Flag carrier Thai Airways International has carved out its regional carrier Thai Smile as a separate, wholly owned subsidiary.
The carrier will focus on domestic and short-haul regional routes using narrowbody aircraft, Thai said in a statement on the Stock Exchange of Thailand.
The state-owned company will have a registered capital of baht (Bt) 1.8 billion ($60 million), which will be invested in two tranches in 2013 and 2014.
The aim of the separation is to ensure that Thai Smile operates its regional services efficiently, is competitive in cost control, and is able to strengthen its route network and create expansion opportunities, says Thai.
Last December, Thai's president Sorajak Kasemsuvan told Flightglobal that he hoped Thai Smile would be able to use its blend of a low-cost operating base and premium service to improve the overall profitability of the airline group.
Thai Smile is in the process of taking over most of Thai's domestic network. It will also serve a number of cities in Southeast Asia, complementing Thai's widebody services in some cases.