THAILAND'S Asia Aviation PCL, the majority owner of low-cost carrier Thai AirAsia, on Monday said it was in talks to buy a stake in rival Nok Airlines PCL, sending Nok's share price up as much as 13 per cent.
The announcement comes as a tourism boom in Thailand stokes competition among carriers. The country logged 38.27 million arrivals last year, and is set to welcome 6.9 per cent more this year, government data showed.
Nevertheless, competition pushed Asia Aviation into losses in the latter half of last year, while Nok Air has not had a profitable quarter since 2015. Joining forces to stem the decline is therefore seen as an attractive option.
"The company is currently considering whether such investment is appropriate," chief financial officer Santhat Sanguandikul said in a statement, issued in response to local media reports that Asia Aviation was in talks to buy shares from the billionaire Jurangkool family.
Nok Air, in a statement issued following Asia Aviation's, said it was "not aware of any details in this respect".
Asia Aviation did not specify how much of Nok Air it would buy.
The target airline is 53 per cent owned by the Jurangkool family, which also controls Thai Steel Cable PCL and unlisted car parts maker Thai Summit. It has a market capitalisation of 9.3 billion baht (S$401.2 million). Its stock has risen 27 per cent year-to-date, and is currently priced at 3.08 baht - its highest since March last year.
The announcement comes less than two weeks after money-losing national carrier Thai Airways PCL waived its rights to subscribe to new shares in Nok and dropped its holding to 15.9 per cent from 21.8 per cent.
Asia Aviation owns 55 per cent of Thai AirAsia, with the remainder held by Malaysia's AirAsia Group Bhd.
AirAsia Group did not immediately respond to a Reuters request for comment. REUTERS