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Nok Air Goes Public Thru IPO
16th May 2013
Thai Airways' low-cost subsidiary, Nok Airways, is set to launch an initial public offering (IPO) next month as the airline plans to raise funds for its expansion programs.
The budget carrier is expecting to raise 5 billion baht from the said IPO which they will use to acquire new aircraft to increase their fleet and expand their network.
According to the airline official, they will offer 30% stake of the airline's total share through the issuance of 187.5 million ordinary shares.
The IPO which will take place and traded on June 20 at the Stock Exchange of Thailand (SET), as revealed by the airline's Chief Financial Officer, Vitai Ratanakorn.
Thair Airways International owns 49% of Nok Air and has been backing its aggressive plans to expand its fleet and operations. The launching of its IPO is timed to take advantage of the positive outlook in the market as well as the aviation industry's positive growth.
Nok Air will become the first of the two airlines planning to go public this year as full-service Bangkok Airways is also planning to do the same soon after.
The holding company of Thai AirAsia, Asia Aviation (AAV), went public in May last year when it debuted on the Stock Exchange of Thailand.
The launch date of Nok Air's IPO comes two months ahead of the original plan which was earlier slated in August.
The airline executive said that no foreign investors shall be allowed to partake in the IPO as the offering is only limited to local investors as the amount of stakes being offered is not that big.
The proceeds of the IPO, according to the executive, shall be largely allocated to fleet expansion as they embark on expanding its route network. The low-cost carrier is planning to augment its fleet by almost half its current size of 16 aircraft.
The airline is seeking to acquire more of the Boeing 737-800, which currently makes up most of its fleet. It will take delivery 4 of the narrow-body twin-engine aircraft this year, another 4 aircraft in the following year and another 4 in 2015.
It also keeps a small fleet of turboprop aircraft such as ATR 72-200 and Saab 340B.
The airline recorded a robust growth in the local market share's low-cost sector over a three-year period, expanding to 41% in 2012 from 34.9% in 2010.
It is also optimistic on the future of the low-cost travel market especially when Asean Economic Community (AEC) takes effect in 2016. The airline, though, is not in a hurry to expand outside Thailand and focus instead in the local market.
Nok Air currently flies to 23 local destinations operating 483 flights per week on average.
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