News
Nok Air collects cash for much-needed capital injection
March 31st 2017
Nok Air’s troubles are worsening and the budget carrier requires an urgent capital injection. Read More »
The Patee Sarasin-led carrier is losing passengers to its competitors and its costs are out of control. Two weeks ago, it reported a 3.28 billion baht (US$94 million) 2016 fiscal year loss, widened from a record loss of 1.66 billion baht in 2015.
Now Patee told the Bangkok Post he is planning a 1.5 billion baht (US$43.5 million) capital injection in the next few months to fix the low-cost carrier’s balance sheet.
Nok is 39%-owned by Thai Airways International (THAI), itself still reeling from inefficiencies, and according to the Post, sources have confirmed THAI’s board has agreed to give fresh cash to Nok.
THAI board chairman, Areepong Bhoocha-Oom, said Nok and THAI’s other airline subsidiary, budget-conscious but not officially low-cost Thai Smile, must strengthen their ties and create more synergies to slash costs.
"We and our subsidiaries have to consolidate. It is a strategy to increase efficiency. And this year, for Nok Air and THAI Smile, the board and the management will make efforts to turn them around," the THAI chairman said.
To cut costs, Nok has subleased three excess B737-800s to SpiceJet for five years and it is working toward improving the utilization rate of its fleet from approximately eight to ten hours a day.
Furthermore, the airline’s senior management has agreed to voluntary cuts in the range of 25-50%.
Nok Air will not be profitable in 2017. "It's unrealistic to expect us to be back in the black this year because of the depth of the problems, but maybe we can break even if our remedial plan works well and no significant impact from external factors arises,” Patee said.
The Nok boss added the airline will shift its focus to increased services to Mainland China, including six new routes: Phuket to Chengdu, Nanjing, and Wuhan; Don Mueang to Nanning and Linyi; and Chiang Mai to Nanjing.
On this note, Nok this week signed a memorandum of understanding with the Henan Civil Aviation Development & Investment Company (HNCA).
Patee said the deal with HNCA marked a new milestone in the relationship between Thailand and China that is aimed at providing travellers “with more positive options to choose from”.
“Henan is endowed with a superior geographical location, and it is one of China’s most significant transportation hubs. Potential air routes would enhance economic, social and cultural opportunities,” he said.
