Second Thai airline hit by Covid fallout as Nok Air to prepare rehab plan

The Central Bankruptcy Court has approved Nok Air’s petition to begin a rehabilitation process, as the low-cost airline struggles with losses incurred due to the Covid-19 economic fallout. The Bangkok Post reports that Nok Air has debts of up to 26 billion baht, with 23 billion baht in assets. In the first half of 2020, it reported revenue of 3.4 billion baht, a drop of nearly 48% on the same period last year. The carrier recorded a net loss of 3.75 billion baht in the first half of this year, up from the 1.18 billion baht loss from the same period in 2019.

Director Kasemsant Weerakun says the carrier has suffered as a result of having its aircraft grounded for months.

“Even though Nok Air can reduce accumulative losses, the airline has suffered from the outbreak, which has grounded our fleet for months. The court has the jurisdiction to rehabilitate the company’s business. This the only path for us.”

The rehabilitation plan, which is expected to be ready in January, will require a re-negotiation of aircraft leasing and maintenance contracts, which currently make up around 40% of the carrier’s total costs. While the rehab process is underway, Nok Air has been given a stay on payments and is holding talks with leasing companies, who it’s believed have agreed to more flexible conditions, such as accepting payments based on the hours an aircraft has been in operation.

Kasemsant says the low-cost carrier will also need to re-evaluate its route plan and look at introducing additional routes, both domestically and internationally. A new route between Chiang Mai and Mae Hong Song is believed to be on the cards, as well as new connections to some Asean nations and the Middle-East. The airline is also planning to work with car rental companies and other potential partners so it can offer extra services to passengers.

Nok Air is hopeful that passenger numbers will pick up in the final 2 months of the year, potentially growing the average load factor to 70–80%, a 10% increase on the current average. During the same period last year, the load factor was around 85%. The airline has now resumed its schedule of domestic flights, connecting a total of 24 destinations, although the frequency of flights is 70% of what it was prior to Covid-19.

Nok Air currently employs 1,500 staff, with Kasemsant saying a restructure of the business is vital to its survival. He doesn’t rule out hiring more employees in the future, depending on the carrier’s plans.

SOURCE: Bangkok Post