BENGALURU/SINGAPORE (REUTERS, THE BUSINESS TIMES) - Thailand's long-haul low-cost carrier NokScoot Airlines will enter liquidation as the coronavirus pandemic worsened conditions for the struggling airline, parent company Nok Airlines said on Friday (June 26).
NokScoot, a joint venture between Thailand's Nok Air and Singapore Airlines' Scoot, wrestled to grow its network in a highly competitive sector for years and was yet to record a profit since formation in 2014.
The joint venture is set to hold a shareholders meeting on July 14 to go ahead with the dissolution and to appoint a liquidator, Nok added.
Scoot said in a statement on Friday that it "does not see a path to recovery and sustainable growth for NokScoot". In considering other possible alternatives to the liquidation, it also offered to sell its 49 per cent stake in NokScoot to Nok Air for a nominal sum of THB1 (5 Singapore cents), but this was not taken up.
"Thailand remains an important market for the Singapore Airlines Group. Singapore Airlines, SilkAir and Scoot are committed to continuing to serve customers in Thailand with their existing operations," it said.
The collapse in travel demand and grounding of flights all over the globe this year after the coronavirus outbreak has tipped several industry players over the edge, with the national carrier Thai Airways filing for bankruptcy protection in May.
To date, NokScoot has retrenched 425 employees with full benefits, Nok Air said.
In a separate statement, SIA said it would book a one-off charge of $123.6 million in the first quarter ending June 30 from the carrier's liquidation, mainly due to an impairment arising from the Boeing aircraft it leased to NokScoot.
SIA Engineering Company (SIAEC) also said on Sunday that it is evaluating the sustainability of its Thai-based line maintenance joint-venture company with NokScoot Airlines.
SIAEC and NokScoot have 49:51 ownership in Line Maintenance Partnership (Thailand) Company Limited (LMPT).
The evolving impact of the Covid-19 pandemic and depressed air traffic movement in Thailand has led the investments in LMPT to be scaled down with a minimal manning level at Don Muang International Airport in Thailand.
"There is, pending its shareholders' approval, a proposal for the dissolution of NokScoot. SIAEC will also evaluate the impact of such dissolution, if approved, on the viability of LMPT," SIAEC said in a regulatory filing on the Singapore Exchange website.
The company said that it will keep shareholders posted on any further material developments.