It has been a long and tortuous road but Thai Airways International looks to be edging towards phased privatisation, with a partial disposal expected before year end.
Thai's board has asked the government to approve the sale of part of its remaining 93 per cent stake along with a new issue of some 100 million shares, which will cut the state holding to around 76 per cent, according to sources at the carrier. The offer price is expected to be 40 baht (US$1.33) per share, well below the 60 baht unit price of the carrier's initial public offering six years ago. Further issues over the next three years would place the airline under private control.
Analysts believe the price tag will attract interest, although potential investors will be nervous, given the share performance over recent years. A Salomon Brothers Hong Kong report on the carrier back in February put a hold recommendation on the shares 'given the current volatility of both the underlying share price and Stock Exchange of Thailand index'. Since then, Thailand's economy has plunged into even deeper recession and the International Monetary Fund is mounting a rescue mission.
News of the share issue comes as Thai prepares for competition from a second international scheduled carrier. But this project is now mired in controversy. Originally named Princess Airlines by the winning consortium led by JVK Holdings, the startup appears to have changed its name to Angel Airlines. Reports of the name change are accompanied by suggestions that the majority of shares will now actually be held by the United Communication Industry group (Ucom), a member of the only other consortium to bid against JVK.
JVK president Vithaya Bunditkrisada denies this is the case, although he does not rule it out, saying he is still negotiating with several parties interested in forming the new airline.
He says nine international airlines have also expressed interest in taking a stake but denies they include Air France and Singapore Airlines. Foreign airlines are limited to a 5 per cent holding, with other offshore investors allowed up to 20 per cent.
Vithaya says the airline would still be established by the government deadline of 9 August. It will have a startup capital of US$100 million and must launch flights within a year.
Tom Ballantyne
Source: Airline Business
