The Transport Ministry says Thai Airways International president Piyasvasti Amranand was sacked because of a disagreement with the board over the multi-billion-baht acquisition of new aircraft for the national flag carrier.
Some seven years ago, THAI received cabinet approval to buy 75 new aircraft.
Under the plan, THAI expects to procure half of the fleet by 2018.
The minister said Mr Piyasvasti believed the THAI board and president had the authority to acquire any remaining aircraft after 2018 without seeking cabinet approval.
But the board disagreed and insisted that the programme must be tabled for cabinet approval, making Mr Piyasvasti's position untenable.
Mr Piyasvasti said he had submitted the aircraft procurement plan to the board for consideration, but it was concerned the purchase of the planes might affect THAI's financial position negatively.
The board then asked that the plan be sent to a risk management committee chaired by deputy transport permanent secretary Silapachai Jarukasemrat.
The committee resolved that the procurement plan should go ahead as it was established that the national carrier had the ability to cope with the financial risks.
The committee also urged the plan be adjusted and then submitted for cabinet approval, Mr Piyasvasti said, insisting he knew that ultimately it would have to go to cabinet. He said he and the board had agreed to act on the committee's recommendation for cabinet approval of the plan.
Meanwhile, Prime Minister Yingluck Shinawatra yesterday said there was no political interference in the removal of Mr Piyasvasti.
Ms Yingluck said the decision was made by the THAI board.
The members of the board, who were appointed during the last government, voted unanimously in favour of dismissing Mr Piyasvasti.
"There is no political interference in this issue and the government has no one in mind for the vacant position," the premier said.
"We should let the THAI board nominate the candidate."
Finance Minister Kittiratt Na-Ranong echoed Ms Yingluck, saying the government was not behind the dismissal of Mr Piyasvasti.
The decision to fire Mr Piyasvasti was at the discretion of the THAI board, Mr Kittiratt said.
However, Democrat Party and opposition leader Abhisit Vejjajiva believed an internal conflict was at play in the dismissal.
It was a shame that a capable person like Mr Piyasvasti had to be fired despite his many positive contributions to the THAI organisation, Mr Abhisit said.
Democrat list-MP Anik Amranand, Mr Piyasvasti's wife, said that her husband had only ever worked for the good of THAI and his removal from the post must have been politically influenced.The sacking could have resulted from the change in administration when the Pheu Thai-led government rose to power, she said.
Jamsri Sukchoterat, president of the THAI labour union, said it will submit a letter to THAI chairman Ampon Kitti-ampon today to ask him to explain to the airline staff why Mr Piyasvasti was sacked.