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Thailand's Nok Air to order Boeing 737 MAX jets: sources

02/06/2014 | Reuters

Thailand's Nok Airlines is close to placing an order for Boeing 737 jets (BA.N), several people familiar with the matter said, sidestepping domestic political turmoil to step up a battle between Southeast Asia's budget carriers.

The deal for the latest version of Boeing's best-selling passenger jet, the 737 MAX, is expected to be announced at next week's Singapore Airshow.

Both the airline and the manufacturer declined to comment.

The order could be worth between $1.5 and $3 billion and contrasts with concerns that aviation could be swept up in Thailand's political and economic uncertainty which has helped fuel a recent slide in emerging markets.

Anti-government protests have been blocking parts of Bangkok in the latest round of an eight-year dispute that broadly pits the capital's middle class, southern Thais and the royalist establishment against the mostly poor, rural supporters of Prime Minister Yingluck Shinawatra and her brother, former premier Thaksin Shinawatra.

Nok Air, 39.2 percent owned by Thai Airways International PCL THAI.BK, competes with Air Asia's (AIRA.KL) Thai venture Asia Aviation PCL AAV.BK, a venture backed by Indonesia's Lion Air and Bangkok Airways Co. Ltd BA.BK.

The new order would be the first major aircraft deal for Nok Air, which listed in Thailand in June in order to renew its fleet and which is expanding domestic and international routes.

Two sources said the airline's requirements could include as many as 28 of the 737 aircraft family, but another said barely half of the total would be ordered directly from Boeing.

"Leasing companies will provide part of Nok's requirements. Nok is looking at a number of arrangements as they need the aircraft," said a further source familiar with the deal.

Nok Air operates 14 Boeing aircraft in its fleet of 21, with the remainder comprising ATR and Saab craft.

Thailand's political instability was among risks cited at a meeting of aviation finance leaders last month.

(Additional reporting by Siva Govindasamy and Tim Hepher; Editing by Jeremy Laurence and Pravin Char)

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