Law360 (July 31, 2020, 3:22 PM EDT) -- A Thai budget airline has become the latest carrier to fall victim to COVID-19, announcing it had filed for restructuring in bankruptcy court due to the "adverse operating environment" caused by the pandemic.
In a filing to the Thai stock exchange, Bangkok-based Nok Air PLC said its board of directors voted Thursday to file a rehabilitation petition in Thai Central Bankruptcy Court with a plan to "continue its business and return to profitability."
"It must be noted that the ongoing situation of COVID-19 pandemic and adverse operating environment [have] been the key drivers leading to the decision to undergo restructuring to enable the company to be a viable entity in the long run and not as a result of mismanagement," the notice said.
A hearing on the petition has been set for Oct. 27, it said.
According to its website, Nok was established in 2004 and began offering low-cost international flights in a joint venture with Singapore Airlines subsidiary Scoot Airlines in 2014. It currently offers domestic Thai flights and flies international routes to China, India, Japan and Myanmar.
According to its 2019 annual report, as of the end of last year it had just less than $116 million in "short-term borrowings" and had lost about $95.2 million for the year.
The notice said the rehabilitation plan would include debt and organizational restructuring, new commercial strategies, "adjustment" of its flight routes and the size of its aircraft fleet and "greater efficiency in human resource management."
"The current environment during COVID-19 presents an opportune time for the company to undertake rehabilitation as the process will most likely be a short one," it said.
International travel restrictions and a sharp decrease in passenger demand due to the pandemic have left many airlines in financial difficulty. Norwegian Air entered bankruptcy in April, Latin American-based LATAM Airlines, Aeromexico and Avianca have all filed for Chapter 11 protection in U.S. courts in recent months, and last month, Hong Kong-based Cathay Pacific announced it was receiving $3.5 billion in government funding to deal with the crisis.
--Editing by Stephen Berg.
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