September 25, 2017 / 10:56 AM / a year ago

Thai budget carrier Nok Air needs to fly leaner fleet

BANGKOK (Reuters) - Budget carrier, Nok Airlines Pcl (NOK.BK), part of Thai Airways’ (THAI.BK) low-cost strategy, needs to work on cutting costs and trimming its fleet size as it tries to turn around operations to reach profitability, Vice Chairman Patee Sarasin said on Monday.

Patee Sarasin, Vice Chairman of Nok Airlines Pcl, speaks during an interview with Reuters in Bangkok, Thailand, September 25, 2017. REUTERS/Chayut Setboonsarng

Nok, which has been in the red since 2015, posted a net loss of 649.7 million baht ($19.6 million) in the second quarter of this year.

After 14 years at the carrier’s helm, Patee resigned as the airline’s chief executive this month, citing “political conflict” with Thai Airways, which holds 21.57 percent in Nok.

Patee is currently Nok Air’s vice chairman while Piya Yodmanee is the airline’s new CEO.

Since Patee’s departure, Thai Airways has signaled it is prepared to participate in Nok Air’s recapitalization in October, for which it hopes to raise 1.7 billion baht ($51.4 million).

Known for his outspoken style, Patee told Reuters on Monday that his public presence may have led to the airline getting “shot at from multiple directions”.

A 2013 campaign featuring bikini-clad models posing with Nok’s aircraft drew the ire of the Thai government, which holds a 51-percent stake in Thai Airways.

“Now that I’ve left, I think it will simmer down and allow Piya to focus on what’s at hand,” he added. Piya, whose nickname is Nok, is well-suited for the job, Patee added.

“Nok Air is at overcapacity and needs to take a step back,” he said referring to the fleet.

The airline will look to increase usage of newer planes to about 11 hours from eight hours and take out planes with high maintenance costs, he added.

The Bangkok Post reported that Nok Air deferred the acquisition of eight Boeing 737 Max 8 jets and planned the early retirement of five Boeing 737-800 and two ATR 72-500 leases. Nok, meaning bird in Thai, has 28 aircraft in its fleet, according to its website.

The brothers Chulangkul, heirs to auto parts manufacturer Thai Summit, who jointly hold 41.24 percent in Nok Air, have a more commercial approach, said Patee, adding that this was important for the success of the airline.

Another key to the success of Thai airlines is resolving a red flag given to Thailand’s aviation industry after the U.N.’s International Civil Aviation Organization (ICAO) downgraded the country in June 2015 for missing a deadline to resolve significant safety concerns.

Resolving the ICAO red flag will “open doors to more expansion for all airlines,” Patee said.

Thai Airways is also undergoing leadership changes.

Editing by Amy Sawitta Lefevre and Jacquelne Wong

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