The Transport Ministry is keeping a close eye on troubled budget carrier Nok Air after a "worrying" sign on its balance sheet was detected, according to the Civil Aviation Authority of Thailand (CAAT).
As the country's second-largest airline in terms of market share, it needs to be put under close watch by the authorities to protect customers, CAAT chief Chula Sukmanop said on Wednesday.
The authority conducted the latest audit of the carrier's coffers and found an issue with its cash flow.
CAAT and transport officials thought the airline might be in trouble as it has cancelled flights altogether or reduced their frequency on some routes, crippling its ability to generate revenue.
Nok Air's flights account for 20% of the domestic market, after Thai Air Asia with about 30%. Thai Lion Air controls 18% of the market.
Nok Air has been in the red for four consecutive years. At the end of 2018, it suffered cumulative losses of 8 billion baht.
The airline has also cut back on the number of pilots it hired and decommissioned some of its plane models, Mr Chula said.
A Transport Ministry source said Nok Air badly needs money to cover its costly spending, including maintenance bills and pilots' salaries, which are higher than at rival airlines.
Nok Air's acting CEO Pravej Ongartsittigul said the airline is aware of the pressing situation it faces. It has followed the business turnaround plan by adopting austerity measures and keeping costs under control while implementing steps to push up revenue in the hope of "stopping the losses within this year", he said.
Among the measures aimed at getting the airline out of the red is the expansion of international flights to lucrative but highly competitive markets such as China, Japan and India.
The company runs a fleet of 26 planes, enough to serve passenger demand on every route it operates, Mr Pravej said.
However, the ministry source said Nok Air must find new investors to augment its capital within this year or it might see its business stall.
Mr Chula, meanwhile, said it should not be too difficult for the company to approach new shareholders and obtain a fresh infusion of cash. He said investors are likely to recognise the lucrative nature of many routes flown by Nok Air.
But the airline's shareholding status is far from certain, according to the source, after Thai Air Asia announced in early March it was dropping a plan to buy Nok Air stock. Thai Airways International, which holds 15% of Nok Air shares, said it would not increase investment in the low-cost airline.
Early last month, Asia Aviation Plc (AAV), the major shareholder in Thai AirAsia Plc, informed the Stock Exchange of Thailand the company would not proceed with a plan to acquire shares in Nok Airlines Plc, the operator of Nok Air.