Nok Air Submits Restructuring Plan To Transport Minister

[george]

Nok Air submits restructuring plan to transport minister

BANGKOK: -- Nok Air, a main Thai low cost airline, has submitted a financial restructuring programme to Transportation Minister Santi Prompat after suffering losses amounting to some Bt114 million, according to CEO Patee Sarasin.

Mr. Patee said his airline had recently presented a reorganisation plan to the minister, citing major losses due to the soaring global oil prices which also affected all other airlines.

In a bid to reduce its losses, according to Mr. Patee, Nok Air has cut its daily flights to 20 from 70, reduced salaries of senior executives and some junior staff, and terminated the employment contracts of outsourced employees.

The airline executive said the actions were implemented a month ago, but have not yet produced tangible results, as the current falling oil prices would produce a result in September. At present, Nok Air passenger capacity is about 88-90 per cent per flight.

The airline started operations on July 23, 2004, and began its first international service to Bangalore, India, on May 31, 2007 on a daily basis but suspended operations to that route in November the same year, citing non-availability of aircraft and to allow service to other lucrative routes in Southeast Asia, especially Vietnam.

-- TNA 2008-08-10

[vladaman]

You know, correct me if I am wrong, but if company is loosing money, their inputs are getting more expensive, why don't they raise the prices? I still don't get it how they can keep selling flights for 399 Baht and complain about loosing money.

These guys must realize that everybody can sell cheap but this is not the way to go in Airline Business.

[britmaveric]

Indeed raise prices to cover your costs and small profit. Not a hard concept these days.

[Tony Clifton]

How can they manage to stay afloat a second time around with 20 flights a day?

[vladaman]

I think I can see one winner: Thai Airways. One Two Go is out of business (technically) and if they let Nok Air to fail then they will share domestic market with just Thai Air Asia.

I think Thai Airways will try to close them down and then enjoy market with just one competitor.

Once Nok Air is around Air Asia can raise their prices to many locations.

Thai Air Asia could be next target since there is still an issue with 51% vs 49% shareholder schemeas far I remember.