Global-focused NokScoot faces long climb
NokScoot is trying to get a grip on its battle with the coronavirus pandemic, while acknowledging that its healing period may take longer in comparison with other airlines because of its dependence on international routes.
The low-cost carrier, a joint venture of Nok Airlines Plc and Singapore’s Scoot, saw revenue jump 23.7%, from 5.8 billion baht in 2018 to 7.2 billion baht last year, as it carried 1.59 million passengers, up from 1.16 million.
But a reversal is on the cards this year as aviation players are hit hard by the coronavirus.
“Our recovery may come with a slower pace compared with other local airlines, which also have domestic routes to cushion the impact,” said Yodchai Sudhidhanakul, chief executive of NokScoot.
Restarting international flights will require more time to ensure that both Thailand and foreign destinations have the outbreak under control.
Mr Yodchai said China exemplifies how travel activity is improving and tourist flow is restarting within the country. Thailand will follow suit with domestic routes restarting at first.
Due to travel restrictions in many countries, Thailand included, NokScoot temporarily suspended all international flights from March 25 to April 30.
The airline is monitoring and assessing the situation and will extend the flight suspension if needed.
Mr Yodchai said all airlines are facing a liquidity crisis as they contend with fixed costs while grounding entire fleets.
“Even though every airline must be prepared for a three-month liquidity crunch, in case of unexpected circumstances, the ongoing pandemic is likely to last longer than we’ve planned,” he said.
NokScoot is introducing the same practices as others to stay afloat, reducing manpower costs by asking pilots and cabin crew to take seven days of unpaid leave per month.
Mr Yodchai and upper management voluntarily slashed their salaries by 20% and 10% respectively for March and April.
If containment remains elusive, the airline will consider extending the salary cuts to all staff.
He insisted NokScoot wouldn’t lay off anyone, adding that well-trained employees who require a lot of time and resources are hard to find.
“Once the pandemic is resolved, there will be huge demand for travel,” said Mr Yodchai. “Airlines have to prepare ourselves for the rebound.”
An earlier termination of 11 pilots and 36 cabin crew was made in response to structural changes as NokScoot downsized the fleet from seven aircraft to five.
“That decision was made before the pandemic, as we had to streamline operations,” he said.
Mr Yodchai said the airline may have to inform shareholders about the cash flow situation for further state aid.
The government has come up with measures such as soft loans to help airline operators maintain their business during the difficult time.
On Jan 23, NokScoot was approved to receive financial assistance with a credit limit of 200 million baht at 6.30% interest from major shareholder Hatairatn Jurangkool, who owns 24.37% of the company.