Will Air Asia be in trouble ?

Thaksin recently sold all his Shin Corp shares to Singapore for 73,000 millions baht. Some of those shares include all his shares in Air Asia. Air Asia is then no longer a Thai company, because it's now owned by Malaysia (49%), and Singapore (49%). As a foreign company, it therefore has no right to fly domestic fligths within Thailand. Their right to fly from Thailand to other countries may also be affected. Several Thai airliners ask the Thai authority to force Air Asia to cease their operations at once. But the authority is giving time to Air Asia to reorganise their shares for fear that ceasing Air Asia operations at once may cause trouble to customers who have already bought the tickets.

[cottmann]

Thaksin recently sold all his Shin Corp shares to Singapore for 73,000 millions baht. Some of those shares include all his shares in Air Asia. Air Asia is then no longer a Thai company, because it's now owned by Malaysia (49%), and Singapore (49%). As a foreign company, it therefore has no right to fly domestic fligths within Thailand. Their right to fly from Thailand to other countries may also be affected. Several Thai airliners ask the Thai authority to force Air Asia to cease their operations at once. But the authority is giving time to Air Asia to reorganise their shares for fear that ceasing Air Asia operations at once may cause trouble to customers who have already bought the tickets.

If the airline is incorporated in Thailand, and if Thailand has no laws disallowing the ownership of private airlines by foreigners, then Air Asia is still a Thai airline, surely?

[Hmmm]

From today's Nation:

"The transaction led to rising anger at Thaksin because Shin Corp holds concessions in satellites, telecoms, and television broadcasting that are considered strategically vital to national security. The deal means that Temasek Holdings, the investment arm of the government of Singapore, becomes the holder of these rights through Shin Corp.

The sale of these national assets has infuriated a broad range of people, including lawmakers, university academics and public-interest groups, who have banded together to demand the prime ministerтАЩs resignation. People driven by outrage over the sale also attended the rally at the Royal Plaza yesterday."



I can't imagine that Temasek would have made the deal for all these Shin Corp assets - including Air Asia - without ensuring that all the concessions that made them so profitable would remain in place.

One can only guess at the consequences should a future Thai government attempt to screw Temasek.

Of course Air Asia was one of Thaksin's more blatant conflicts of interest - establish an 'open skies' policy, forcing the national carrier into competition with carriers better placed to cut costs, having had his family company take a governing stake in one of those foreign competitors.

Of course Air Asia was one of Thaksin's more blatant conflicts of interest - establish an 'open skies' policy, forcing the national carrier into competition with carriers better placed to cut costs, having had his family company take a governing stake in one of those foreign competitors.
Well, yes, but politics in Asia is usually synonymous with patronage and economic self-aggrandizement. The small country where the Dear Leader is now head of government, following on (though not immediately) from his father the Great Leader is a prime case in point. Those who attempt to point this out with respect to that small country are always the subject of libel actions (and I'm not talking North Korea). The sons of former Prime Minister Mahathir of Malaysia are all "unusually wealthy" even though Mahathir himself was a country doctor before entering politics

Thai Air Asia will remain a Thai owned company because Temasek purchased their stake in Shin Corp through their Thai subsidiaries which are 51% owned by the Siam Commercial Bank and a private group of Thai investors.

Sounds a bit like the kind of deal some other non-Thais do in order to buy property in Thailand - but for the time being I can't see why all shouldn't be well.

AVIATION / SHIN CORP SALE

Thai AirAsia licence in doubt

AMORNRAT MAHITTHIROOK
The Transport Ministry is investigating Thai AirAsia's shareholding structure to see if it should still be licensed as a Thai airline following the sale of its parent company Shin Corp to Singapore's Temasek Holdings.


A ministry source said a Thai airline must be at least 51% Thai-owned. Shin Corp used to have a 51% stake in Thai AirAsia while the rest is held by AirAsia of Malaysia.


Following the sale on Jan 23 of the Shinawatra and Damapong families' 49.6% holding in Shin Corp, the remaining Thai owner of Thai AirAsia should be its chief executive officer Tassapon Bijleveld, who has a 1% stake.


The airline management is looking for a new Thai partner to retain the 51% proportion and the business, the same source said.


Deputy Transport Minister Phumtham Wechayachai said yesterday that he had ordered the Aviation Department to check the shareholding structure of Thai AirAsia. Pending its reply, the airline could continue its service as usual.


Chaisak Angsuwan, head of the Aviation Department, said he had already inquired about the shareholding structure with the airline, the Securities and Exchange Commission and the Commerce Ministry, and was waiting for their replies.


If the Thai ownership was less than 51%, the department would revoke Thai AirAsia's licence, he said.


Mr Tassapon was unavailable for comment yesterday but would hold a press conference on the matter soon, his secretary said.

From Bangkokpost http://www.bangkokpost.com/News/07Feb2006_news06.php

"Rush for partner after Shin sale to keep Thai licence;тАШdeal this weekтАЩ. Thai AirAsia has become the first unit of Shin Corp to feel the fallout from the Temasek deal, as the budget carrier scrambles to comply with Thai laws on foreign ownership. CEO Tasapon Bijleveld said yesterday the airline was looking for new Thai partners to maintain its Thai-majority ownership in order to keep its aviation licence.

Thai AirAsia is a 50:49 per cent joint venture between Shin and MalaysiaтАЩs Air Asia. тАЬWe hope we can announce the new partners on Friday or Saturday,тАЭ Tasapon said. There were two potential candidates but he de-clined to name them. тАЬWeтАЩll do everything to comply with Thai laws on foreign business ownership. We donтАЩt want to be in a grey area,тАЭ Tasa-pon said. A source said the Aviation Department had sent a letter to the airline asking it to review its shareholding structure after Temasek Holdings became the largest shareholder in Shin Corp, which owns a 50-per-cent stake in Thai AirAsia.

TemasekтАЩs 49.6-per-cent stake in Shin Corp pushed Thai AirAsiaтАЩs foreign ownership above the 49 per cent limit, putting it in breach of the Foreign Business Act. This disqualifies the airline from holding a licence for aviation services in the Kingdom. To remain eligible for the licence, the airline, which was launched in 2003, must ensure that Thai nationals or Thai entities own at least 51 per cent of its shares.

Currently, Shin Corp owns 50 per cent of Thai AirAsia, Air Asia founder Tony Fernandes owns 49 per cent and Tasapon, a Thai national, owns the remaining 1 per cent.

When signing the share-purchase contract with Shin Corp, Temasek said it had no plans to sell any Shin-owned businesses."

More at http://www.nationmultimedia.com/2006/02 ... 65671.html (http://www.nationmultimedia.com/2006/02/08/headlines/index.php?news=headlines_19865671.html)
February 8th 2006

Done to comply with foreign holding limit, AMORNRAT MAHITIROOK, Bangkok Post

Tassapon: Confirms shareholding change. Thai AirAsia has changed its shareholding structure, leaving the airline with Thai investors holding a majority stake. The budget airline decided on the shareholding alteration in order to comply with Thai laws on foreign ownership after the takeover of Shin Corp, which owned 50% of the airline, by Singapore's Temasek. The sale of Shin Corp on Feb 23 caused the no-frills carrier to fall foul of rules which state that Thai-registered airlines must be at least 51% Thai-owned. Thai AirAsia chief executive Tassapon Bijleveld yesterday said the airline had changed its shareholding structure by bringing in Asia Aviation Co to replace Shin Corp. The new firm has already been registered with the Commerce Ministry's Business Development Department. A press conference on the new shareholding structure will be held today.

A source said Asia Aviation was registered yesterday with capital of five million baht. The four executives on its board are Arak Chonlatanon, Siripen Sittsuwan, Sitthichai Veerathammanoon and Bussapa Saeng-ngarmplang. Its office is located on Phahol Yothin road in Phaya Thai district.

A document on its shareholding proportions showed that the firm had a total of 500,000 shares. The company has seven founders: Shin Corp chief executive officer Boonklee Plangsiri, Siripen Sittasuwan, Mr Arak, Mr Tassapon, Khunakorn Setthee, Pornanand Kerdprasert and Jitchai Musikabut. Asia Aviation has Shin Corp holding 49% of the shares with the rest held by Thai investor Mr Sitthichai. The source said Asia Aviation was given until next Monday to divulge its shareholding details.

Transport Minister Pongsak Raktapongpaisal said he had yet to receive a report on the change of stakeholders. But Chaisak Angsuwan, director-general of the Aviation Department, said he was verbally informed by Mr Tassapon that Thai AirAsia had changed its shareholding structure.

Under the old structure, Shin Corp held a 50% stake, Mr Tassapon 1% and Malaysia's AirAsia 49%. The adjustment would enable Asia Aviation to hold 50% of the total shares, Mr Tassapon has 1% and Kuala Lumpur-based AirAsia holds 49%.Deputy Transport Minister Phumtham Wechayachai said the ministry was awaiting an Aviation Department report. The airline still has 15 days to finalise its shareholding structure