Nok Air’s board of directors has approved the carrier’s plans to invest in a low-cost long-haul joint venture with Singapore-based Scoot.
In a document to The Stock Exchange of Thailand, Nok says a subsidiary firm NOK SPV will be set up for this investment purpose. Nok’s chief executive Patee Sarasin will hold a 50% stake in the subsidiary while Nok will take a 49% stake. The remaining one percent will be held by a person not related to Nok.
The board has hence approved a loan of not more than Bt970 million ($29.7 million) to NOK SPV. The transaction will be executed once shareholders’ approval is secured at an annual general meeting on 9 April.
Nok’s board has also agreed to a brand license agreement, which allows the joint venture company to use the name, brand and trademarks of Nok and Scoot.
Scoot and NOK SPV will each hold a 49% stake in NokScoot, while a firm made up of four representatives from Nok will take the remaining 2%. The joint venture’s board will have seven directors – three each from Scoot and NOK SPV, and one from the 2% firm.
NokScoot will have a capitalisation of Bt2 billion, although it is “contemplated” that it could eventually receive an investment of Bt3 billion.
The low-cost joint venture will operate widebody aircraft on international routes from Bangkok’s Don Mueang International airport.
“Operating in new international routes will enhance new market opportunity for the company, and partnering with Scoot could give benefit to the company as it can utilise know-how from Scoot at a lower amount of initial investment and promptly operate the business,” says Nok.
Sarasin recently told Flightglobal that NokScoot will start operations with Boeing 777-200s that it will take from Scoot later this year. The airline is expected to launch in the second half of 2014.