Thai Airways International Pcl said on Friday it was unsure whether global economic uncertainty would prevent it from making a net profit for 2011, but it would go ahead with plans to launch a new regional carrier and another budget airline.

"The economic concerns in the United States and Europe may slow down air travel demand, while the impact from fuel costs may not be as bad as earlier expected," President Piyasvasti Amranand told reporters after a board meeting.

"But we can't say right now that we will make profit for the whole year," he said, citing the volatility of global oil prices.

Fuel costs account for about 40 percent of the airline's total costs.

The national carrier is expected to report a net profit of 6.7 billion baht (US$224 million) for 2011, according to Thomson Reuters I/B/E/S.

It reported a first-half net loss of 7.26 billion baht (US$243 million), versus a net profit of 11.9 billion baht a year earlier.

The flag carrier planned to start operations of the new regional airline named, Thai Smile, from July 1, 2012, to tap strong demand for air traffic in Asia and win back market share in the wake of fierce competition in the region.

The launch timeframe is four to five months, delayed from the previous schedule in March or April 2012.

Chairman Ampon Kittiampon said the new airline would fly to domestic cities in the first year of operations before expanding its destinations into Southeast Asian countries as well as China and India in 2013, when it expected to make profit.

Expansion Plan

The wholly owned mid-tier carrier will operate with 11 Airbus 320s and cover journeys with an average flight time of 1-2 hours, Ampon said.

The mid-tier carrier is part of Thai Airways' expansion plan, an effort to turn itself around after years of losing market share in a region where swelling middle classes, fast economic growth and liberalised air policies provide opportunities for higher earnings.

Thai Air, with a market value of US$2 billion, is 51 percent owned by Thailand's Finance Ministry and competes with bigger rivals like Singapore Airlines and Cathay Pacific Airways .

Piyasvasti said the airline also planned to discuss with the new transport minister to get the go-ahead for the launch of a new budget carrier, Thai Tiger Airways, its joint venture with Singapore's Tiger Airways Holdings Ltd.

In 2010, Thai Airways formed the alliance with Tiger Airways to operate the new budget carrier, but the plan has been delayed, pending an approval from the transport ministry.

Thai Tiger, 51 percent owned by Thai Airways and 49 percent by Tiger, was originally supposed to have started in late March. Piyasvasti gave no details about the new launch date.

Thai Airways was still keen to raise its 39 percent stake in budget airline Nok Air to 49 percent by buying another 10 percent from state-owned Krung Thai Bank at 33 baht each, the president said.

Shares in Thai Airways slipped 2.7 percent at 09:11 a.m. GMT, when the broad index was 1.9 percent lower.