Thai Air Asia hopes share sale imminent

End of controversy brings optimism

BOONSONG KOSITCHOTETHANA

Sepang, Malaysia _ The management and shareholders of Thai AirAsia may breathe a sigh of relief when Shin Corp sells its stake in the no-frills carrier in the coming weeks.

The controversial holding of Shin Corp, the telecom giant once owned by deposed prime minister Thaksin Shinawatra's family, but now controlled by Singapore's Temasek Holdings, has distracted management from its growth focus.

But the airline looks forward to putting the negative press behind it and focusing on its US$2.5 billion growth plan. Negotiations are reportedly in the advanced stage for Shin to sell all of its shares in Thai AirAsia, held through Asia Aviation Co, to unnamed Thai entities.

Shin Corp holds 49% of Asia Aviation, a company registered in Bangkok, which in turn owns 50% of Thai AirAsia.The only other stakeholder in Asia Aviation is Thai businessman, Sittichai Veerathummnoon, who holds a 50% stake and has been accused of acting as a proxy of Temasek.

Critics had charged that Thai AirAsia exceeded the 49% ownership limit, which should have disqualified it from holding a licence. But the Department of Civil Aviation later cleared Thai AirAsia of the charge.

Tony Fernandes, group chief executive of AirAsia Bhd, Southeast Asia's largest low-cost carrier which holds 49% in Thai AirAsia, is upbeat about the prospect of Shin striking a deal.

Though he is not directly involved in the talks, he told the Bangkok Post: "We, as shareholders, are very happy with the way [the negotiation] is moving. Over the next few weeks, I think the management (of Thai AirAsia) would be able to make an announcement which will be positive for all sides."

The existing holdings in Thai AirAsia by AirAsia and Thai AirAsia chief executive Tassapon Bijleveld (1%) will remain intact, according to insiders.

Though a confidentiality agreement prohibits disclosing the prospective buyers, insiders said they were Thai-owned and some are not involved in airlines.

"If the deal is done, then management can focus on its future, deploying up to 50 new A320 jetliners...over the next three to five years," Mr Fernandes said.

Insiders said Temasek wanted to dispose of Shin's holdings in other companies except its stake in the mobile operator Advanced Info Service. "Temasek has too many headaches and just wants to reduce it to the flagship AIS," one said.

But it is only prepared to sell its shares in Thai AirAsia at a "reasonable" price the source said.

Thai AirAsia aims to dominate budget air travel in Thailand, with a goal to put at least 40 new Airbus A320 jetliners in its fleet over the next five years.

By 2012, the no-frills carrier plans to have 320 flights a day through Bangkok, compared with 80 a day currently, while doubling the number of passengers.

Bangkok Post

Last Updated : Tuesday April 10, 2007