Nok Air Enters Fleet Rationalisation Process

22nd Sep 2017

As part of the strategy to turn its balance sheet around, Thai-based airline Nok Air is entering a fleet rationalization process. The new management, led by the newly-appointed Chief Executive Officer Piya Yodmani, who took over from the former CEO Patee Sarasin a few days ago, is planning to offload some of the planes the carrier already has in its fleet and curb additional capacity to better match traffic demand.

In addition, the airline has agreed with the US aircraft manufacturer Boeing to delay the acquisition of eight new Boeing 737 MAX 8 planes that it has previously ordered. According to the original deal that Nok Air and Boeing made in 2014, the carrier would take the jets in three time spans. The first 737 MAX 8 would be delivered next year (2018), next two in 2019 and the remaining four in 2020.

Now however, the two sides have agreed to postpone this by one year for each delivery. That means that the carrier will receive the first plane from Boeing in 2019, the next two in 2020 and the last four in 2021.

The airline managed to get this delay from Boeing without it being considered a breach of contract and paying appropriate penalties. However, that does not mean the Thai airline won’t have to pay to lessors for the aircraft it planes to return. According to the airline’s CEO, the plan is to retire five Boeing 737-800s and two ATR 72-500 turboprop planes (which it also wants to replace with Bombardier Q400 turboprops) either by the end of this year or early in 2019. These are all leased and if the carrier pulls this off it will save significantly on leasing costs.

This Wednesday, Nok Air took delivery of a new Boeing 737-800. This is the 22nd plane of this type in the carrier’s fleet and it will be the last addition to its fleet until 2019, when the first 737 MAX 8 arrives from Boeing.

The airline gathered losses of around 4.93 billion baht between 2014 and June 2017.

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