

3. Mr. Chartsiri

Sophonpanich

Member

The Audit Committee performed its duties as assigned by the Board of Directors and according to the Audit Committee’s Charter and in-line with the Stock Exchange of Thailand’s guidelines for the Audit Committee as best practice.

In 2007, the Committee convened ten times. The head of the Office of the Internal Audit, external auditors and the Management were invited to attend the meetings as appropriate. Significant activities undertaken by the Committee include : Review of quarterly and annual financial statements for fiscal year 2007. The Committee reviewed both the consolidated and THAI’s financial statements, ensuring integrity in all material aspects and sufficient disclosure of information and that the financial statements were prepared in accordance with generally accepted accounting standards. A review of the disclosure of related party transactions was also made to ensure compliance with generally accepted business practices and the regulations of the Stock Exchange of Thailand before being compiled for the Board of Directors. These reviews were conducted with a focus on completeness and accuracy of financial statements and adequacy of information disclosure.

Oversight of internal audit. The Committee reviewed and approved a long-term audit plan spanning 2008 - 2010 and an annual audit plan which were prepared in relation to the Company’s risk factors. The audit plans are modified with changing in risk profile encompassing all significant business and work processes. To ensure adequate internal control and mitigation of THAI’s overall risk, the Committee reviewed internal audit results, monitored actions taken by the Management as per the recommendations of Audit Reports and reviewed quarterly updates of activities undertaken by the Office of the Internal Audit. The Committee deems THAI’s internal audit approach to be adequate, appropriate and effective.

Reviewed internal control process. The Committee reviewed the policy and overall direction of risk management as put forth by the Risk Management Committee. The Committee was also responsible for reviewing the internal control process and Control Self-Assessment reports as per the State Audit Commission’s internal audit guidelines of B.E. 2544 as well as over seeing the function of the Office of the Internal Audit.

The Committee deems THAI’s internal controls to be adequate and sufficient.

Thai Airways International Public Company Limited

117

Ensuring of compliance. The Committee is tasked to ensure THAI’s compliance with the Securities and Exchange Acts and laws related to the Company’s business based on the internal audit reports and the report provided by the Company Secretary, who is responsible for compliance monitoring. Upon review, the Audit Committee deems THAI’s operations to be in accordance with relevant laws and regulations.

Self-assessment. The Committee conducted a self-assessment to evaluate its performance by benchmarking with the Audit Committee’s Charter based on current best practice guidelines from the Stock Exchange of Thailand and the Audit Committee Guidelines for State Enterprises as detailed by the Ministry of Finance. The result of the assessment for the fiscal year 2007 performance was considered to be “Very Good.”

Appointment of and remuneration for external auditors. The Committee reviewed the re-appointment of and remuneration for the Auditor General as THAI’s external auditors for fiscal year 2008 prior to the Board of Directors submission for approval at the Annual General Meeting of Shareholders.

Khun Pornthip Jala Chairman November 22, 2007

118

Annual Report 2007

Auditor’s Report

TO : THE SHAREHOLDERS OF THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LIMITED

The Office of the Auditor General of Thailand has audited the accompanying consolidated balance sheets of Thai Airways International Public Company Limited and its subsidiary and the balance sheets of Thai Airways International Public Company Limited as at September 30, 2007 and 2006, and the related consolidated and the Company’s statements of income, changes in shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management as to their correctness and completeness of the presentation. The responsibility of the Office of the Auditor General of Thailand is to express an opinion on these financial statements based on the audits.

The Office of the Auditor General of Thailand conducted the audits in accordance with generally accepted auditing standards. Those standards require that the Office of the Auditor General of Thailand plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. The Office of the Auditor General of Thailand believes that the audits provide a reasonable basis for the opinion.

In the opinion of the Office of the Auditor General of Thailand, the consolidated and the Company’s financial statements referred to above present fairly, in all material respects, the financial position of Thai Airways International Public Company Limited and its subsidiary and of the Thai Airways International Public Company Limited as at September 30, 2007 and 2006, and the results of operations, the changes in shareholders’ equity, and the cash flows for the years then ended in accordance with generally accepted accounting principles.

(Signed) Khunying Jaruvan Maintaka (Jaruvan Maintaka) Auditor General

(Signed) Rungravee Sahsomsuwan (Rungravee Sahsomsuwan) Director of Auditor Office

Office of the Auditor General November 20, 2007

Thai Airways International Public Company Limited

119

Balance Sheets Thai Airways International Public Company Limited and Its Subsidiary As at September 30, 2007 and 2006

Units : Baht CONSOLIDATED Notes

2007

2006

THE COMPANY 2007

2006 (restated)

ASSETS Current Assets Cash and cash equivalents

5.1

Current investment-available

20,583,897,733

9,175,267,322

131,873,024

102,256,496

20,241,103,098

8,937,827,934

-

-

Trade account receivables-net

5.2

17,985,430,375

16,613,734,289

17,948,254,495

16,576,817,194

Inventories and supplies-net

5.3

5,997,875,383

5,255,350,885

5,997,875,383

5,255,350,885

Other current assets

5.4

14,800,019,875

14,556,067,780

14,756,089,261

14,524,282,369

59,499,096,390

45,702,676,772

58,943,322,237

45,294,278,382

5.5.1

1,519,888,879

1,523,006,071

926,770,500

907,572,750

5.5.2

104,182,823

191,846,188

83,598,922

86,534,540

Total Current Assets Non-Current Assets Investments in associated and subsidiary companies Other long-term investments Property, Plant and Equipment-Net

5.7

204,714,573,949

196,030,545,530

204,653,040,673

195,937,578,431

Intangible assets-net

5.8

856,819,811

421,211,394

853,269,727

418,776,627

Deferred income taxes

5.9

3,901,537,844

4,020,317,829

3,889,351,863

4,008,711,086

Other non-current assets

5.10

1,490,103,840

1,144,792,764

1,490,103,840

1,144,792,764

Total Non-Current Assets

212,587,107,146

203,331,719,776

211,896,135,525

202,503,966,198

Total Assets

272,086,203,536

249,034,396,548

270,839,457,762

247,798,244,580

The accompanying notes are an integral part of these financial statements.

120

Annual Report 2007

Units : Baht CONSOLIDATED Notes

2007

THE COMPANY

2006

2007

2006 (restated)

LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Trade account payables Short-term loans 5.11 Current portion of long-term loans Debentures 5.15 Long-term loans 5.12 Liabilities under financial leases 5.13 Promissory notes 5.14 Other current liabilities Accrued expenses Accrued dividends Accrued income taxes Unearned transportation revenues Others 5.16

7,950,593,217 12,121,060,200

9,423,137,305 5,606,417,700

7,942,173,649 12,121,060,200

9,411,603,172 5,606,417,700

6,000,000,000 8,667,640,690 1,050,000,000

8,023,757,350 8,314,392,593 1,050,000,000

6,000,000,000 8,667,640,690 1,050,000,000

8,023,757,350 8,314,392,593 1,050,000,000

20,488,319,740 62,901,721 28,593,987 30,537,000,786 2,636,244,727

16,417,248,467 57,863,117 20,613,157 24,287,909,663 4,627,275,264

20,465,787,505 62,901,721 30,537,000,786 2,615,403,652

16,398,217,085 57,863,117 24,287,909,663 4,605,732,387

89,542,355,068

77,828,614,616

89,461,968,203

77,755,893,067

34,000,000,000 4,074,621,000 68,369,645,625 2,100,000,000 4,771,886,386

40,000,000,000 4,393,142,000 53,485,647,432 3,150,000,000 4,495,820,618

34,000,000,000 4,074,621,000 68,369,645,625 2,100,000,000 4,771,886,386

40,000,000,000 4,393,142,000 53,485,647,432 3,150,000,000 4,495,820,618

Total Non-Current Liabilities

113,316,153,011

105,524,610,050

113,316,153,011

105,524,610,050

Total Liabilities Shareholders’ Equity Share capital Authorized 1,700.00 million ordinary shares par value of Baht 10 each

202,858,508,079

183,353,224,666

202,778,121,214

183,280,503,117

17,000,000,000

17,000,000,000

17,000,000,000

17,000,000,000

16,989,009,500 15,639,064,110

16,988,961,500 15,642,835,031

16,989,009,500 15,639,064,110

16,988,961,500 15,642,835,031

-

-

-

1,700,000,000 34,641,666,188

1,700,000,000 31,102,776,657

1,700,000,000 33,733,262,938

1,700,000,000 30,185,944,932

68,969,737,219 257,958,238

65,434,573,188 246,598,694

68,061,336,548 -

64,517,741,463 -

69,227,695,457

65,681,171,882

68,061,336,548

64,517,741,463

272,086,203,536

249,034,396,548

270,839,457,762

247,798,244,580

Total Current Liabilities Non-Current Liabilities Long-term debts Debentures Long-term loans Liabilities under financial leases Promissory notes Staff pension fund

Issued and paid-up 1,698.90 million ordinary shares par value of Baht 10 each Premium on share capital Unrealised gain on current investment-available-for-sale securities Retained earnings Appropriated Legal reserve Unappropriated

5.15 5.12 5.13 5.14 5.24

5.18

(2,579)

5.19

Total Company Shareholders’ Equity Minority interests Total Shareholders’ Equity Total Liabilities and Shareholders’ Equity

The accompanying notes are an integral part of these financial statements.

(Signed) Flg.Off. Apinan Sumanaseni (Apinan Sumanaseni) President

(Signed) Ngamnit Sombutpibool (Ngamnit Sombutpibool) Executive Vice President Finance and Accounting

Thai Airways International Public Company Limited

121

Statements of Income Thai Airways International Public Company Limited and Its Subsidiary For the years ended September 30, 2007 and 2006

Units : Baht CONSOLIDATED 2007

THE COMPANY

2006

2007

2006 (restated)

Revenues from the Sale of Goods and the Rendering of Services Passenger and excess baggage

156,258,304,364

143,401,184,068

156,258,304,364

143,401,184,068

25,737,296,643

25,649,667,924

25,737,296,643

25,649,667,924

992,282,983

1,036,188,352

992,282,983

1,036,188,352

9,049,138,039

8,519,843,512

8,689,395,806

8,159,740,321

192,037,022,029

178,606,883,856

191,677,279,796

178,246,780,665

Personnel

32,634,774,287

30,729,663,179

32,603,597,343

30,697,016,022

Fuel and oil

58,892,664,167

59,999,262,178

58,892,664,167

59,999,262,178

Inventories and supplies

9,996,537,252

10,201,744,088

9,996,537,252

10,201,744,088

Lease of aircraft and spare parts

6,767,821,949

5,434,434,982

6,767,821,949

5,434,434,982

Flight operations

41,557,103,822

37,659,857,591

41,557,103,822

37,659,857,591

Depreciation

17,751,341,713

15,514,467,423

17,716,486,919

15,484,615,707

Marketing

3,198,407,158

3,115,691,548

3,151,111,310

3,075,578,993

Insurance

1,016,273,298

1,516,417,024

1,016,273,298

1,516,417,024

25,416,858

26,493,191

24,143,805

25,051,680

7,408,591,010

6,044,654,090

7,328,108,029

5,957,823,150

179,248,931,514

170,242,685,294

179,053,847,894

170,051,801,415

12,788,090,515

8,364,198,562

12,623,431,902

8,194,979,250

Freight Mail Other activities Total Revenues from the Sale of Goods and the Rendering of Services Operating expenses

Remuneration to board of directors Other operating expenses Total operating expenses Profit from the Sale of Goods and the Rendering of Services

The accompanying notes are an integral part of these financial statements.

122

Annual Report 2007

Units : Baht CONSOLIDATED Notes

2007

THE COMPANY

2006

2007

2006 (restated)

Profits from the Sale of Goods and the Rendering of Services

12,788,090,515

8,364,198,562

12,623,431,902

8,194,979,250

620,971,083

316,822,629

609,306,786

315,364,272

1,381,793,717

3,388,247,464

1,574,025,926

3,547,894,973

2,002,764,800

3,705,070,093

2,183,332,712

3,863,259,245

(1,184,797,148)

(6,178,102,699)

(1,184,797,148)

(6,178,102,699)

102,110,925

75,923,013

102,110,925

75,923,013

2,156,963,358

1,154,594,702

2,154,739,436

1,146,427,301

1,074,277,135

(4,947,584,984)

1,072,053,213

(4,955,752,385)

13,716,578,180

17,016,853,639

13,734,711,401

17,013,990,880

122,787,633

256,226,137

-

-

122,787,633

256,226,137

-

-

13,839,365,813

17,273,079,776

13,734,711,401

17,013,990,880

Interest expenses

4,698,766,508

4,450,936,258

4,698,766,508

4,450,936,258

Income tax expenses

2,739,919,472

3,777,437,609

2,685,448,239

3,727,555,881

6,400,679,833

9,044,705,909

6,350,496,654

8,835,498,741

58,611,654

53,108,828

-

-

6,342,068,179

8,991,597,081

6,350,496,654

8,835,498,741

3.73

5.29

3.74

5.20

3.73

5.29

3.74

5.20

Other Income Interest income Others

5.20

Total Other Income Other Expenses Gains on foreign currency exchange Yields from pension fund Others

5.21

Total Other Expenses Profits from Operations Share of Profits from Investments by the Equity Method Share of net profit from associated companies Total Share of Profits from Investments by the Equity Method

5.5.1

Profits before Interest and Income Tax Expenses

Profits after Tax Net profit of minority interest Net profits Basic earnings per share

5.22

Net profits Diluted earnings per share

5.22

Net profits

The accompanying notes are an integral part of these financial statements.

(Signed) Flg.Off. Apinan Sumanaseni (Apinan Sumanaseni) President

(Signed) Ngamnit Sombutpibool (Ngamnit Sombutpibool) Executive Vice President Finance and Accounting

Thai Airways International Public Company Limited

123

Statements of Changes in Shareholders’ Equity Thai Airways International Public Company Limited and Its Subsidiary For the years ended September 30, 2007 and 2006

Units : Baht CONSOLIDATED Share Capital issued and fully paid

Premium on share capital

16,988,881,500

15,646,761,354

-

-

Add Net Profits

-

Less Dividends paid Add Proceeds from ESOP offering

Notes

Balance as at October 1, 2005

Proceeds from ESOP offering 12,000

Unrealised gain (losses) on available-for-sale securities

Legal Reserve

Retained Earnings Unappropriated

Minority Interest

(477,805)

1,700,000,000

24,659,514,201

-

477,805

-

-

-

-

-

-

-

-

-

-

-

-

-

108,000

-

-

-

-

(120,000)

Total

217,398,934

59,212,090,184

390,932

868,737

8,991,597,081

53,108,828

9,044,705,909

(2,548,334,625)

(24,300,000)

(2,572,634,625)

- Unrealised gains on current investment - available-for-sale securities

Add Issued share capital

80,000

Less Share offering expense

-

-

-

-

(3,966,323)

-

-

-

-

-

16,988,961,500 15,642,835,031

-

-

1,700,000,000

31,102,776,657

246,598,694

65,681,171,882

-

-

1,700,000,000

31,102,776,657

246,598,694

65,681,171,882

-

Balance as at September 30, 2006 Balance as at October 1, 2006

16,988,961,500

40,000

108,000

15,642,835,031

(3,966,323)

- Unrealised losses on current investment- available-for-sale securities Add Net Profits Less Dividends paid

5.17

-

-

-

(2,110)

(4,689)

-

-

-

-

-

6,342,068,179

58,611,654

6,400,679,833

-

-

-

-

-

(2,803,178,648)

(47,250,000)

(2,850,428,648)

24,000

-

-

-

-

-

72,000

(3,794,921)

-

-

-

-

-

(3,794,921)

16,989,009,500 15,639,064,110

-

1,700,000,000

34,641,666,188

Add Issued share capital Less Share offering expense Balance as at September 30, 2007

48,000 -

(2,579)

(2,579)

-

-

257,958,238

The accompanying notes are an integral part of these financial statements.

(Signed) Flg.Off. Apinan Sumanaseni (Apinan Sumanaseni) President

124

Annual Report 2007

(Signed) Ngamnit Sombutpibool (Ngamnit Sombutpibool) Executive Vice President Finance and Accounting

69,227,695,457

restated

Units : Baht THE COMPANY Notes

Share Capital issued and fully paid

Premium on share capital

Proceeds from ESOP offering

Unrealised gain (losses) on available-for-sale securities

Legal Reserve

Retained Earnings Unappropriated

Total

Balance as at October 1, 2005 (before adjustment)

16,988,881,500

15,646,761,354

12,000

(477,805)

1,700,000,000

24,659,514,201

58,994,691,250

(760,733,385)

(760,255,580)

- Cumulative effect of change in accounting policy for investment by cost method

-

-

-

477,805

-

Balance as at October 1, 2005 (after adjustment)

16,988,881,500

15,646,761,354

12,000

-

1,700,000,000

23,898,780,816

58,234,435,670

Add Net Profits

-

-

-

-

-

8,835,498,741

8,835,498,741

Less Dividends paid

-

-

-

-

-

(2,548,334,625)

(2,548,334,625)

Add Proceeds from ESOP offering

-

-

108,000

-

-

-

40,000

Add Issued share capital

80,000

Less Share offering expense

-

Balance as at September 30, 2006

108,000

(120,000)

-

-

-

-

(3,966,323)

-

-

-

-

(3,966,323)

16,988,961,500

15,642,835,031

-

-

1,700,000,000

16,988,961,500

15,642,835,031

-

-

1,700,000,000

-

-

-

-

-

30,185,944,932 64,517,741,463

Balance as at October 1, 2006 (before adjustment)

31,102,776,657

65,434,573,188

(916,831,725)

(916,831,725)

1,700,000,000

30,185,944,932

64,517,741,463

- Cumulative effect of change in accounting policy for investment by cost method

-

-

Balance as at October 1, 2006 (after adjustment)

16,988,961,500

Add Net Profits Less Dividends paid

5.17

-

-

-

-

-

6,350,496,654

6,350,496,654

-

-

-

-

-

(2,803,178,648)

(2,803,178,648)

Add Issued share capital

48,000

Less Share offering expense

-

Balance as at September 30, 2007

15,642,835,031

16,989,009,500

24,000

-

-

-

-

72,000

(3,794,921)

-

-

-

-

(3,794,921)

15,639,064,110

-

-

1,700,000,000

33,733,262,938 68,061,336,548

The accompanying notes are an integral part of these financial statements.

(Signed) Flg.Off. Apinan Sumanaseni (Apinan Sumanaseni) President

(Signed) Ngamnit Sombutpibool (Ngamnit Sombutpibool) Executive Vice President Finance and Accounting

Thai Airways International Public Company Limited

125

Statements of Cash Flows Thai Airways International Public Company Limited and Its Subsidiary For the years ended September 30, 2007 and 2006

Units : Baht CONSOLIDATED 2007

THE COMPANY

2006

2007

2006 (restated)

Cash flows from operating activities Net profit

6,342,068,179

8,991,597,081

6,350,496,654

8,835,498,741

17,751,341,713

15,514,467,423

17,716,486,919

15,484,615,707

(122,787,633)

(256,226,137)

-

-

Adjustment to reconcile net profit to cash provided by (paid from) operating activities : Depreciation Income from investments by the equity method Stock dividend

-

-

(19,197,750) 5,194,235

-

Losses (gains) on sales of assets

5,194,235

(991,232,983)

Gain on current investments-available-for-sale securities

(6,623,970)

(4,587,358)

Amortisation of deferred charges

214,270,101

176,512,541

214,270,101

176,512,541

Gains on foreign currency exchange

(12,298,234)

(5,646,399,237)

(12,298,234)

(5,646,399,237)

Net profit of minority interests

58,611,654

53,108,828

Provision for obsolete inventories and supplies

(14,146,942)

144,151,808

(14,146,942)

144,151,808

633,476,587

97,541,894

631,345,791

89,632,317

24,849,105,690

18,078,933,860

24,872,150,774

18,092,638,285

(1,618,301,394)

(1,338,153,082)

(1,615,911,813)

(1,338,470,881)

Inventories and supplies

(728,377,555)

(303,517,666)

(728,377,555)

(303,517,666)

Prepaid expenses and deposits

(944,544,652)

394,254,749

(944,505,056)

396,709,604

Tax refund

1,218,851,394

(448,783,917)

1,218,851,394

(448,783,917)

Other current assets

(1,197,796,398)

(998,114,588)

(1,185,690,791)

(992,047,374)

Deferred income taxes

118,779,984

119,175,442

119,359,223

121,473,315

Other assets

(59,007,009)

-

-

(991,373,592) -

-

Allowance for doubtful accounts and impairment in value of assets Operating profit before changes in operating assets and liabilities Decrease (increase) in operating assets : Trade account receivables

Deferred charges

-

(59,007,009)

-

(500,574,167)

(462,344,246)

(500,574,167)

(462,344,246)

Trade account payables

(1,499,522,851)

1,428,218,890

(1,496,408,286)

1,429,135,671

Accrued expenses and other current liabilities

1,973,738,498

19,223,004

1,962,958,617

24,737,122

276,065,768

(46,920,753)

276,065,768

(46,920,753)

5,635,890,877

6,363,320,218

5,635,890,877

6,363,320,218

27,524,308,185

22,805,291,911

27,554,801,976

22,835,929,378

Increase (decrease) in operating liabilities :

Staff pension fund Unearned transportation revenue Net cash from operating activities The accompanying notes are an integral part of these financial statements.

126

Annual Report 2007

Units : Baht CONSOLIDATED 2007

THE COMPANY

2006

2007

2006 (restated)

Cash flows from investing activities Short-term investments increase Cash paid for acquisition of fixed assets Cash paid for intangible assets

-

(100,000,000)

-

-

(22,218,872,910)

(20,231,596,361)

(22,215,564,123)

(20,151,032,348)

(525,376,162)

(455,609,398)

(524,148,662)

(453,130,576)

Cash received from transferring down payment of aircraft and aircraft spare parts Cash received from sales of assets Investments decrease (increase)

357,816,407

2,065,589,465

357,816,407

2,065,589,465

1,306,091,660

5,521,806,216

1,306,091,660

5,521,726,259

211,339,798

129,369,337

(2,955,527)

(5,491,445)

Cash received from current investmentsavailable-for-sale securities

-

-

-

(20,895,661,207)

(13,070,440,741)

(21,078,760,245)

(13,022,338,645)

Cash received from short-term loans

21,798,454,814

5,512,267,800

21,798,454,814

5,512,267,800

Cash received from long-term loans

19,127,297,087

1,259,525,538

19,127,297,087

1,259,525,538

48,000

72,000

48,000

72,000

Net cash used in investing activities

(26,660,000)

Cash flows from financing activities

Cash received from issuing ordinary shares Cash received from premium on ordinary shares

(3,770,922)

(3,930,323)

(3,770,922)

(3,930,323)

Cash paid for repayment of short-term loans

(15,231,608,114)

-

(15,231,608,114)

-

Cash paid for repayment of long-term loans

(17,129,728,094)

(13,701,821,877)

(17,129,728,094)

(13,701,821,877)

Cash paid for repayment of promissory notes

(1,050,000,000)

(1,050,000,000)

(1,050,000,000)

(1,050,000,000)

Dividends paid

(2,845,390,044)

(2,567,247,267)

(2,798,140,044)

(2,542,947,267)

4,665,302,727

(10,551,134,129)

4,712,552,727

(10,526,834,129)

11,293,949,705

(816,282,959)

11,188,594,458

(713,243,396)

Net cash from (used in) financing activities Increase (decrease) in cash and cash equivalents Increase in the effect from changing in exchange rate on cash and cash equivalents

114,680,706

61,549,377

114,680,706

61,549,377

9,175,267,322

9,930,000,904

8,937,827,934

9,589,521,953

20,583,897,733

9,175,267,322

20,241,103,098

8,937,827,934

Interest expenses

4,079,123,039

4,327,541,483

4,079,123,039

4,327,541,483

Corporate income tax

3,698,277,864

4,115,660,767

3,651,208,222

4,055,682,939

5,795,831,779

16,975,783,568

5,795,831,779

16,975,783,568

Cash and cash equivalents at the beginning of the periods Cash and cash equivalents at the end of the periods Supplementary cash flows information : Cash paid during the year for

Non - cash item Assets under financial lease The accompanying notes are an integral part of these financial statements.

(Signed) Flg.Off. Apinan Sumanaseni (Apinan Sumanaseni) President

(Signed) Ngamnit Sombutpibool (Ngamnit Sombutpibool) Executive Vice President Finance and Accounting

Thai Airways International Public Company Limited

127

128

Annual Report 2007

Notes to the Financial Statements Thai Airways International Public Company Limited and Its Subsidiary For the years ended September 30, 2007 and 2006

1.

BASIC OF FINANCIAL STATEMENT PREPARATION The Company’s financial statements consist of Thai Airways International Public Company Limited and

the Company’s staff pension fund.

The consolidated financial statements consist of the Company and its subsidiary, Thai-Amadeus Southeast Asia Company Limited, in which the Company holds equity interests of 55%. Significant transactions between the Company and its subsidiary have been eliminated from the consolidated financial statements.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Allowance for Doubtful Accounts An allowance for doubtful accounts is established for trade account receivables, excluding those

from government agencies and state enterprises, which are more than 6 months overdue: Period overdue

Allowance for doubtful accounts (%)

6 months up to 1 year

50

1 year up to 2 years

75

2 years or more

100

Allowance for doubtful accounts for contingent estimated losses that may result from uncollectable trade account receivables, including government agencies and state enterprises, is estimated from historical collection experience and the position of account receivables at the balance sheet date.

2.2 Inventories and Supplies Inventories and supplies at the year-end, consisting of aircraft spare parts, fuel and oil for aircraft, cabin supplies, goods for sales as well as stationery and office supplies, are stated at the lower of moving average cost or net realisable value, except inventories in transit are stated at purchased date cost.

- Provision for obsolescence of aircraft spare parts is made at an annual rate of 10% of the year-end balance.

- Slow moving aircraft spare parts and spare parts for sales are spare parts not moving over two years or spare parts for aircraft not represented in the fleet. Provision for obsolescence is made at an annual rate of 33.33% of the incurred balance during the year.

- Provision for obsolete and damaged inventories is made at the full amount.

Thai Airways International Public Company Limited

129

2.3 Investments 2.3.1 Investments in subsidiary and associated companies are stated by the equity method in the consolidated financial statement but by cost method in the Company’s financial statement.

2.3.2 Long-term investments in non-marketable equity securities are stated at cost net of a provision for impairment. An impairment loss is recognised in the income statement.

2.3.3 Current investments in marketable equity securities are stated at market value at the year-end. Gain or loss on change in value of trading securities is recognised in the income statement. For available-for-sale securities, the Company recognises gain or loss on change in value as an unrealised gain or loss under shareholders’ equity.

2.4 Property, Plant and Equipment and Depreciation 2.4.1 Aircraft and aircraft under financial leases 2.4.1.1 Aircraft and aircraft under financial leases are stated at cost, including where applicable (engines and other flight equipment), cost of decoration and acquisition, and interest on loans for the purchase of the aircraft incurred prior to the aircraft being placed into service but excluding passenger seats and the first estimated overhaul cost, less any concessions for the acquisition of aircraft. Depreciation is calculated on a straight-line basis over an estimated useful life of 20 years with a salvage value of 10% of cost.

2.4.1.2 Aircraft overhaul (D-check) costs, the first estimated overhaul costs, are presented as separate assets from the aircraft cost and depreciated over the period of the next scheduled overhaul 4-7 years depending on type of aircraft. When these costs incur, the asserted assets will be expensed and replaced by the incurred overhaul cost.

2.4.1.3 Passenger seats are presented as separate assets from the aircraft cost and depreciated on a straight-line basis over an estimated useful life of 5 years. When the replacement costs incur, they are accounted for as the separate assets and the replaced assets will be written off.

2.4.2 Aircraft spare parts are stated at cost on the acquisition date and depreciated on a straight-line basis over an estimated useful life of 5-20 years.

2.4.3 Other fixed assets are stated at cost on the acquisition date or on the date of completion of construction and depreciated on a straight-line basis over an estimated useful life of 5-30 years.

2.4.4 Leasehold buildings are amortised as expense over a lease term of 10-30 years.

2.4.5 Gain or loss on sale of aircraft is calculated from the difference between the sale price and the net book value of the aircraft, including D-check and improvements to passenger seats net of sales expense. Gain or loss on sale of other assets is calculated from the difference between the sale price and net book value of sold assets and recognised as revenue or expense in the income statement.

130

Annual Report 2007

2.5 Intangible Assets Computer programmes Software license and cost that are directly with identifiable and unique software product, which can be separated, identified costs and have an economic useful life over the accounting period, will be recognised as an intangible asset and amortised as expenses on a straight-line basis over an useful life of 5 years.

Expenses arising from developing or maintaining computers are recognised as expenses when incurred.

2.6 Impairment of Assets Assets may be impaired whenever there is an indicator that the carrying amount of the asset exceeds its recoverable amount. A recoverable amount is the higher of an asset’s net selling price and its value in use.

The Company will recognise an impairment loss in income statement whenever the carrying amount exceeds its recoverable amount. Also, the Company will reverse the impairment loss when there is an indicator that the value of asset is no longer impaired or amount of impairment has decreased.

2.7 Deferred Charges 2.7.1 Aircraft overhaul costs (D-check) for aircraft under operating lease are presented as deferred charges and amortised as expenses over an estimated useful life of 4-7 years but not over the lease term.

2.7.2 Loan guarantee premiums are recorded as deferred charge and amortised as expenses over the period of loans in each accounting period.

2.8 Liabilities Under Financial Leases Liabilities under financial leases are liabilities from the purchase of aircraft under long-term financial leases with financial institutions and are stated at obligation value less aggregate repayments.

2.9 Revenue Recognition 2.9.1 Passenger and excess baggage revenues: 2.9.1.1 Revenue from ticket sales and service orders is recognised as revenue when transportation is provided. For passengers using the services of other airlines, the difference between the selling price charged by the Company and the amount billed to the Company by those airline performing the services is recognised as revenue.

2.9.1.2 Unused tickets and service orders are recognised as revenue after 2 years.

Thai Airways International Public Company Limited

131

2.9.1.3 Deferred revenues for war risk insurance and fuel surcharges are recognised as revenues when the outstanding balances are over 3 years.

2.9.2 Freight revenue is recognised when the Company provides the services and issues its air waybills. For freight carried by other air carriers, the difference between the selling price charged by the Company and the amount billed to the Company by those air carriers performing the services is recognised as revenue.

- Freight with respect to which the Company has issued an air waybill but carried by other air carriers is recognised as revenue if the other air carriers do not bill within 1 year.

2.9.3 The Company has operated a frequent flyer program called “Royal Orchid Plus” since 1993.

Members exchange accumulated mileage for services. The Company calculates cost per mile by dividing the average net collected fare in each zone by the number of miles redeemed for awards in that zone.

The Company estimates the number of miles utilised by members based upon the weighted zonal redemption.

The estimated cost is used to reduce passenger revenues and record liability under “unearned transportation revenue”. Revenues are recognised when members redeem awards.

2.9.3.1 Unredeemed awards are recognised as revenue after 3 years.

2.9.3.2 Redemptions with Star Alliance partners involve interline billing arrangements and costs per mile specified in partner agreements. Revenues are recognised when transportation is provided.

2.9.3.3 The Company sells mileage to its members in order to encourage redemptions and recognises the difference between the sale price and mileage cost as revenue.

2.9.4 Revenues from business units, Aircraft Maintenance Services, Ground Customer Services, Ground Support Equipment Services and Cargo and Mail Commercial are recognised when services are provided. Revenues from Catering Services, Sales on Board and Thai Shop are recognised at sale.

2.9.5 Other revenues are recognised on an accrual basis.

2.10 Basic Earnings Per Share Basic earnings per share is calculated by dividing net profit for the year by the weighted average number of ordinary shares outstanding during the period.

2.11 Foreign Currency Transactions Foreign currency transactions incurred during the year are converted into Baht at exchange rates calculated from the average exchange rate of the Bank of Thailand and commercial banks in the month in which the transaction occurs. Except for foreign loans, the Company uses the exchange rate of the Bank of Thailand at cash received date.

132

Annual Report 2007

Assets and liabilities denominated in foreign currency at year-end are converted into Baht at average commercial bank buying and selling rates announced by the Bank of Thailand at that date. Gains or losses on currency exchange are recognised in the income statement.

2.12 Staff Provident Fund On June 26, 1992, the Company established an “Employee of Thai Airways International Public Company Limited Registered Provident Fund” in accordance with the Provident Fund Act B.E. 2530. The fund is managed by a professional fund manager and does not appear on the Company’s balance sheet.

The Company contributes to the fund on a monthly basis at a rate of 9% of salaries for members having not more than 20 years of service and 10% for members having more than 20 years of service. Contributions are treated as expenses of the Company.

2.13 Deferred Income Tax The Company’s tax expenses is calculated in accordance with the Revenue Code of Thailand.

The deferred income tax is calculated from temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

2.14 Accounting Estimations The Company and its subsidiary have applied the accounting estimations and many assumptions in preparation financial statements to conform to the generally accepted accounting principles. These will impact on the amounts of assets, liabilities, revenues, expenses as well as the disclosure of contingent assets and liabilities which may be differed from the actualities.

2.15 Financial Instruments The Company uses derivative financial instruments which are Interest Rate Swap (IRS) and Cross Currency Swap (CCS) to reduce the fluctuation risk from an interest rate and exchange rate by entering into a forward contractual agreement to exchange the principal amount and interest at maturity according to the contract. The different gain or loss will be recorded as interest income or expenses in an income statement.

In addition, the Company also entered into fuel-oil hedging agreement in which premiums and the difference of the fuel price arising from this agreement will be recorded as expenses in income statement.

Thai Airways International Public Company Limited

133

3.

THE EFFECT OF CHANGE IN ACCOUNTING POLICY In fiscal year 2007, the Company has changed its accounting policy according to the Notification of

the Federation of Accounting Professions No. 26/2006 and No. 32/2006 regarding the change in accounting for the investments in subsidiary and associated companies in the Company’s financial statements which formerly recorded by equity method to cost method.

The Company restated its 2006 financial statement as though the Company had consistently followed the new policy by using cost method in the Company’s financial statement. From the change in this policy caused the book value of the investments in subsidiary and associated companies in the Company’s financial statement as at September 30, 2007 was THB 926.77 million, a decrease of THB 908.40 million. As a result, the “Cumulative effect of change in accounting policy for an investment by cost method” presented in the Company’s statement of change in shareholders’ equity as at October 1, 2006 and 2005 decreased by THB 916.83 and 760.26 million, respectively. Also, net profit for the year ended September 30, 2007 and 2006 of the Company’s financial statement increased by THB 8.43 million and decreased by 156.10 million, respectively.

4.

ACCOUNTING PRESENTATION IN FINANCIAL STATEMENT The Company has reclassified the accounting item regarding outsource wages and salaries, formerly

presented in flight operation expenses, to present in other operating expenses in the financial statement for the year ended September 30, 2006 to conform with the current fiscal year which has no impact to net profit or shareholders’ equity.

134

Annual Report 2007

5.

SUPPLEMENTARY INFORMATION 5.1 Cash and Cash Equivalents Units : Million Baht Consolidated 2007

The Company

2006

2007

2006

Cash - Domestic

15.10

18.13

15.10

18.13

Cash - Abroad

29.53

18.91

29.53

18.91

4,024.43

2,486.93

3,681.63

2,249.49

16,514.84

6,651.30

16,514.84

6,651.30

20,583.90

9,175.27

20,241.10

8,937.83

Bank Deposits - Domestic Bank Deposits - Abroad Total

5.2 Trade Account Receivables - Net Trade account receivables are classified according to their stages of delinquency, as expressed in the schedule below.

Units : Million Baht Consolidated

The Company

2007

2006

2007

2006

17,925.45

16,522.50

17,888.69

16,488.21

63.24

109.19

63.24

107.50

113.46

146.57

111.76

139.42

1,245.98

1,141.78

1,218.80

1,121.66

19,348.13

17,920.04

19,282.49

17,856.79

(1,362.70)

(1,306.30)

(1,334.24)

(1,279.97)

17,985.43

16,613.74

17,948.25

16,576.82

Period of overdue Not over 6 months Over : 6 months to 1 year Over : 1 year to 2 years Over : 2 years

Less Allowance for doubtful accounts Trade account receivables - net

Thai Airways International Public Company Limited

135

5.3 Inventories and Supplies - Net

Aircraft spare parts Less Provision for obsolescence (10% of the year-end balance) Aircraft spare parts - Net Vehicle spare parts and ground support equipment Slow moving aircraft spare parts and spare parts for sale Less Provision for obsolescence (33.33% of incurred balance during the period) Slow moving aircraft spare parts and spare parts for sale - Net Fuel and oil for aircraft Goods for sales Cabin supplies Supplies and other consumables Stationery and office supplies Inventories and spare parts in transit Total inventories and supplies Obsolete and damaged inventories for disposal Less Provision for obsolescence (100%) Obsolete and damaged inventories for disposal - Net Total inventories and supplies - Net Total inventories and supplies at year-end Less Total provision for obsolete inventories and supplies Total inventories and supplies - Net

Consolidated 2007 2006 4,345.85 4,192.54

Units : Million Baht The Company 2007 2006 4,345.85 4,192.54

(434.58) 3,911.27

(419.25) 3,773.29

(434.58) 3,911.27

(419.25) 3,773.29

232.54

210.76

232.54

210.76

1,841.70

1,896.35

1,841.70

1,896.35

(1,799.66)

(1,828.08)

(1,799.66)

(1,828.08)

42.04 1,062.07 205.75 285.77 26.49 113.20 118.75 1,812.03 12.98 (12.98)

68.27 485.15 206.37 293.62 26.53 113.38 77.98 1,203.03 14.05 (14.05)

42.04 1,062.07 205.75 285.77 26.49 113.20 118.75 1,812.03 12.98 (12.98)

68.27 485.15 206.37 293.62 26.53 113.38 77.98 1,203.03 14.05 (14.05)

-

-

-

-

5,997.88 8,245.10

5,255.35 7,516.73

5,997.88 8,245.10

5,255.35 7,516.73

(2,247.22) 5,997.88

(2,261.38) 5,255.35

(2,247.22) 5,997.88

(2,261.38) 5,255.35

5.4 Other Current Assets

Prepaid expenses and deposits Tax refund Cash and fixed deposits of pension fund Others Total 136

Annual Report 2007

Consolidated 2007 2006 5,198.51 4,366.85 1,519.77 2,738.62 4,659.21 4,270.00 3,422.53 3,180.60 14,800.02 14,556.07

Units : Million Baht The Company 2007 2006 5,192.83 4,361.21 1,519.77 2,738.62 4,659.21 4,270.00 3,384.28 3,154.45 14,756.09 14,524.28

5.5 Investments Consolidated Units : Million Baht Percentage of Name of Company

Shareholding

Investments

Income on

Cost method

Equity method

2007

2006

2007

2006

investments

2007

2006

2007

2006

24

24

225.00

225.00

290.23

313.81

35.37

76.01

40

40

48.00

48.00

194.47

219.97

(8.70)

63.48

22.6

22.6

115.19

95.99

514.03

469.13

89.06

98.96

30

30

30.00

30.00

53.82

44.81

15.01

4.86

30

30

305.33

305.33

232.88

278.40

(45.52)

(19.36)

39

39

195.00

195.00

234.46

196.89

37.57

32.28

1,519.89 1,523.01

122.79

256.23

5.5.1 Investments using the equity method Royal Orchid Hotel (Thailand) Public Co., Ltd. (Market value for the year 2007 amount of THB 832.50 million and the year 2006 amount of THB 810.00 million) Donmuang International Airport Hotel Company Limited Bangkok Aviation Fuel Services Public Company Limited (Market value for the year 2007 amount of THB 1,244.01 million and the year 2006 amount of THB 1,084.67 million) Phuket Air Catering Company Limited Suvarnabhumi Airport Hotel Company Limited Nok Airlines Company Limited Total investments using the equity method 5.5.2 Other long-term investments stated at cost Fuel Pipeline Transportation Limited

8.4

8.4

133.00

133.00

-

-

Aeronautical Radio of Thailand Limited

2.6

2.8

16.89

18.27

-

-

SITA Investment Certificate

-

-

30.77

29.32

-

-

Trade Siam Company Limited

3.5

3.5

1.75

1.75

-

-

SITA Information Networking Computing

-

-

31.22

34.24

-

-

Other Shares

-

-

2.97

2.95

0.77

1.75

Investment in private fund

-

-

20.58

105.32

-

-

(133.00)

(133.00)

-

-

104.18

191.85

0.77

1.75

(paid 25% of authorized share capital)

Less Allowance for impairment of Fuel Pipeline Transportation Limited Total other long-term investments

Thai Airways International Public Company Limited

137

The Company Units : Million Baht

Name of Company

Percentage of

Investments

Shareholding

Cost method 2007

Dividend Income

2007

2006

2006

2007

2006

55

55

8.25

8.25

57.75

29.70

24

24

225.00

225.00

58.95

56.93

40

40

48.00

48.00

16.80

19.20

22.6

22.6

115.19

95.99

63.35

54.71

Phuket Air Catering Company Limited

30

30

30.00

30.00

6.00

4.50

Suvarnabhumi Airport Hotel Company Limited

30

30

305.33

305.33

-

-

Nok Airlines Company Limited

39

39

195.00

195.00

-

-

918.52

899.32

145.10

135.34

926.77

907.57

202.85

165.04

5.5.1 Investments using the cost method Subsidiary Company Thai-Amadeus Southeast Asia Company Limited Associated Companies Royal Orchid Hotel (Thailand) Public Co., Ltd. (Market value for the year 2007 amount of THB 832.50 million and the year 2006 amount of THB 810.00 million) Donmuang International Airport Hotel Company Limited Bangkok Aviation Fuel Services Public Company Limited (Market value for the year 2007 amount of THB 1,244.01 million and the year 2006 amount of THB 1,084.67 million)

Total Total investments using the cost method 5.5.2 Other long-term investments stated at cost Fuel Pipeline Transportation Limited

8.4

8.4

133.00

133.00

-

-

Aeronautical Radio of Thailand Limited

2.6

2.8

16.89

18.27

-

-

SITA Investment Certificate

-

-

30.77

29.32

-

-

Trade Siam Company Limited

3.5

3.5

1.75

1.75

-

-

SITA Information Networking Computing

-

-

31.22

34.24

-

-

Other Shares

-

-

2.97

2.95

0.77

1.75

(133.00)

(133.00)

-

-

83.60

86.53

0.77

1.75

(paid 25% of authorized share capital)

Less Allowance for impairment of Fuel Pipeline Transportation Limited Total other long-term investments

138

Annual Report 2007

5.5.3 Financial Data Summary of Subsidiary and Associated Companies Units : Million Baht Name of Company

Assets

Liabilities

Income

Gains (Losses)

Subsidiary Company Thai-Amadeus Southeast Asia Company Limited

656.63

83.39

382.03

130.25

1,427.94

218.65

586.91

96.44

524.68

38.52

86.01

(12.79)

5,558.24

3,180.78

826.94

227.09

186.51

7.11

102.89

41.85

Suvarnabhumi Airport Hotel Company Limited

2,631.33

1,855.07

520.87

(54.88)

Nok Airlines Company Limited

1,053.94

452.76

1,791.65

51.88

Associated Companies Royal Orchid Hotel (Thailand) Public Co., Ltd. Donmuang International Airport Hotel Company Limited Bangkok Aviation Fuel Services Public Company Limited Phuket Air Catering Company Limited

The Company used financial statements of associated companies as at June 30, 2007 to record the investment by equity method in the consolidated financial statement and by cost method in the Company’s financial statement due to a different reporting period in financial statements except for Suvarnabhumi Airport Hotel Company Ltd., which has the same accounting period as the Company but cannot summit its financial statement to the Company in time for accounting closing.

5.6 Related Parties The Company 5.6.1 Major shareholders Units : Million Baht 2007

2006

Ministry of Finance Guaranteed loans Foreign loans via the Ministry of Finance

16,195.68

150.00 17,873.32

Thai Airways International Public Company Limited

139

5.6.2 Subsidiary Company Units : Million Baht 2007 Name of Company

Sales

Account

2006

Purchase

Receivables

Account

Sales

Payables

Account

Purchase

Receivables

Account Payables

Thai - Amadeus Southeast Asia Company Limited

30.29

3.00

-

-

49.12

10.63

-

-

5.6.3 Associated Companies Units : Million Baht 2007 Name of Company

Sales

Account

2006

Purchase

Receivables

Account

Sales

Payables

Account

Purchase

Receivables

Account Payables

Royal Orchid Hotel (Thailand) Public Co., Ltd.

0.05

0.05

21.24

-

0.03

0.01

21.77

0.83

-

-

14.76

-

-

-

56.00

0.80

0.03

0.01

405.26

32.95

0.22

0.01

295.30

25.64

6.20

1.01

3.73

0.75

5.67

0.29

3.84

0.45

-

-

44.00

0.55

-

-

-

-

116.22

-

1,694.07

143.90

-

-

Donmuang International Airport Hotel Company Limited Bangkok Aviation Fuel Services Public Company Limited Phuket Air Catering Company Limited Suvarnabhumi Airport Hotel Company Limited Nok Airlines Company Limited

1,806.23

-

The Company purchases goods and services at a market price from related parties on normal commercial term as unrelated parties.

140

Annual Report 2007

5.7 Property, Plant and Equipment - Net Consolidated Units : Million Baht Aircraft

Aircraft

Aircraft

Land

Other

under

spare parts

buildings

plant and

financial

and

equipment

leases

development

Total

Cost As at October 1, 2006

154,518.30

108,895.50

28,238.39

17,018.88

27,960.26

336,631.33

- Adjust/Transfer

(14,876.19)

13,140.13

(1,594.83)

(147.46)

(4,475.36)

(7,953.71)

- Increased asset

8,254.67

15,147.71

2,439.48

2,110.17

5,030.07

32,982.10

- Sold

(5,493.62)

(42.70)

(1,371.72)

(132.40)

(518.97)

(7,559.41)

142,403.16

137,140.64

27,711.32

18,849.19

27,996.00

354,100.31

79,511.41

19,205.06

16,989.67

8,125.01

16,769.63

140,600.78

6,837.49

6,189.10

1,916.33

798.01

1,920.39

17,661.32

253.25

(1,976.54)

(904.95)

-

-

(2,628.24)

(4,924.87)

(42.70)

(638.90)

(125.34)

(516.31)

(6,248.12)

81,677.28

23,374.92

17,362.15

8,797.68

18,173.71

149,385.74

As at September 30, 2006

75,006.89

89,690.44

11,248.72

8,893.87

11,190.63

196,030.55

As at September 30, 2007

60,725.88

113,765.72

10,349.17

10,051.51

9,822.29

204,714.57

As at September 30, 2007 Accumulated depreciation As at October 1, 2006 - Depreciation - Adjust/Transfer - Sold As at September 30, 2007 Net book value

Thai Airways International Public Company Limited

141

The Company Units : Million Baht Aircraft

Aircraft

Aircraft

Land

Other

under

spare parts

buildings

plant and

financial

and

equipment

leases

development

Total

Cost As at October 1, 2006

154,518.30

108,895.50

28,238.39

17,018.88

27,713.08

336,384.15

- Adjust/Transfer

(14,876.19)

13,140.13

(1,594.83)

(147.46)

(4,459.23)

(7,937.58)

- Increased asset

8,254.67

15,147.71

2,439.48

2,110.17

5,010.87

32,962.90

- Sold

(5,493.62)

(42.70)

(1,371.72)

(132.40)

(518.97)

(7,559.41)

142,403.16

137,140.64

27,711.32

18,849.19

27,745.75

353,850.06

79,511.41

19,205.06

16,989.67

8,125.01

16,615.42

140,446.57

6,837.49

6,189.10

1,916.33

798.01

1,885.89

17,626.82

253.25

(1,976.54)

(904.95)

-

-

(2,628.24)

(4,924.87)

(42.70)

(638.90)

(125.34)

(516.32)

(6,248.13)

81,677.28

23,374.92

17,362.15

8,797.68

17,984.99

149,197.02

As at September 30, 2006

75,006.89

89,690.44

11,248.72

8,893.87

11,097.66

195,937.58

As at September 30, 2007

60,725.88

113,765.72

10,349.17

10,051.51

9,760.76

204,653.04

As at September 30, 2007 Accumulated depreciation As at October 1, 2006 - Depreciation - Adjust/Transfer - Sold As at September 30, 2007 Net book value

In this fiscal year, there are 90 aircraft in the Company’s fleet consisting of 53 own aircraft which 5 aircraft are leased by other company, 25 aircraft under financial leases and 12 aircraft under operating leases. Two Airbus A300-600 and one Boeing 747-300 aircraft are sold in this fiscal year amount of THB 1,085.81 million with a total book value of THB 644.06 million including labor and maintenance supplies.

So, the Company has gain on sales of aircraft amount of THB 441.75 million.

Aircraft spare parts consist of aircraft engines and other aircraft spare parts.

Other plants and equipment-net amount of THB 9,822.29 million (consolidated) and THB 9,760.76 million (the Company) have already included the work in progress of Suvarnabhumi project amount of THB 336.78 million consisting of building, facilities, equipment and information technology which support to the services in Suvarnabhumi.

142

Annual Report 2007

The Company uses buildings and equipment purchased at THB 36,699.71 million that are now fully depreciated.

5.8 Intangible Assets-net Units : Million Baht Consolidated

The Company

Cost As at October 1, 2006

455.61

453.13

- Assets increase

525.64

524.15

As at September 30,2007

981.25

977.28

As at October 1, 2006

34.40

34.35

- Depreciation

90.03

89.66

124.43

124.01

As at September 30, 2006

421.21

418.78

As at September 30, 2007

856.82

853.27

Accumulated depreciation

As at September 30, 2007 Net book value

5.9 Deferred Income Taxes Units : Million Baht Consolidated 2007

The Company

2006

2007

2006

Contribution to staff pension fund

1,179.21

1,162.87

1,179.21

1,162.87

Allowance for obsolete inventories

674.17

678.41

674.17

678.41

Allowance for doubtful accounts

465.00

481.68

456.46

473.78

Allowance impairment in value of assets

354.88

172.77

354.88

172.77

Estimated accrual expenses

450.45

353.57

450.45

353.57

Frequent flyer program (ROP)

446.89

313.97

446.89

313.97

Deferred loss on foreign currency exchange

313.66

853.34

313.66

853.34

17.28

3.71

13.63

-

3,901.54

4,020.32

3,889.35

Others Total

4,008.71

Thai Airways International Public Company Limited

143

5.10 Other Non-Current Assets Consolidated and the Company Units : Million Baht

Deferred charges Others

2007

2006

1,431.09

1,144.79

59.01

Total

1,490.10

1,144.79

Deferred charges consisted of aircraft overhaul costs (D-check) for aircraft under operating lease which are amortized as expenses over an estimated useful life of 4-7 years but not over the lease term and loan guarantee premiums for purchasing of aircraft are amortized as expenses over the period of due payment loans in each accounting period.

5.11 Short-term Loans Consolidated and the Company Currency

Loan Currency 2007

Baht Equivalent (Million)

2006

2007

2006 5,606.42

EUR

100,000,000

117,000,000

4,883.01

USD

132,000,000

-

4,538.83

-

9,000,000,000

-

2,699.22

-

JPY Short-term loans

12,121.06

5,606.42

At the end of fiscal year 2007, the short-term loans of the Company loaned from the Ministry of Finance in the form of European Commercial Paper (ECP) amounted to THB 12,121.06 million at the interest rate ranging from 0.60 - 5.20% per annum.

5.12 Long-term Loans Consolidated and the Company Currency

Loan Currency 2007

JPY USD THB Total Long-term loans Less Current portion of long-term loans Net Long-term loans 144

Annual Report 2007

2006

9,000,000,000 18,000,000,000 40,000,000 -

172,477,817 150,000,000

Baht Equivalent (Million) 2007

2006

2,699.22

5,775.30

1,375.40

6,491.59

4,074.62 4,074.62

150.00 12,416.89 8,023.75 4,393.14

At the end of fiscal year 2007, the outstanding of long-term loans for acquisition of 7 aircraft consist of foreign loans via the Ministry of Finance and domestic financial institutions. Such loans were guaranteed by the Ministry of Finance amount of THB 4,074.62 million at the interest rates ranging from 1.70% - 7.07% per annum.

5.13 Liabilities Under Financial Leases Consolidated and the Company Currency

Loan Currency 2007

JPY

Baht Equivalent (Million)

2006

2007

49,496,724,849 61,334,337,659

2006

14,844.71

19,679.12

USD

216,775,736

268,091,820

7,453.85

10,090.25

EUR

1,121,003,637

668,446,068

54,738.72

32,030.67

77,037.28

61,800.04

Less Current portion of financial leases

8,667.64

8,314.39

Net Liabilities under financial leases

68,369.64

53,485.65

Total Financial lease

For certain of its aircraft, the Company has financial leases with buyout options. The Company had financial leases with 7 foreign financial institutions. The accounting policy for recording aircraft under financial leases is described in Note 2.8. In fiscal year 2007, the Company has outstanding obligations totalling THB 91,692.51 million under financial leases for 25 aircraft with maturities ranging from 2007 to 2019. After deducting interest due amount of THB 14,655.23 million, the principal balance of obligations under the Company’s financial leases is THB 77,037.28 million.

The Company has entered into a long-term loan contract in the form of Asset-Based Financing for Boeing 777-200ER No. 1 - 4 for an aggregate of EUR 361.38 million or approximately THB 17,173.32 million arranged by BNP Paribas and guaranteed by the US Ex - Im Bank.

On April 11, 2007, the Company has entered into a long-term loan contract in the form of Asset - Based Financing for Airbus A340-500 No. 4 for an aggregate of EUR 79.14 million or approximately THB 3,735.90 million arranged by the HSBC. On September 24, 2007, the Company has entered into a financial lease contract with foreign financial institutions for 12 years. This financial lease was arranged by the HSH Nordbank AIG Singapore Branch for Boeing 777-200ER No. 5 amount of EUR 82.64 million or approximately THB 4,013.89 million.

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145

5.14 Promissory Notes The Company has loaned from the Government Saving Bank and THAI Employees’ Saving & Credit Coops Ltd. by issuing promissory notes with a floating interest rate computed by using the interest rate on six-month fixed deposits at the Government Saving Bank plus 2.90% to 3.00% per annum. Such issuances financed the purchase of Boeing 747-400 No.14 and the payment of Airbus A330-300 No.12. In this fiscal year, the brought forward balance was THB 4,200.00 million and the amount of THB 1,050.00 million was repaid during the period, leaving a balance of THB 3,150.00 million (THB 1,950.00 million from the Government Saving Bank guaranteed by the Ministry of Finance and THB 1,200.00 million from THAI Employees’ Saving & Credit Coops Ltd.,). As at September 30, 2007, these promissory notes were transferred to current portion of long-term loans in the amount of THB 1,050.00 million, leaving the long-term liabilities balance at THB 2,100.00 million.

5.15 Debenture Bonds According to the Resolution of Extraordinary Shareholders’ Meeting No. 1/2003 held on September 2, 2003 approved the Company to issue debentures in the amount of THB 40 billion. The Company has already issued its debentures for the first tranch of THB 10 billion, the second tranch of THB 15 billion, and the third tranch of THB 15 billion, totalling to THB 40 billion which has already been transferred to the Company’s account. As at September 30, 2007, the amount of THB 6,000 million was transferred to a current portion of long-term loans, leaving a balance as long-term loans amount of THB 34 billion. The details are as follows: Tenor

Interest Rate

Amount

(Year)

Pay every 6 months

(MTHB)

Maturity date

(%) The first

5

3.00

5,500

October 8, 2008

7

3.70

4,500

October 8, 2010

10,000 The second

5

4.65

7,500

October 20, 2009

7

5.20

4,500

October 20, 2011

10

5.80

3,000

October 20, 2014

15,000 The third

3

3.82

6,000

May 12, 2008

6

4.67

6,000

May 12, 2011

10

5.19

3,000

May 12, 2015

15,000 The balance as at September 30, 2007 146

Annual Report 2007

40,000

The Company has registered these debentures with the Thai Bond Dealing Center (THAI BDC) in the bond electronic exchange of the Stock Exchange of Thailand.

5.16 Current Liabilities - Others Units : Million Baht Consolidated 2007

The Company

2006

2007

2006

1,176.61

2,348.38

1,176.61

2,348.38

1.31

3.68

1.04

2.83

Taxes payable

387.59

372.90

385.52

370.90

Fringe benefits-field office staff

422.22

447.95

422.22

447.95

Other account payables

648.51

1,454.36

630.01

1,435.67

2,636.24

4,627.27

2,615.40

4,605.73

Airport fees Deferred income

Total

5.17 Dividends Payment the Company According to the Annual General Shareholders’ Meeting for the year 2006 held on December 27, 2006 approved the Company to pay the dividends for the year 2006 operation at THB 1.65 per share for an aggregate of THB 2,803.18 million.

5.18 Share Capital As at September 30, 2007, the Company has authorized ordinary shares amount of 1,700 million shares at par value THB 10 each for an aggregate of THB 17 billion, issued and paid-up ordinary shares amount of THB 16,989.01 million.

The Company determined the last exercise date for type-one and type-two warrants to purchase ordinary shares on April 2, 2007. If the warrant holders do not exercise their warrants by the last exercise date, the Company will deem such warrants expired and warrant holders can no longer exercise such warrants. There are 3,350 and 5,450 units of type-one and type-two warrants which have not been exercised, respectively.

5.19 Legal Reserve At the end of fiscal year 2006, the Company’s legal reserve balance was THB 1,700.00 million which equaled to 10% of the Company’s registered shares. Therefore, the Company does not have to provide the legal reserve in this fiscal year.

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147

5.20 Other Incomes - Others Units : Million Baht Consolidated 2007

The Company

2006

2007

2006

Compensation revenues from insurance companies (asset) Gains on sales of assets Revenue from investments

14.88

566.60

14.88

566.60

571.34

1,611.50

571.34

1,611.50

0.77

1.75

0.77

1.75

-

-

202.85

165.04

Dividend from subsidiary and associated companies Other incomes Total

794.80

1,208.40

784.18

1,203.00

1,381.79

3,388.25

1,574.02

3,547.89

5.21 Other Expenses - Others Units : Million Baht Consolidated 2007

The Company

2006

2007

2006

Bad and doubtful debts

101.11

109.29

98.98

101.38

Credit card fees

522.48

429.60

522.39

429.60

Compensation to customers for Damages

156.49

130.35

156.49

130.35

1,307.38

442.91

1,307.38

442.91

69.50

42.44

69.50

42.19

2,156.96

1,154.59

2,154.74

1,146.43

Impairment loss of assets Other expenses Total

5.22 Earnings Per Share Consolidated and the Company Basic earnings per share is calculated by dividing net profit for the period by the weighted average number of ordinary shares outstanding during the periods.

Diluted earnings per share is calculated by dividing net profit for the period by the weighted average number of ordinary shares outstanding during the period adjusted by all dilutive potential ordinary shares under the assumptions that all dilutive potential ordinary shares are converted into ordinary shares. The dilutive potential ordinary shares of the Company are ordinary shares and warrants to purchase the ordinary shares under ESOP.

148

Annual Report 2007

Consolidated For the years ended September 30, 2007 and 2006 Gains

No. of Shares

Earnings per share

2007

2006

2007

2006

Million

Million

Million

Million

Baht

Baht

Shares

Shares

6,342.07

8,991.60

1,698.90

1,698.89

2007

2006

Baht

Baht

Basic earnings per share Net Profits attributable to ordinary shareholders

3.73

5.29

3.73

5.29

Effects of dilutive potential ordinary shares Warrants to purchase ordinary shares not exercising the rights

-

-

-

0.01

Diluted earnings per share Net Profits attributable to ordinary shareholders under conversion assumption to ordinary shares

6,342.07

8,991.60

1,698.90

1,698.90

The Company For the years ended September 30, 2007 and 2006 Gains

No. of Shares

Earnings per share

2007

2006

2007

2006

Million

Million

Million

Million

Baht

Baht

Shares

Shares

6,350.50

8,835.50

1,698.90

1,698.89

2007

2006

Baht

Baht

Basic earnings per share Net Profits attributable to ordinary shareholders

3.74

5.20

3.74

5.20

Effects of dilutive potential ordinary shares Warrants to purchase ordinary shares not exercising the rights

-

-

-

0.01

Diluted earnings per share Net Profits attributable to ordinary shareholders under conversion assumption to ordinary shares

6,350.50

8,835.50

1,698.90

1,698.90

Thai Airways International Public Company Limited

149

5.23 Financial Information by Segment Consolidated 5.23.1 Business Segments

Statements of Income For the years ended September 30, 2007 and 2006 Units : Million Baht Inter - Segment Revenues 2007 Air transportation

Revenues

2006

182,987.88 170,087.04

Total Revenues

2007

2006

-

-

2007

2006

182,987.88 170,087.04

Segment Results 2007

2006

12,122.77

6,239.21

Business Units

7,869.25

7,387.96

15,923.86

13,472.24

23,793.11

20,860.20

530.55

1,886.13

Other activities

1,179.88

1,131.88

400.23

369.46

1,580.11

1,501.34

134.77

238.86

Eliminations

-

-

12,788.09

8,364.20

122.79

256.23

(4,077.80)

(4,134.11)

1,184.80

6,178.10

(877.28)

2,157.73

(58.61)

(53.11)

Income taxes

(2,739.92)

(3,777.44)

Net profits

6,342.07

8,991.60

Operating profits

-

-

(16,324.09) (13,841.70)

-

-

Share of net profit from subsidiary and associated companies Interest expenses-net Gains on foreign currency exchange Other revenues (expense) Minority interests

150

Annual Report 2007

Assets and Liabilities As At September 30, 2007 and 2006 Units : Million Baht Current Assets

Non-Current Assets

2007

2006

56,311.59

42,633.50

Business Units

492.04

487.28

11,810.60

6,674.61

12,302.64

7,161.89

Other activities

558.78

419.02

97.85

212.32

656.63

631.34

2,136.68

2,162.88

-

-

2,136.68

2,162.88

Air transportation

Non-allocated assets Total

59,499.09

2007

Total Assets

2006

2007

200,678.66 196,444.79 256,990.25

2006 239,078.29

45,702.68 212,587.11 203,331.72 272,086.20 249,034.40

Units : Million Baht Current Liabilities

Non-Current Liabilities

2007

2006

87,324.01

77,224.84

Business Units

1,810.62

248.04

32.13

54.74

Other activities

83.39

83.35

-

324.34

272.38

-

Air transportation

Non-allocated liabilities Total

89,542.36

2007

2006

Total Liabilities 2007

113,284.02 105,469.87 200,608.03

2006 182,694.71

1,842.75

302.78

-

83.39

83.35

-

324.34

272.38

77,828.61 113,316.15 105,524.61 202,858.51 183,353.22

Segment results derive from segment revenues net of segment expenses excluding interest expenses, gains (losses) on foreign currency exchange, other expenses, and income taxes.

Segment current and non-current assets are those operating assets that are employed by a segment in its operating activities.

Segment current and non-current liabilities are those operating liabilities that result from the operating activities of a segment.

The Company records inter-segment revenue transfers at market price charged to its unaffiliated customer net of discount. Those transfers are eliminated in consolidation.

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151

5.23.2 Geographical Segments Units : Million Baht 2007

2006

Transportation

11,319.06

10,782.97

Business units

7,869.25

7,387.96

Other activities

1,179.89

1,131.88

20,368.20

19,302.81

Regional Asia

69,678.17

71,172.75

Europe

49,888.46

47,275.32

6,653.66

4,699.40

16,667.90

12,498.45

Domestic Revenues

Total domestic revenues Foreign Transportation Revenues

North Pacific Australia & New Zealand Africa

1,184.65

Total foreign transportation revenues

-

144,072.84

135,645.92

Charter revenues and others

7,126.43

6,335.74

Insurance surcharge from passengers

2,387.32

2,501.60

18,082.23

14,820.81

Fuel surcharge from passengers

192,037.02 178,606.88

Total

5.24 Staff Pension Fund Consolidated and the Company The Company has established a staff pension fund, contributing 10% of employee salaries to the fund each month. The fund’s assets, liabilities and balance are presented in the Company’s balance sheet. Interest and expenses arising from fund operations are recognised as income and expenses of the Company. The details are as follows: Units : Million Baht

Current assets Others Total Other current liabilities Pension fund Total

152

Annual Report 2007

2007

2006

4,757.13

4,485.25

37.99

45.79

4,795.12

4,531.04

23.24

35.22

4,771.88

4,495.82

4,795.12

4,531.04

As at September 30, 2007, the fund balance was THB 4,771.88 million, equal to the Company’s obligation to its staff under the fund. The total Company contribution to the fund in this fiscal year was THB 345.78 million, consisting of contributions at a rate equivalent to 10% of employee salaries in the amount of THB 247.86 million and additional amounts to match the Company’s obligation of THB 97.92 million.

5.25 Staff Provident Fund The Company contributes to the provident fund at the rate of 9% for members having not more than 20 years of services and 10% for members having more than 20 years of services, representing amount of THB 1,052.49 million in fiscal year 2007.

The Company’s provident fund is managed by TISCO Asset Management Company Limited and Krungthai Asset Management Public Company Limited which are permitted by the Securities and Exchange Commission, Thailand (SEC).

5.26 Contingent Liabilities The Company has contingent liabilities, not presented in the financial statements, as follows: Units : Million Baht 2007 Letters of guarantee issued by banks

2006

2.95

6.07

Labour dispute cases

548.55

515.70

Damage claims cases

1,311.96

290.63

Total

1,863.46

812.40

The Company as defendant in

On February 26, 2007, the Company has been filed a lawsuit by 35 airfreight customers before United States District Court Eastern District of New York. The lawsuit alleges that the Company and other 38 air carriers have conspired to fix prices of surcharge such as fuel, war risk, etc. which were claimed to be in violation of Sherman Act/Antitrust Law and EU Law and caused damages to them. The airfreight customers have brought this action before the court to recover treble damages from the air carriers. At the time of filing, the actual damage amounts have not been determined by each plaintiff, but will be raised to the court later. However, the Company has retained the antitrust lawyer and has joined defense with other 26 defendant air carriers. On July 18, 2007, the joined defendants’ motion to dismiss the case has been filed with the court contending that the court dose not have jurisdiction and plaintiffs do not have standing.

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153

5.27 Disclosure of Financial Instruments The Company 5.27.1 Interest rate risk Interest rate risk in financial statements arises from changes in market interest rates which have an effect on the Company’s operating results.

The following tables show weighted average interest rates and the amount of financial liabilities.

Units : Million Baht 2007

Financial Liabilities

Weighted

Floating Interest Rates

Fixed Interest Rates

Average

Less than

Over

Less than

Over

Interest Rate

1 year

1 year

1 year

1 year

Total

USD

6.28

773.56

2,786.72

5,645.37

4,162.44

13,368.09

JPY

0.97

2,290.60

12,554.11

2,699.22

2,699.22

20,243.15

EUR

4.15

3,129.36

36,385.89

6,250.60

13,855.88

59,621.73

THB

4.47

1,050.00

2,100.00

6,000.00

34,000.00

43,150.00

Units : Million Baht 2006

Financial Liabilities

Weighted

Floating Interest Rates

Fixed Interest Rates

Average

Less than

Over

Less than

Over

Interest Rate

1 year

1 year

1 year

1 year

Total

USD

3.77

797.77

3,897.02

6,119.73

5,767.33

16,581.85

JPY

0.65

2,434.11

15,881.02

4,251.64

2,887.65

25,454.42

EUR

2.73

1,270.84

14,506.62

6,920.48

14,939.15

37,637.09

THB

4.71

1,050.00

3,150.00

150.00

40,000.00

44,350.00

For Interest Rate Risk Management, The Company applies a derivative financial instrument, Interest Rate Swap (IRS), to swap the floating interest rates which show high tendency to increase to fixed.

At the end of fiscal year 2007, the portion of the Company’s debt after swap with floating to fixed interest rate is 31.6 : 68.4, including obligation under operating lease.

154

Annual Report 2007

5.27.2 Foreign Currency Exchange Rate Risk The Company generates revenues in more than 40 currencies, mainly in EUR and THB while incurring liabilities and expenses mainly in 4 major currencies : USD, JPY, EUR and THB. Fluctuations in exchange rates affect on long-term liabilities and operating expenses denominated in foreign currencies.

Therefore, The Company has adopted “Natural Hedge” strategy to mange these risk by increasing the matching of currency between the revenue and expenses and the currency mix between its debts and net cash flow from operation. In addition, The Company has a policy to enter into Cross Currency Swap (CCS) when the financial market benefits to the Company. At the end of fiscal year 2007, the proportion of the Company’s debts after swap in each currency i.e. USD : EUR : YEN : THB is 12.4 : 50 : 14 : 23.6 including obligation under operating lease.

Units : Million Baht Foreign Currency Liabilities 2007 Currency

2006

Maturity within

Maturity over

Maturity within

Maturity over

1 year

1 year

1 year

1 year

USD

6,418.93

6,949.16

6,917.50

9,664.35

JPY

4,989.82

15,253.33

6,685.75

18,768.67

EUR

9,379.96

50,241.77

8,191.32

29,445.77

5.27.3 Fuel Price Risk Fuel price fluctuations depend on the supply and demand of fuel in the world market and the global political situation and have a direct effect on the Company’s operations. To hedge the expense/lost from fuel price fluctuation, the Company matchs foreign fuel supplies with the Company’s fuel demands by entering into an agreement with various supplies in many countries and always monitors the change in fuel price. Moreover, the Company’s hedging policy for this risk is to hedge maximum 50% of its utilized fuel quantity. In this fiscal year, the Company hedges this risk in the proportion of 22.51% per annum.

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155

5.27.4 Fair Value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing, independent parties with the freedom to bargain.

The following table presents year-end financial statement balances and an estimate of fair value of financial assets and liabilities as at September 30, 2007 and 2006.

Units : Million Baht The Company 2007 Balance

2006

Fair Value

Balance

Fair Value

(restated)

(restated)

Financial Assets Cash and cash equivalents Investments in related companies Other investments Trade account receivables

20,241.10

20,241.10

8,937.83

8,937.83

926.77

2,663.09

907.57

2,481.25

83.60

83.60

86.53

86.53

17,948.25

17,948.25

16,576.82

16,576.82

7,942.17

7,942.17

9,411.60

9,411.60

136,382.97

136,382.97

124,023.36

124,023.36

20,528.69

20,528.69

16,456.08

16,456.08

Financial Liabilities Trade account payables Loans Accrued expenses

The methods and assumptions that the Company uses to estimate the fair value of assets and liabilities are as follows: Cash and cash equivalents, trade account payables, loans, and accrued expenses are stated at balance sheet amounts.

Investments in related companies are stated at a closed market price of the Stock Exchange of Thailand.

Other investments are stated at net book value net of allowance of impairment. Investments in marketable equity securities are stated at market value.

Trade account receivables are stated at net book value net of allowances for doubtful accounts.

156

Annual Report 2007

5.28 Contractual Obligations 5.28.1 Obligation to Purchase Aircraft The Company has a payment obligation to purchase aircraft amount of THB 46,305.00 million.

5.28.2 Leases and Obligations of aircraft 5.28.2.1 The Company has entered into operating leases amount of USD 229.23 million or approximately THB 7,882.16 million (exchange rate USD 1 : THB 34.3851).

5.28.2.2 The Company sent the notification to exercise the purchase option for four aircraft after expiry date of operating leases. These consisted of two Boeing 747-400 which the lease will be expired on April 28 and November 12, 2008 at the price of USD 38.91 and 38.83 million or approximately THB 1,337.76 and 1,335.31 million, respectively, as well as two Boeing 777-200 which the leases will be expired on October 31, 2008 and January 9, 2009 at the price of USD 33.30 and 33.38 million or approximately THB 1,145.11 and 1,147.82 million, respectively, due to the need to utilize of such aircraft and no plan to remove those aircraft from the Company’s fleet. Moreover, the exercise prices of the aircraft are still lower than the appraised value and the Company already modified these four aircraft.

5.29 Events After the Balance Sheet Date 5.29.1 On November 12, 2007, the Securities and Exchange Commission (SEC) permitted the Company issuing the first offering Baht debentures to the public for an aggregate of THB 7,500 million during November 15 - 21, 2007. These debentures are offered into two tranches. The first tranch amounted to THB 3,000 million with 3 - year maturity at fixed coupon rate of 4.51% per annum and the second tranch amounted to THB 4,500.00 million with 5 - year maturity at fixed coupon rate of 5.04% per annum.

5.29.2 On October 11, 2007, the Company sold one Boeing 747-300 aircraft with a gain on sales of THB 118.01 million.

5.29.3 On October 29, 2007, the Company took a delivery of one Boeing 777-200ER under financial lease at a total cost of THB 5,300.56 million.

5.30 Approval of Financial Statements These financial statements were approved by the Audit Committee, the Authorized Board of Directors, on November 20, 2007.

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157

General Information

Company Name Business Head Office Registration Number Home Page Telephone

Thai Airways International Public Company Limited Aviation transportation services and other related services 89 Vibhavadi Rangsit Road, Jompol, Jatujak, Bangkok 10900 0107537001757 www.thaiairways.com 66 (0) 2545-1000, 66 (0) 2695-1000

Ordinary Shares As of April 11, 2007 the Company has : Registered capital: 1,700,000,000 shares with a par value of 10 baht per share or a total of 17,000,000,000 baht Paid-up capital: 1,698,900,950 shares with a par value of 10 baht per share or a total of 16,989,009,500 baht

Affiliated companies in which the Company’s shareholding exceeds 10% Company Names

Business Type

Share Type

Paid-up Authorized Shares (million baht)

Percent of Interest

Thai-Amadeus Southeast Asia Company Limited The Offices at CentralWorld 999/9 Unit 3406-3412, 34th Floor, Rama 1 Road, Pathumwan, Pathumwan, Bangkok 10330 Thailand Tel. 66 (0) 2207-9090 Fax. 66 (0) 2207-9191

Online Ticketing Services and Other Travel Services to Agents

Ordinary

15.00

55.0

Donmuang International Airport Hotel Company Limited 333 Moo 10, Chert Wudthakas Road, Don Muang, Bangkok 10210 Tel. 66 (0) 2566-1020-1 Fax. 66 (0) 2566-1941

Hotel and Restaurant

Ordinary

120.00

40.0

Phuket Air Catering Company Limited 10/3 Moo 6, Sanambin Road, Tambon Mai Khoa, Amphur Thalang, Phuket 83000 Tel. 66 (0)-7632-7497-506 Fax. 66 (0)-7632-7123-4

Airline Catering

Ordinary

100.00

30.0

Royal Orchid Hotel (Thailand) Public Company Limited 2 Captain Bush Lane, Charoen Krung Road, Bangrak, Bangrak, Bangkok 10500 Tel. 66 (0) 2266-0123 Fax. 66 (0) 2236-6656

Hotel and Restaurant

Ordinary

937.50

24.0

Bangkok Aviation Fuel Services Public Company Limited 171/2 Moo 10, Vibhavadi Rangsit Road, Sikan, Don Muang, Bangkok 10210 Tel. 66 (0) 2565-3811-8 Fax. 66 (0) 2565-3825

Aviation Fuel Services, Aviation Depot and Aircraft Refueling Service

Ordinary

425.00

22.6

Suvarnabhumi Airport Hotel Company Limited 999 Suvarnabhumi Airport Hotel Building Moo 1, Nongprue, Bang Phli, Samutprakarn 10540 Tel. 66 (0) 2131-1111 Fax. 66 (0) 2131-1188

Hotel and Restaurant

Ordinary

1,017.78

30.0

Ordinary

500.00

39.0

Nok Air Company Limited Aviation Transport 183 Rajanakarn Building, 17th Floor, Services South Sathorn Road, Yannawa, Sathorn, Bangkok 10120 Tel. 66 (0) 2627-2000 Fax. 66 (0) 2286-9830

158

Annual Report 2007

References Securities Registrar

THAILAND SECURITIES DEPOSITORY CO., LTD. 62 Ratchadapisek Road, Khlong Toei, Bangkok 10110 Tel. 66 (0) 2229-2800, 66 (0) 2229-2888, 66 (0) 2654-5599 Fax. 66 (0) 2359-1262-3

Debenture Holders’ Representative 1/2546

KASIKORNBANK PLC. Securities Service Department Fl.20, 1 Soi Kasikornthai, Ratburana Road Ratburana, Bangkok 10140 Tel. 66 (0) 2470-3687, 66 (0) 2470-1986 Fax. 66 (0) 2470-3684

Debenture Registrar 1/2546

KASIKORNBANK PLC. Securities Service Department Fl.20, 1 Soi Kasikornthai, Ratburana Road Ratburana, Bangkok 10140 Tel. 66 (0) 2470-1981-3 Fax. 66 (0) 2470-1998

Debenture Holders’ Representative 1/2547

NATIONAL FINANCE PLC. 900 Tonson Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. 66 (0) 2665-9129 Fax. 66 (0) 2655-9001

Debenture Registrar 1/2547

SIAM COMMERCIAL BANK PLC. Corporate Trust Operations Division Building 2, Fl.3, 1060 Phetchaburi Tat Mai Road, Mukkasun, Ratchatawee Bangkok 10400 Tel. 66 (0) 2256-2323-27 Fax. 66 (0) 2256-2405

Debenture Holders’ Representative 1/2548

BANKTHAI PLC. 44 Langsuan Road, Lumpini, Pathumwan Bangkok 10330 Tel. 66 (0) 2626-7000 Fax. 66 (0) 2626-7543

Debenture Registrar 1/2548

TMB BANK PLC. Registrar and Paying Agent 393 Silom Road, Soi 7 Bangrak, Bangkok 10500 Tel. 66 (0) 2230-5575, 66 (0) 2230-5731 Fax. 66 (0) 2230-6093

Auditor

OFFICE OF THE AUDITOR GENERAL OF THAILAND Rama 6 Road, Phayathai, Bangkok 10400 Tel. 66 (0) 2273-9674-91 Fax. 66 (0) 2618-5769-70

Thai Airways International Public Company Limited

159

Board of Directors

Mr. Suparut Kawatkul

ACM Chalit Pukbhasuk Chairman Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Commander Air Combat Command - Deputy Chief of the Air Staff - Assistant Chief of the Air Staff for Personnel Present Positions - Commander in Chief, Royal Thai Air Force Headquarters - Deputy Chairman, Council for National Security Acting for Chairman

1St Vice Chairman Education - M.Sc. (Econ.), Queen Mary College, University of London, U.K. Experience - Director-General, Revenue Department - Director-General, Fiscal Policy Office, Ministry of Finance - Director of the Board, PTT Public Company Limited Present Positions - Permanent Secretary for Finance, Ministry of Finance - Chairman of the Board of Directors, Government Pension Fund - Chairman of the Board of Directors, Krung Thai Bank Public Company Limited

Mr. Chaisawasd Kittipornpaiboon 2nd Vice Chairman Education - Bachelor of Civil Engineering, Chulalongkorn University Experience - Director-General, The Department of Highways - Director, Bureau of Field Highway 11 - Director, Office of Inter-City Motorway Present Positions - Permanent Secretary, Ministry of Transport

160

Annual Report 2007

∫«√»—°¥‘Ï

Mr. Chaisak Saeng-Xuto

Mr. Borwornsak Uwanno

Director Education - Master of Engineering, University of California, Berkeley, California, U.S.A. Experience - Advisor to the Board, Siam Cement Public Company Limited - Audit Committee Member, The Siam Commercial Samaggi Insurance Public Company Limited Present Position - Independent Director, KASIKORNBANK Public Company Limited

Director Education - Docteur de 3 e cycle (Droit Public Général) (mention trés bien) Université de Paris X (Nanterr) Experience - Dean, the Faculty of Law, Chulalongkorn University - Secretary-General to the Cabinet, The Secretariat of the Cabinet - Chairman of the Audit Committee, Ministry of Justice Present Positions - Secretary-General, King Prajadhipok’s Institute - Chairman of Princess Maha Chakri Sirindhorn Anthropology Centre - Director, Bank of Thailand

Khun Pornthip Jala

Mr. Chartsiri Sophonpanich

Director Education - Master of Laws (LL.M) University of Michigan, U.S.A. Experience - Committee Member, Financial Institution Development Fund, Bank of Thailand - Director, Government Pension Fund Present Positions - Secretary-General, Office of the Council of State, Office of the Prime Minister - Director, Bank of Thailand - Independent Director, PTT Public Company Limited

Director Education - Master’s Degree, Chemical Engineering, Massachusetts Institute of Technology (MIT), U.S.A. Experience - Chairman, The Thai Bankers’ Association - Director, Thai Asset Management Corporation Present Positions - President, Bangkok Bank Public Company Limited - Director, The Post Publishing Public Company Limited

Thai Airways International Public Company Limited

161

Gen. Ruengroj Mahasaranond

Gen. Pairoj Panichsamai

Director Education - Bachelor of Science, Chulachomklao Royal Military Academy Experience - Supreme Commander, Office of Supreme Commander - President of Advisory Group, Office of Supreme Commander - Commanding General, Armed Forces Development Command Present Positions - Director, General Prem Tinsulanonda Statesman Foundation - Director, Rakmuangthai Foundation

Director Education - Master’s Degree in Social Development, National Institute of Development Administration Experience - Deputy Supreme Commander, Office of Supreme Commander - President of Advisory Group, Royal Thai Army Headquarters - Commanding General, Weapon Production Center, Royal Thai Army Headquarters Present Position - Audit Committee, RS Public Company Limited

Mr. Wisudhi Srisuphan

Mr. Pichai Chunhavajira

Director Education - M.A.A. Business Economics, Thammasat University Experience - Director-General, The Excise Department, Ministry of Finance - Director-General, The Treasury Department, Ministry of Finance - Director, PTT Exploration and Production Public Company Limited Present Positions - Director-General, The Customs Department, Ministry of Finance - Chairman, Government Savings Bank, Ministry of Finance - The Fifth Committee of the Councillor of State, Office of the Council of State

Director Education - Master of Business Administration (Finance), Indiana University of Pennsylvania, U.S.A. Experience - Acting President, The Bangchak Petroleum Public Company Limited - Deputy Governor, Finance, Petroleum Authority of Thailand Present Positions - Senior Executive Vice President, Corporate Finance and Accounting, PTT Public Company Limited - Director, PTT Exploration and Production Public Company Limited - Director, Thaioil Public Company Limited

162

Annual Report 2007

Mr. Wichit Na-Ranong

Mr. Sivaporn Dardarananda

Director Education - Master of Public Administration, University of Southern California, U.S.A. Experience - President, Tourism Council of Thailand - President, Thai Hotels Association - Committee Member, ASEAN Tourism Association (ASEANTA) Present Positions - Managing Director, Pearl Group Company - Honorable Committee, Prince of Songkla University - Member, Advisory Board of Sasin Graduate Institute of Business Administration of Chulalongkorn University

Director Education - MBA in International Business and Finance, Wharton Graduate Division, Philadelphia, Pennsylvania, U.S.A. Experience - Managing Director, TISCO - Advisor for Governor of Bank of Thailand - Director at Counseling Committee for Reforming Financial Institution System Present Positions - Secretary-General, Elephant Reintroduction Foundation - Independent Director and Audit Committee Member, The Siam Commercial Samaggi Insurance Public Company Limited - Director, The Union Mosaic Industry Public Company Limited

Mr. Aviruth Wongbuddhapitak

Flg. Off. Apinan Sumanaseni

Director Education - Master of Business Administration, New York University, U.S.A. Experience - President, Cementhai Property (2001) Public Company Limited - Vice President & Chief of Financial Officer, The Siam Cement Public Company Limited - President, TileCera Inc., U.S.A. Present Positions - Assistant & Director General, the Crown Property Bureau - Chairman of the Executive Committee, The Deves Insurance Public Company Limited - Member of the Executive Committee, Thai Plastic and Chemicals Public Company Limited

Director Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Executive Vice President, Operations Department - Vice President, Flight Operations Department - Deputy Vice President, Flight Operations Department Thai Airways International Public Company Limited Present Positions - President, Thai Airways International Public Company Limited - CEB, Star Alliance Services GmbH

Thai Airways International Public Company Limited

163

Management Team

Wg. Cdr. Supachai Limpisvasti Special Activities Advisor, Technical, Senior Executive Vice President level Education - Doctor of Engineering (Structure Engineering and Mechanics), Asian Institute of Technology Experience - Managing Director, Technical Department, Executive Vice President level - Vice President, Heavy Maintenance Department - Technical Representative, Aircraft Type Boeing 737-400, Boeing 777 and Airbus A330

Flg. Off. Apinan Sumanaseni President Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Executive Vice President, Operations Department - Vice President, Flight Operations Department - Deputy Vice President, Flight Operations Department

ACM Narongsak Sangapong Executive Vice President, Corporate Secretariat Department Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Executive Vice President, Special Project Department

164

Annual Report 2007

Mrs. Ngamnit Sombutpibool

Mr. Wallop Bhukkanasut

Executive Vice President, Finance and Accounting Department Education - Bachelor in Accountancy, Chulalongkorn University Experience - Executive Vice President, Office of the Internal Audit - Vice President, Comptroller Department - Deputy Vice President, Revenue Planning and Management Department

Executive Vice President, Commercial Department Education - Bachelor of Arts, The University of Hawaii, U.S.A. Experience - Vice President, Sales & Distribution Department - Vice President, Marketing Planning Department - Vice President, Alliance Department

Flt. Lt. Prasart Khoon-In

Flt. Lt. Pisal Chayakula

Executive Vice President, Operations Department Education - Certificate, German Air Force Officer School, Germany Experience - Vice President, Aviation Personnel Development Department - Assistant Vice President, Aviation Personnel Development Department - Director, Pilot Administration Department

Executive Vice President, Corporate Planning and Information Technology Services Department Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Executive Vice President, Corporate Support Department - Vice President, Aviation Personnel Development Department - Deputy Vice President, Aviation Personnel Development Department

Thai Airways International Public Company Limited

165

Mr. Tummasak Chutiwong

Mr. Chanchai Singtoroj

Managing Director, Technical Department, Executive Vice President level Education - Master of Engineering, Lamar University, U.S.A. Experience - Executive Vice President, Corporate Secretariat Department - Executive Vice President, Human Resources Development and Management Department - Vice President, Corporate Strategic Department

Executive Vice President, Human Resources Development and Management Department Education - Master of Arts in Political Science, Thammasat University Experience - Managing Director, Cargo & Mail Commercial Department - Vice President, Marketing Planning Department - Vice President, Sales and Distribution Department

Flg. Off. Norahuch Ployyai

Flg. Off. Chinawut Naressaenee

Executive Vice President, Standards Assurance and Risk Management Department Education - Bachelor of Science, Royal Thai Air Force Academy Experience - Vice President, Special Project Department - Director, Operations Appraisal and Coordination Department - Deputy Director, Crew General Administration Department

Executive Vice President, Corporate General Administration Department Education - Master of Arts (Political Science), Public Administration, Thammasat University Experience - Executive Vice President, Standards and General Administration Department - Senior Vice President, Standards and Safety Assurance Department - Vice President, Special Project Department

166

Annual Report 2007

Mr. Kaweepan Raungpaka Executive Vice President, Office of the President Education - Master of Business Administration, Central Missouri State University, U.S.A. Experience - Executive Vice President, Human Resources Development and Management Department - Executive Vice President, Finance and Accounting Department - Vice President, Corporate Finance Department

Thai Airways International Public Company Limited

167

THAI On-line Offices

ATHENS, GREECE 32 ELEFTHERIOU VENIZELOU STR. 166 75 GLYFADA ATHENS, GREECE

e-mail TKT/RSVN FAX

: athaatg@thaiairways.gr : (30-210) 969-2020 : (30-210) 960-2686

AUCKLAND, NEW ZEALAND LEVEL 8, 23 CUSTOMS STREET EAST CITIBANK CENTRE, PO BOX 4559 AUCKLAND, NEW ZEALAND

e-mail TKT/RSVN FAX

: aklaa@thaiair.co.nz : (64-9) 377-3886 : (64-9) 379-8598 (64-9) 306-6315 (GROUPS)

BRUNEI DARUSSALAM SUITE 401-404, KOMPLEKS JALAN SULTAN 51-55 JALAN SULTAN BANDAR SERI BEGAWAN BS 8811 BRUNEI DARUSSALAM

e-mail TKT/RSVN FAX

: bwnaatg@thaiairways.com.bn : (673) 224-2991-3 : (673) 224-2871

BEIJING, PEOPLE’S REPUBLIC OF CHINA UNITS 303-4, LEVEL 3, OFFICE TOWER W3 ORIENTAL PLAZA, NO.1 EAST CHANG AN AVE. DONG CHENG DISTRICT, BEIJING 100738 PEOPLE’S REPUBLIC OF CHINA

e-mail TKT/RSVN FAX

: bjsaatg@thaiairways.com.cn : (86) 8515-0088 : (86) 8515-1134

HYDERABAD, REPUBLIC OF INDIA ALCAZAR PLAZA AND TOWER 1st FLOOR, 6-3-249/6 ROAD NO. 1 BANJARA HILLS, HYDERABAD - 500034, REPUBLIC OF INDIA

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: hydaatg@gmail.com : (91-40) 2333-3030 : (91-40) 2333-3003

e-mail TKT/RSVN FAX

: bneaa@thaiairways.com.au : (61-7) 3215-4777 : (61-7) 3215-4737

ISLAMABAD, ISLAMIC REPUBLIC OF PAKISTAN OFFICE NO 3, 4 HOLIDAY INN ISLAMABAD HOTEL ISLAMABAD, PAKISTAN

e-mail RSVN

BANGALORE, REPUBLIC OF INDIA ANCHORAGE, 100/1, GROUND FLOOR RICHMOND ROAD, KARNATAKA, BANGALORE 560 025, REPUBLIC OF INDIA

FAX

: nuthitphuk@yahoo.com : (92-51) 227-2140 (92-51) 227-2141 : (92-51) 282-3735

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: blraatg@yahoo.com : (91-80) 411-24343 : (91-80) 411-24888

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: jktaatg@thaiairways.co.id : (62-21) 230-3041 : (62-21) 319-30792

BUSAN, REPUBLIC OF KOREA 88-7, 4Ga 11 FLR, KYOBO BUILDING JUNGANG-DONG, JUNG-GU BUSAN 600-737, REPUBLIC OF KOREA

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: pusaa@thaiairways.co.kr : (82) 051-463-8181 : (82) 051-463-8564

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: management@thaiair.co.za : (27-11) 783-5262 : (27-11) 783-5289

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: khiaatg@cyber.net.pk : (92-21) 279-2294 : (92-21) 279-1934

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: ktmmgmt@thaiairways.com.np : (977-1) 422-3565 : (977-1) 422-5084

BRISBANE, AUSTRALIA 145 EAGLE STREET, BRISBANE QUEENSLAND 4000, AUSTRALIA

CHENGDU, PEOPLE’S REPUBLIC OF CHINA ROOM 2309, 23rd FLOOR ZONGFU BUILDING, 35 ZONGFU ROAD CHENGDU, SICHUAN PEOPLE’S REPUBLIC OF CHINA CHITTAGONG, BANGLADESH FINLAY HOUSE, AGRABAD, CHITTAGONG BANGLADESH

COPENHAGEN, DENMARK RAADHUSPLADSEN 16 DK-1550, COPENHAGEN V DENMARK DELHI, REPUBLIC OF INDIA HOTEL INTERCONTINENTAL EROS, NEHRU PLACE NEW DELHI 110019, REPUBLIC OF INDIA DENPASAR, REPUBLIC OF INDONESIA INNA GRAND BALI BEACH HOTEL JL. HANG TUAH, SANUR - BALI 80227 REPUBLIC OF INDONESIA DHAKA, BANGLADESH DHAKA SHERATON HOTEL, MINTO ROAD DHAKA 1000, BANGLADESH

HONG KONG 24 A, UNITED CENTRE 95 QUEENSWAY, HONG KONG

e-mail TKT

: hkgaa@thaiairways.com.hk : (852) 2179-7700 (852) 2179-7777 : (852) 2179-7600 (852) 2179-7661

JAKARTA, REPUBLIC OF INDONESIA BDN TOWER, 19th FLOOR JI.M.H. THAMRIN NO. 5 JAKARTA PUSAT 10340 REPUBLIC OF INDONESIA JOHANNESBURG, REPUBLIC OF SOUTH AFRICA TWO COMMERCE SQUARE 39 RIVONIA ROAD, SANDHURST, SANDTON JOHANNESBURG, REPUBLIC OF SOUTH AFRICA

e-mail

: : : : :

ctuaatg@thaiairways.com.cn ctuaatg@yahoo.com (86-28) 8678-1336 (86-28) 8675-7755 (86-28) 8678-1048

KOLKATA, REPUBLIC OF INDIA 229, A. J. C. BOSE ROAD, “CRESCENT TOWERS” 8TH FLOOR, KOLKATA - 700020 REPUBLIC OF INDIA

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: ccuaatg-thaiairways@reach2net.com : (91-33) 2283-8865/68 : (91-33) 3982-7197

: : : :

cgpaatg@thaiairways.com.bd thaiairwayscgp@gmail.com (880-31) 713-435-36 (880-31) 713-436

KUALA LUMPUR, MALAYSIA WISMA GOLDHILL 67 JALAN RAJA CHULAN 50200 KUALA LUMPUR, MALAYSIA

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: kulaatg@thaiairways.com.my : (60-3) 2031-1900 : (60-3) 2032-5805

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: kmgaatg@thaiairways.com.cn : (86-871) 351-1515 : (86-871) 316-7351

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: kwiaatg@thaiairways.com.kw : (965) 242-1444 : (965) 245-3702

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: : : :

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: lonaa@thaiairways.co.uk : (44-870) 606-0911 : (44-207) 409-1463

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: laxaatg@thaiairwaysusa.com : (1-310) 640-0097 ext. 747 : (1-310) 322-8728

e-mail TKT RSVN FAX

: : : :

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e-mail TKT/RSVN FAX

: natthakorn.c@thaiair.it : (39) 02-890-0351 : (39) 02-8645-1711

TKT RSVN FAX e-mail

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e-mail TKT/RSVN FAX

: pricha.n@thai-airways.dk : (45-33) 750-120 : (45-33) 750-121

e-mail TKT/RSVN FAX

: virojhora@gmail.com : (91-11) 4149-7777 : (91-11) 4149-7788

e-mail TKT/RSVN FAX

: dpsaatg@thaiairways.co.id : (62-361) 288-141 : (62-361) 288-063

KUNMING, PEOPLE’S REPUBLIC OF CHINA 2nd FL, ATTACHED BLDG. OF KUNMING JINJIANG HOTEL 98 BEIJING ROAD, KUNMING 650011 PEOPLE’S REPUBLIC OF CHINA KUWAIT DAWLIAH COMMERCIAL CENTER P.O. BOX 26775, SAFAT 13128, KUWAIT LAHORE, ISLAMIC REPUBLIC OF PAKISTAN 9-A, DAVIS ROAD, GRAND HOTEL & TOWER LAHORE, ISLAMIC REPUBLIC OF PAKISTAN

LONDON, GREAT BRITAIN AND IRELAND 41 ALBEMARLE STREET LONDON, W1S 4BF GREAT BRITAIN LOS ANGELES, U.S.A. 222 NORTH SEPULVEDA BLVD., SUITE 100 EL SEGUNDO, CA 90245, U.S.A.

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: anon.j@thai-airways.de : (49-69) 92874-129 : (49-69) 92874-222

FUKUOKA, JAPAN HINODE FUKUOKA BUILDING 1-12-1, TENJIN, CHUO-KU FUKUOKA, 810-0001 JAPAN

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: fukaa@thaiair.co.jp : (81-92) 734-6409 : (81-92) 734-9480

GUANGZHOU, PEOPLE’S REPUBLIC OF CHINA G3, WEST WING, THE GARDEN HOTEL 368 HUANSHI DONG LU, GUANGZHOU 510064 PEOPLE’S REPUBLIC OF CHINA

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: canaatg@thaiairways.com.cn : (86-20) 8365-2333 : (86-20) 8365-2488

Annual Report 2007

: sgnaa@thaiairvn.com : (84-8) 822-3365 : (84-8) 822-3465

KATHMANDU, NEPAL ANNAPURNA ARCADE DURBAR MARG, KATHMANDU, NEPAL

e-mail TKT/RSVN FAX

168

e-mail TKT/RSVN FAX

: vutchennai@yahoo.com : (91-44) 4217-3311 : (91-44) 4217-3388

: dacaatg@thaiairways.com.bd : (880-2) 831-4711-18 : (880-2) 832-2353

FRANKFURT, GERMANY ZEIL 127 60313 FRANKFURT, GERMANY

HOCHIMINH CITY, SOCIALIST REPUBLIC OF VIETNAM UNITE 102, SAIGON TOWER OFFICE BUILDING 29 LE DUAN BOULEVARD, DISTRICT 1 HOCHIMINH CITY, SOCIALIST REPUBLIC OF VIETNAM

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DUBAI, U.A.E. NO.1 BU HALEEBA PLAZA AL-MURAQQABAT ROAD, DEIRA P.O. BOX 13142 DUBAI, U.A.E.

: hanaa@thaiairvn.com : (84-4) 826-7921/22 : (84-4) 826-7394

KARACHI, ISLAMIC REPUBLIC OF PAKISTAN APT NO. A, C110 VIRGO LEGACY, BLOCK 2 CLIFTON, KARACHI, ISLAMIC REPUBLIC OF PAKISTAN

TKT/RSVN FAX COLOMBO, SRI LANKA APT. 505/506, HILTON COLOMBO RESIDENCE 200, UNION PLACE COLOMBO 2, SRI LANKA

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FAX

BODHGAYA, REPUBLIC OF INDIA INPAC TRAVELS (INDIA) PVT LTD. C/O MR CB SINGH GF, HOTEL THE ROYAL RESIDENCY DUMUHAN ROAD, BODHGAYA DISTT GAYA, BIHAR, REPUBLIC OF INDIA CHENNAI, REPUBLIC OF INDIA 31 HADDOWS ROAD, NUNGAMBAKKAM CHENNAI 600006, REPUBLIC OF INDIA

HANOI, SOCIALIST REPUBLIC OF VIETNAM 44B LY THUONG KIET STREET HANOI, SOCIALIST REPUBLIC OF VIETNAM

MADRID, SPAIN PRINCIPE DE VERGARA 185 28002 MADRID, SPAIN

MANILA, PHILIPPINES COUNTRY SPACE 2 BUILDING SEN. GIL J. PUYAT AVENUE MAKATI CITY, PHILIPPINES MELBOURNE, AUSTRALIA LEVEL 3, 250 COLLINS STREET MELBOURNE, VICTORIA 3000, AUSTRALIA MILAN, REPUBLIC OF ITALY 15 VIA AMEDEI 20123 MILAN REPUBLIC OF ITALY

lheaatg@thaiairways.com.pk tglhegm@thaiairways.com.pk (92-42) 630-9791-4 (92-42) 636-8690

madaa@thaiairways.es (34-91) 782-0523-24 (34-91) 782-0520-22 (34-91) 564-5620

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