Nok Air IPO likely to result in Thai stake drop

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Thai Airways' stake in Nok Air could drop by about 10% as the low-cost carrier works toward getting listed on the Stock Exchange of Thailand by July.

Nok is planning to issue 1.25 million shares, about 30% of the carrier's total shares, to raise around baht (Bt) 3 billion ($103 million), says its chief executive Patee Sarasin in an interview with Flightglobal Pro.

"In the beginning everyone will have to give up some of their shares so Thai will probably come down to 39%. But they have the ability to buy in the market to come back up to 49%, and that's probably what they will try to do," Sarasin says.

He adds that the lowering of Thai's shareholding will also mean the carrier will have one less seat on Nok's board. Thai now holds the majority of five out of nine board places with its 49% stake.

The flag carrier paid Bt 165 million for an additional 10% stake in Nok in November 2011. It said then that this would give Thai greater control in determining strategic policies for Nok, and for it to be more involved in the carrier's business decisions.

Senior officials from Thai had previously expressed unhappiness with Nok's "autonomous" management style and its financial performance, which suffered because of rising fuel prices and a difficult economic environment.

The two carrier's relationship, however, has improved, Sarasin says. He explained that things were not always smooth sailing between the two because Thai is a classic legacy carrier and that there was "a lack of understanding" of Nok's low-cost role.

"They know exactly what we are now, and what we're supposed to do. So between us and Thai, our relationship is pretty solid right now," Sarasin says.