THE BOARD of directors of Thai Airways International (THAI) is expected to greenlight a new capital increase plan for Nok Air within the next two to three months following the resignation on Thursday of Nok Air’s chief executive officer Patee Sarasin.
Nok Air, which is 21-per-cent owned by THAI, told the Stock Exchange of Thailand in a statement that Patee would remain a director and vice chairman of the beleaguered budget airline, while Piya Yodmanee has been named Nok Air’s new CEO effective from Thursday.
Airline sources said THAI has been working with other shareholders of Nok Air who control another 40 per cent of the carrier to formulate a new recapitalisation plan and chart a new business course.
In an interview with Krungthep Tulakij newspaper, THAI chairman Areepong Bhoocha-oom said the national-flag carrier, which co-founded Nok Air, will help the low-cost carrier survive the ongoing challenges, especially its capital increase requirement. Earlier, Somjaineuk Engtrakul, chairman of Nok Air’s board, also tendered his resignation.
Nok Air was earlier battered by severe pilot and other staff management problems as well as fierce competition from other low-cost carriers. Due to strikes by pilots, multiple flights had to be abruptly cancelled last year causing massive inconvenience to passengers and prompting the airline industry’s regulatory body to issue warnings to Nok Air.
Areepong said THAI would have no problem in supporting Nok Air’s new capital increase plan, even though its board in May this year had decided not to do so, resulting in the loss-making budget airline’s inability to raise cash to tackle its liquidity problem.
At the last failed attempt at recapitalisation, there was a proposal to hike Nok Air’s capital from Bt625 million to Bt1.41 billion.
THAI had said previously that it would not subscribe to the new shares because Nok Air did not have a clear business revival plan.
Last week, Areepong said there would be an amendment of Nok Air’s regulations to boost the airline’s management efficiency, while noting that Nok Air has a strong brand name and a high 80 per cent load factor, but it needs to adjust airfare prices and better manage costs to stay competitive.
According to Areepong, THAI intends to see Nok Air survive with a better business performance regardless of whether the national-flag carrier remained Nok Air’s single largest shareholder.
He added that Nok Air also used a lot of THAI facilities in its operations so there would be further cooperation.
Besides Nok Air, THAI also operates Thai Smile as a subsidiary airline for premium domestic services to help it compete with other low-cost carriers such as Thai Air Asia.
Nok Air shares yesterday rose 8.79 per cent, closing at Bt5.20 per share. The share peaked at Bt6.05 during day trade, rising 26 per cent from the day’s opening. The volume of trade was 955.1 million shares. An analyst at Asia Plus Securities said that investors felt confident about the attempt to revitalise the airline and they also believed that the second round of fund-raising would be successful.