Orient Thai ends talks with HK carrier

[ Boonsong kositchotethana , Bangkok Post : 22 October 2004]

Orient Thai Airlines has called off talks to acquire a substantial stake in CR Airways after finding the terms proposed by the Hong Kong-based carrier too tough to swallow.

Udom Tantiprasongchai, the chief executive and owner of Orient Thai, said he found the proposed equity holding percentage and valuation of CR Airways' assets unacceptable.

CR Airways, founded in 2001 to provide scheduled and chartered air services in the region, proposed that Orient Thai take a 40% share in the company with Hong Kong investors controlling 60%, while the Thai carrier suggested it hold 49% and the Hong Kong side 51%.

Orient Thai, better known in Thailand for its budget subsidiary One-Two-Go, also believed that the deal's negotiators had ''excessively'' valued CR Airways' assets, on which the pricing was based.

''As far as we are concerned, the negotiations are over,'' Mr Udom said. ''We are not in hurry to acquire stakes in other airlines as there are many Asian carriers that have approached us for equity partnership.''

He declined to give the names of the other airlines.

CR Airways has reportedly turned to a Singaporean entity to become a stakeholder in the airline, which specialises in flying from Hong Kong to small ''exotic'' cities in Southeast Asia and China, using Bombardier Aerospace CRJ-200 aircraft.

Its operation is still limited to two destinations: Laoag (northwestern Luzon, Philippines) and Siem Riep in Cambodia.

CR Airways also has a plan to open four destinations in mainland China _ Nanning, Jihan, Wenzhou and Meixian _ but has yet to fix the launch time, understood to be subject to conclusion of a joint-venture deal with another airline.

Meanwhile, Orient Thai has taken a more cautious approach in expanding its One-Two-Go's operations in the light of fierce competition by other low-cost carriers and slower-than-expected growth in domestic air traffic demand.

One-Two-Go will not add new destinations as quickly as planned earlier. In the pipeline had been services to Surat Thani, Ubon Ratchathani, Khon Kaen and Narathiwat.

A service to Krabi is scheduled to begin on Dec 5 while flights to Udon Ratchathani were ''temporarily suspended'' in July due to insufficient traffic demand.

However, the airline intends to increase frequencies from Bangkok to Chiang Mai to five flights daily from three at present, on weekends and holidays, starting next month to meet peak travel demand.

Similarly, flights from Bangkok to Hat Yai will be stepped up to three a day from two on weekends and holidays. It services to its two other destinations _ Chiang Rai and Phuket _ remain unchanged at one daily.

Orient Thai recently started daily flights between Bangkok and Guangzhou, China, adding to its three other routes _ Bangkok-Hong Kong, Bangkok-Seoul and Phuket-Seoul.

Orient Thai's current fleet consists of eight 747-200 jumbo jets and three Boeing 757s used for both international and domestic flights.

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