Airports of Thailand [SET:AOT] says next fiscal year will be tough after coronavirus pandemic shutdown

SET-listed Airports of Thailand said on Friday that the next fiscal year starting in October will hit the company hard due to the effects of the coronavirus pandemic.

AOT President Nitinai Sirimatthakarn told reporters that the number of passengers in the first six months of 2020 dropped by over 60 per cent compared to the same period last year.

Nitinai said that he expects an even more drastic drop in the second half as second-wave coronavirus infections have broken out across the region and the world, with international travel unlikely even towards the end of 2020.

According to sources inside the cabinet, all talks of a travel bubble arrangement with countries that have managed the pandemic well have been shelved and Thailand is unlikely to reconsider the bubble again until the last quarter of 2020.

These considerations mean, according to Nitinai, that the AOT will likely suffer record losses. Though the company has liquidity of 50 billion baht, that number is already down by 7 billion since the pandemic began.

The coronavirus pandemic has hit the travel industry hard with airlines and hotel groups declaring bankruptcy and seeking emergency government loans.

Nok Air became the second Thai carrier to apply for bankruptcy protection on Thursday. (Read more here)

King Power Extension

AOT also announced at a board meeting that it would extend King Power International Group’s new commercial contracts by one year until the end of March 2031 with brokers questioning the profitability of the company’s plan.

Local media reported that King Power International won the bidding and secured Suvarnabhumi duty-free shops as well as regional airports including Phuket, Chaing Mai, and Hat Yai airports.

The duration of the contract to operate and renovate the duty-free shops at the main passenger terminal and the first satellite terminal (SAT-1) will run from September 28, 2020, to March 31, 2031.

The board meeting also revealed that the AOT will provide an extension of monthly payments to 12 months for businesses and airlines affected by the pandemic at all six airports.

Trading impact

This morning AOT opening price stood at 51.50 baht/share which is lower than the last closing price at 52.25 baht/share.

As of 11 AM the AOT share price dropped to 51.75, down by -0.50 baht or -0.96 per cent.

SCB securities (SCBS) predicted the downside on the new measure to collect minimum returns proposed by King Power Group.

Initially, SCBS set the impact of the minimum returns to the company’s earnings at 6 per cent in the 2022 Fiscal year and 10 per cent in the 2023 Fiscal year. As the normal profit would be affected by 13 and 17 per cent in 2022 and 2023 respectively.

Asia Plus securities also provided a negative sentiment toward AOT’s profit in the 10 year contract for the King Power Group. The estimate of customers is still not certain due to the COVID-19 outbreak situation that has caused a profit decline in the long run.

Reporting by Cod Satrusayang and Panithan Onthaworn

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