Thai Rating and Information Services Co., Ltd. (TRIS) announced Friday 8 September 2000 that it has reassigned a "AA" corporate credit rating of Aeronautical Radio of Thailand Ltd. (AEROTHAI). The rating reflects TRIS's adoption of a national scale rating system that focuses exclusively on ratings in local currency and that is relevant only for comparison within the domestic market. Under the national scale rating system, which takes effect on 25 July 2000, the highest credit rating within the country is "AAA".
TRIS said that AEROTHAI's rating continues to reflect its close ties to the government, its strategic importance to the country and increasing demand for air transportation in the region as economies recover in East Asia. These strengths are offset by a high gearing ratio, which will grow higher because of the substantial future investments needs, and increasing operating expenses.
AEROTHAI is a state enterprise with 91% government holding. As a state member of the International Civil Aviation Organization (ICAO), the government is responsible for providing air transportation safety. The government has assigned AEROTHAI to operate the country's air traffic control service and aeronautical telecommunication services which cover Thailand, part of the South China Sea and the upper airspace of Cambodia. Its operation are in compliance with international practices set by the ICAO.
The ICAO estimated that air passenger traffic in the Asia/Pacific grew 6.9% in 1999. It forecasts 7% growth in 2000 and 7.4% growth in 2001, which is higher than the world average growth and highest growth rate among ICAO's six regions. The International Air Transportation Association (IATA) forecasts 5.02% annual average growth for global scheduled international traffic for 1999-2003 (down 0.5% from its 1998-2002 estimate). The IATA says the growth in Asia is supported by the upswing in some regional economies. In the AEROTHAI's en route control, total civilian traffic reached 235,248 flights in 1999, a 1.5% increase from 1998. In 1998, total civilian flight in AEROTHAI's en route control decrease 2.5% from 1997.
TRIS said that AEROTHAI operates on a non-profit basis. Member airlines compenate shortfalls from operating expenses. Currently, the government does not guarantee its outstanding debt. AEROTHAI foresees a need for substantial funds for investments over the next 3-4 years, especially for the Second Bangkok International Airport (Nong Ngu Hao airport), and air navigation aid installation at provincial airports. The company plans to source funds through debt financing. Its total debt-to-capitalization, therefore, is expected to increase over 80% in 2002, and funds from operations (FFO)-to-total debts would deteriorate because of its higher debts and non-profit status.
Aeronautical Radio of Thailand Ltd. (AEROTHAI) Company Rating Senior debt AA