The Thai Airways International board has given Sorajak Kasemsuvan the chance to turn around the national carrier's financial woes after voting to retain him as airline president.
There had earlier been speculation Mr Sorajak might be removed from the post due to the airline's poor recent performance.
Though his work over the first half of this year disappointed airline executives in some aspects, the board, chaired by Ampon Kitiampon, yesterday gave Mr Sorajak a passing overall grade.
He will remain in the top job on the condition that he produces better plans to boost the airline's revenues, a source on the board said.
Mr Sorajak is subject to twice-yearly performance reviews.
THAI suffered a net loss of 8.4 billion baht in the second quarter of this year, raising doubts about the future of Mr Sorajak, a 58-year-old PhD graduate in law from the University of London.
The airline was also hit by the global economic slowdown and stronger competition which affected its freight service revenue, Mr Ampon said.
In considering Mr Sorajak's performance, board members appeared displeased with THAI's declining revenues, but pointed to a sharp increase in the airline's load factor, or the measure of the utilisation of an aircraft's capacity, the source said.
"This [falling revenue] is a question that must be answered," the source said.
Mr Sorajak was instructed to clarify the airline's problems and take a more proactive approach to securing THAI's market position.
The source said the board wants to see Mr Sorajak improve his management skills. It would be unfair to remove him after six months in the job, as such a move would "discourage others from working with THAI", the source added.
Earlier, the board appointed former permanent secretary for transport Sinlapachai Charukasemrattana to lead a team considering a restructuring that would see THAI focus more on its aviation business. THAI's other units, including those offering food and aircraft maintenance services, must define their roles more clearly or else be separated from the airline, the source said.