The Srivaddhanaprabha family of duty-free operator King Power has insisted it does not plan to shake up Thai AirAsia nor delist the firm that owns the majority stake in Thailand's largest budget carrier.
King Power Group chairman Vichai and his son Aiyawatt spoke yesterday as the family acquired a controlling stake in SET-listed Asia Aviation Plc (AAV), which owns 55% of Thai AirAsia (TAA). The move accords it the ability to change management.
"We want to see TAA's management maintained," said Mr Vichai. Mr Aiyawatt, who serves as group chief executive, said he had never doubted TAA management's ability.
Mr Vichai and his adult children bought a 39% stake in AAV for 7.94 billion baht from AAV chief executive Tassapon Bijleveld and his family.
Mr Tassapon, who still owns 5% in AAV, has been confirmed to remain as chief executive for both TAA and AAV over the next five years to continue with the current business plan and growth strategy.
"Rest assured management, myself included, will continue the good work TAA has always done," said Mr Tassapon.
TAA will continue with its growth plan for this year by ramping up its Airbus 320 fleet to 51, carrying 17 million passengers and increasing its network.
Mr Aiyawatt, his brother Apichet and King Power vice-chairman Sombat Dechapanichkul are expected to join the AAV board.
Next week they will begin identifying and planning business strategies together with TAA management.
Mr Vichai emphasised TAA and King Power will greatly complement each other, providing cutting-edge services and products. This will accelerate TAA's growth and ensure it remains at the forefront of the low-cost carrier business.
Mr Tassapon pointed out that King Power has an extensive travel-related business connection in China and much of its duty-free clientele are Chinese tourists to Thailand.
TAA ferries the most Chinese tourists to Thailand through its expanding routes, with 20% of its revenue generated by the Chinese market, said Mr Tassapon.
He attributed his family's decision to sell a substantial stake in AAV at a below-market price to the Srivaddhanaprabha family having the cash and the fact the buyers are Thais, as aviation regulations require at least 51% of listed Thai airline company shares to be held by Thai individuals.
Mr Vichai said his family will keep the AAV shares "for a long time", which was part of Mr Tassapon's decision calculus to sell. Mr Vichai added he had no plan to delist the company from the Thai bourse.
In compliance with regulatory acquisition rules, the buyer must issue a mandatory tender offer for the remaining 60% of AAV's shares listed on the Stock Exchange of Thailand, at 4.20 baht a share, the same price they paid to the Bijleveld family.
Siam Commercial Bank will act as financial adviser and potential lender for the tender offer, which costs 12 billion baht. Because the tender is priced below current trading prices, it may not attract sellers.
The AAV acquisition is the latest diversification for King Power, whose Leicester City Football Club became England's Premier League champions in May.
King Power has dropped its plan to open duty-free shops in Tokyo airports and shifted its focus to business expansion in Asean and Thailand. Mr Vichai said the company does not have enough manpower to run the planned Japanese store.
It will push for duty-free shop investment in Myanmar instead because the shops are easier to operate in the neighbouring country as there is little competition and the Myanmar government is aggressively promoting tourism.
King Power's decision may have been influenced by AirAsia's recent route expansion in Myanmar. King Power is studying market viability before investing there.
"We are interested in opening duty-free shops in Yangon, Mandalay and Nay Pyi Taw," said Mr Vichai.
King Power revenue in the first quarter this year rose 20% to 35 billion baht. It expects revenue to reach 85 billion for the full year. The group's revenue goal for 2017 is 100 billion baht.
King Power Group operates six duty-free shops in Bangkok, Pattaya, Phuket and Hat Yai.
The group plans to open a new downtown shop in Chiang Mai and is awaiting an auction for a duty-free shop concession at U-tapao airport.