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MARCH 2019

Week 9


Thai truce and domestic domination?

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March 1st 2019

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Thai AirAsia’s majority shareholder confirms talks to take a stake in Nok Air. Combined they account for half of Thai’s domestic market. Read More »

Analysts do not have a consensus why Thai AirAsia majority shareholder Asia Aviation would invest in Nok Air. Any equity or partnership between the two could bring sizeable impacts since combined they account for about half of the Thai domestic market.

A brief statement said Asia Aviation was considering a stake of an undisclosed amount. Nok Air is 53% owned by Thai family Jurangkool. Two weeks prior, Thai Airways declined to subscribe to new Nok shares, causing Thai’s stake in Nok to be diluted from 21.8% to 15.9%. Thai Airways had wanted Nok to present a clearer business plan, but Thai also faces its own strategic decisions.

Thailand’s domestic and short-haul international markets have seen sharp passenger growth but profits have been elusive; Nok Air’s last profit was in 2015 and since then management has changed.

Thai AirAsia is the largest in the domestic market, with a 30% share. Nok Air is second-largest with a 19% share, according to Thai government figures.

Nok Air used to be mostly a domestic airline but has increasingly expanded internationally to diversify. The Thai domestic market came under strong competition with the entry of Thai Lion Air (third-largest with 16% domestic share) and Thai VietJet (smallest, with a 6% share).

Regulatory opinion is of interest. So too is longevity of a possible deal. Thai AirAsia chief executive Tassapon Bijleveld sold 39% of Asia Aviation to the chairman of King Power Group, which has a monopoly on Thai duty free. 18 months later, Bijleveld bought the shares back at a steep discount.

Condensed ownership tree of possible Asia Aviation investment into Nok

Source: Orient Aviation

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