Thai Airways International says it will continue to support the restructuring of Nok Air despite its decision not to plough more money into the loss-making low-cost carrier.
Thai’s board of directors on May 21 decided not to subscribe to a share issue designed to provide an additional 1.5 billion baht ($US44m) in additional funding for the carrier.
The Bankok Post has estimated that the rejection of the Nok Air offer of 245 million new shares, will cut Thai’s shareholding from 39.25 per cent to about 20 per cent.
Thai said its board took the decision not to invest after considering a report prepared by a special task force that studied the suitability and value of an additional investment in Nok Air. It also took into account the fact the airline’s transformation program was still underway.
“Even though there will be no subscription to new shares, the company will continue to contribute as a shareholder and grant support for Nok Air’s eventual recovery and sustainable growth,’’ Thai said in a statement. “A company representative who is a member of Nok Air’s Board of Directors has been assigned by THAI’s Board of Directors to oversee and assist Nok Air through to successful completion of the transformation plan as soon as possible.’’
Nok Air indicated in a letter to the Thai Stock Exchange on May 24 that it did not need the Thai investment because it had received a good response from other shareholders who had oversubscribed substantially.
“The company has received most of the right offering share subscription with funds sufficient to cope with its financial needs and the Company will have no liquidity problem as reported on the news,’’ chief financial officer Brian Jeffrey said in the letter, noting the carrier would report the results of the rights issue “soonest’’.
Launched in 2004, Nok Air services destinations within Thailand as well international routes to Vietnam and Myanmar. It is part of the recently formed Value Alliance, a regional LCC partnership covering more than 160 destinations that also has as members Cebu Pacific, Jeju Air, NokScoot, Scoot, Tigerair Singapore, Tigerair Australia and Vanilla Air
Nok reported a net loss of 295 million baht in the first quarter of 2017 after posting a net loss of 2.8 billion baht for the 2016 financial year. It attributed the loss to factors such as pressure from existing and new competitors, pricing competition and changes in consumer behaviour.
The airline operated 31 aircraft as of March 31 — 21 Boeing 737-800s, eight Bombardier Q400s and two ATR72s — and in 2016 carried 8.56 million passengers on almost 64,000 flights.
