Wednesday, August 18, 2010

Airports of Thailand assists business partners as revenues plummet

Source: ©The Moodie Report

By Martin Moodie

THAILAND. Airports of Thailand (AoT) has reported a -139.29% fall in profitability for the third quarter of its financial year (1 April to 30 June) to a loss of THB516.23 million (US$16.22 million), following the recent political unrest in the country which damaged tourism demand.

The company has also spelled out a range of proactive measures it has taken to aid its airline and concessionaire partners during this difficult period.

In a compulsory filing to the Stock Exchange of Thailand, AOT said that the decrease was mainly due to the political unrest which led to a significant decrease in the number of tourists arriving in April and May.

AOT also announced measures to help its airlines and concessionaires during the period, leading to a -17.2% year-on-year decrease in operating income for the quarter.

AOT said it had also posted a THB742.87 million (US$23.34 million) loss on foreign exchange for the quarter, compared with a gain last year of THB260.05 million (US$8.17 million), mainly due to the extraordinary appreciation of the Japanese Yen.

More positively, AoT said that due to the country’s current economic recovery and the continuous economic stimulus measures from the government, tourism has since recovered and is expected to increase overall in 2010 – compared to a year-on-year drop in 2009.

GRANTING RELIEF TO BUSINESS PARTNERS

AOT took the opportunity to spell out the measures it has taken to assist airlines and operators in recent months. For 2010 they include:

A) The reduction of airport landing fees by -10% and the parking fee by -20% for every airline for the ten months from March to December 2010.

B) Concession fees have been adjusted for airport operators which were approved or signed a concession contract with AOT prior to 25 November, 2008 as follows:
– In the case of a fixed rate of concession fee, the fee has been reduced by -5% for ten months from March to December 2010.
– In the case of a percentage concession fee together with a minimum guarantee
(1) For a concession contract of over five years, the revenue sharing in percentage and the minimum guarantee applied in the second year of contract will be applied in the fourth year of the contract. Similarly, the revenue sharing in percentage and the minimum guarantee applied in the third year contract onwards will also be postponed as per the second year contract pattern and so on until the end of the contract.
(2) In the case of a contract life of 3–5 years, the revenue sharing in percentage and the minimum guarantee have been applied as follows:
– The percentage concession fee and minimum guarantee of the first year of contract will be applied in the third year.
– The percentage concession fee and minimum guarantee of the second year of contract will be applied in the fourth year. (if any)
– The percentage concession fee and minimum guarantee of the third year of contract will be applied in the fifth year. (if any)

C). A new incentive scheme has also been introduced for Suvarnabhumi Airport by rewarding the participating airlines through reduced landing fees.

The reduction will be calculated as a percentage of the landing fees that the airline pays for the year 2010, and the calculation will be based on the increase in number of international passengers that the airline brought through Suvarnabhumi Airport during 2010 comparing to the number in 2009.

NEW RELIEF MEASURES ADDED

Additional measures for aiding airlines and business operators at Suvarnabhumi Airport and Don Muang International Airport in 2010 due to the domestic political unrest include:

1) A -15% reduction on the landing fee and -50% reduction on the parking fee for all scheduled flights for the period of 9 months starting from April to December 2010.

2) Reducing the rental fee and/or terminal and building service charge by -10% for all tenants for the nine months from April to December 2010.

3) Reducing concessions fee as follows:
– In the case of a constant concession fee, the fee will be reduced for the nine months from April to December 2010. The reduction will be as follows:

Time period and reduction
http://www.moodiereport.com/document.php?c_id=6&doc_id=24955

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