BUDGET carrier Nok Airlines Plc (Nok) has sought to reassure investors that its moves to staunch its losses and create sustainable growth are on track.
Prawet Ongartsitthikul, acting chief executive officer of Nok, said that the airline is continuing to operate its business as set out in the plan to halt the losses, bring stability and promote continuous growth. The airline is now in the first phase of this plan, rushing to mop up the red ink on its balance sheet.
According to the carrier's financial report to the Stock Exchange of Thailand (SET) for the third quarter of 2018, the company and its subsidiaries had a consolidated net loss of Bt1.515.26 billion, compared with a loss of Bt652.73 million for the same quarter last year.
“[Nok’s] financial statements are in difficulty as we all know, given that the overall situation is difficult to control and that has required us to have a ‘C’ (caution) sign posted,” Prawet said.
The SET posted the “C” sign on Nok on August 10 and it has remained as warning for investors on Nok's financial risk after its shareholders' equity fell to less than 50 per cent of the paid-up capital.
If the “C” sign remains in place for three consecutive quarters, the airline may need a capital increase, which would require approval from the board of directors and shareholders, Prawet said.
He conceded that Nok’s board has discussed a capital increase but the plan has not been finalised and has not yet received the board's approval.
In response to a rumour of a planned sale of Nok's stake to other airlines, he insisted that there has not been any negotiations on this matter. However, he said that in the future, if Nok has to expand its business, it may become necessary to find a partner.
“Next year, we hope to stop making a loss and we have to stop making losses for three consecutive quarters in order to move into the next stage – to bring stability and promote growth,” Prawet said.
“We believe next year will be a good year, particularly for the Chinese market. Our cabin factor is now high at 86 per cent. The plans for partners, cost reduction, income generation and more use of aircraft during night time will help us to increase income and widen the gap between income and cost.”
In the third quarter, Nok and other airlines were weighed down by external factors, ranging from high crude prices and currency fluctuations to a drop in the number of Chinese tourists.
Prawet said that there was a high chance the business would improve next year, thanks to factors such as decreasing crude prices, an increase in the number of countries awarded visa-free privileges and an improved Chinese market.
He said that, under Nok’s business strategy, the carrier will open additional routes in Japan, India and Vietnam. Services on these routes will get under way next month and in January.
In 2017, Nok raised capital twice. The low-cost airline offered 625 million new shares to existing shareholders at Bt2.40 apiece, but only 511 million new shares were subscribed to that year as Nok's major shareholder Thai International Airways Plc did not exercise its right. Later, in October 2017, Nok launched the second capital increase, offering 1,135 million new shares and its public offering shares were two times oversubscribed.