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THAI Re-Evaluates Future with Nok Air
16th Jun 2017
What is the future of the Thai Airways International-Nok Air relationship? At the moment, no one seems to have a clear answer to this, but after the former refusing the offering to shareholders in May by Nok Air, just ahead of the deadline, things are not looking good.
However, THAI’s decline to take up a subscription of 245 million ordinary shares left room for two foreign entities to swoop in. On the other side, THAI’s share in Nok Air dropped from 39.2% to 21.6%. That still makes it the single largest shareholder, but its position is weakened, especially since Nuttapol and Thaveechat Jurangkool now have a combined 28.9% share of the carrier.
Nok Air’s future was also on the agenda of the latest THAI board meeting held this Wednesday, along with the plan to procure 28 new aircraft for THAI and Thai Smile over the next five years and the resumption of service between Bangkok and Vienna.
The board decided not to increase capital in Nok Air. Explaining the decision, acting president of THAI Usanee Sangsingkeo said that the LCC did not offer a clear financial and management plan.
Usanee said:
THAI will not be affected financially if it purchases new shares of Nok Air, as we have enough EBITDA. But we have to be aware of THAI as a state enterprise and of its shareholders. If Nok Air has a specific plan and gives us a return on investment, it’ll be acceptable. We have to wait and see what Nok Air proposes and who its strategic partners are.
According to insiders, business strategists at THAI don’t think that it would be beneficial for the flag carrier to become Nok Air’s owner.
An insider explained:
Realistically, Nok Air has been for years less than keen to come under THAI's wing, despite THAI being the largest shareholder in it, let alone now having 21.6%.
Between 2014 and Q1 2017 Nok Air lost a total of 4.28 billion baht. It did manage to raise 1.2 billion baht in capital by selling 510.99 million shares out of 625 million subscribed by current shareholders.
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