Thai Rating and Information Services Co., Ltd. (TRIS) announced that it has affirmed the company rating of Aeronautical Radio of Thailand Ltd. (AEROTHAI) at "AA". The rating reflects the company's strategic importance to the country, an enhancement from government support and increasing demand for air transportation in the Asia/Pacific region in the medium to long term even though demand took a hard hit for the short term following the catastrophic events of 11 September 2001 in the United States. These strengths are partially offset by a high gearing ratio, which will grow higher because of substantial future investments needs.
TRIS reported that as a state member of the International Civil Aviation Organization (ICAO), Thai government is responsible for providing air transportation safety over Thailand. Therefore it has assigned AEROTHAI to be a sole operator for the country's air traffic control service and aeronautical telecommunication services, which are essential functions for air transportation safety.
TRIS said that as one of the strategic centers of the Asia/Pacific, Thailand has experienced high growth in air transportation. In 2000, the civilian air traffic of AEROTHAI reached 252,250 flights, an increase of 7% after growing only 1% in 1999. Before the tragic events in the United States, the ICAO projected that air traffic in the Asia/Pacific region would grow 7% for passengers and 7.5% for freight during 1999-2010. This is the highest rate of growth in the ICAO's regions and exceeds the world average. The ICAO also projected that the number of passengers carried on the Trans-Pacific route and on the Europe-Asia/Pacific route would grow 6.5% per annum during 1999-2010. The terrorist attacks in the United States on 11 September 2001 created short-term impacts on global air traffic. However, the International Air Transportation Association (IATA) recently announced that it expects global air traffic to recover by 2002. TRIS will closely monitor the impact of the recent tragedy in the United States to see if that affects air traffic demand in the Asia-Pacific over the long term.
TRIS said AEROTHAI foresees a need for substantial funds for investments over the next three to four years and is likely to employ debt financing to meet the capital requirement. Its total debt-to-capitalization, therefore, is expected to increase to over 80% in 2003, and funds-from-operations (FFO) to total debts ratio would deteriorate, because of its higher debts and non-profit status. However, according to its shareholding agreement, member airlines reimburse AEROTHAI for undercollections when AEROTHAI's operating expense exceeds the income.
Although AEROTHAI's financial status is vulnerable, TRIS sees that the government's support enhances the company's strong rating. The company being a state enterprise and its critically important function providing the country's air transportation safety, ensures continuous government support.
Aeronautical Radio of Thailand Ltd. (AEROTHAI) Company Rating Affirmed at AA
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TRIS reported that as a state member of the International Civil Aviation Organization (ICAO), Thai government is responsible for providing air transportation safety over Thailand. Therefore it has assigned AEROTHAI to be a sole operator for the country's air traffic control service and aeronautical telecommunication services, which are essential functions for air transportation safety.
TRIS said that as one of the strategic centers of the Asia/Pacific, Thailand has experienced high growth in air transportation. In 2000, the civilian air traffic of AEROTHAI reached 252,250 flights, an increase of 7% after growing only 1% in 1999. Before the tragic events in the United States, the ICAO projected that air traffic in the Asia/Pacific region would grow 7% for passengers and 7.5% for freight during 1999-2010. This is the highest rate of growth in the ICAO's regions and exceeds the world average. The ICAO also projected that the number of passengers carried on the Trans-Pacific route and on the Europe-Asia/Pacific route would grow 6.5% per annum during 1999-2010. The terrorist attacks in the United States on 11 September 2001 created short-term impacts on global air traffic. However, the International Air Transportation Association (IATA) recently announced that it expects global air traffic to recover by 2002. TRIS will closely monitor the impact of the recent tragedy in the United States to see if that affects air traffic demand in the Asia-Pacific over the long term.
TRIS said AEROTHAI foresees a need for substantial funds for investments over the next three to four years and is likely to employ debt financing to meet the capital requirement. Its total debt-to-capitalization, therefore, is expected to increase to over 80% in 2003, and funds-from-operations (FFO) to total debts ratio would deteriorate, because of its higher debts and non-profit status. However, according to its shareholding agreement, member airlines reimburse AEROTHAI for undercollections when AEROTHAI's operating expense exceeds the income.
Although AEROTHAI's financial status is vulnerable, TRIS sees that the government's support enhances the company's strong rating. The company being a state enterprise and its critically important function providing the country's air transportation safety, ensures continuous government support.
Aeronautical Radio of Thailand Ltd. (AEROTHAI) Company Rating Affirmed at AA
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