TRIS Rating Co., Ltd. has affirmed the company rating of Aeronautical Radio of Thailand Ltd. (AEROTHAI) at “AA” with “stable” outlook. The rating reflects the strategic importance of air traffic
control to the country, AEROTHAI’s status as the only air traffic control provider in Thailand, and its
capable and experienced management team. The rating also reflects increasing demand for air transportation
in the Asia-Pacific region in the medium to long term, which is expected to improve AEROTHAI’s
cash generation in the future. In addition, implicit support from the government is a major factor enhancing
the company’s credit profile. These strengths are partially offset by the recent deterioration in cash
flow protection due to an increased gearing ratio, which will remain high because of the substantial
investment requirement at the Suvarnabhumi Airport .
The “stable” outlook is based on the expectation of continued support from the government because
of AEROTHAI’s status as the nation’s sole air traffic control operator, its strong operating profile,
and improving internal cash generation. AEROTHAI’s outlook and/or rating will be revised after operations
at the new airport are running smoothly and the company is able to improve its financial profile.
TRIS Rating reported that AEROTHAI is a state enterprise, 91% owned by the government, the
remaining 9% is held by airlines. The Thai government, as a member of the International Civil
Aviation Organization (ICAO), is responsible for providing air transportation safety over Thailand. AEROTHAI has been appointed by the government to operate the country’s air traffic control service
and aeronautical telecommunication services, which are critical functions for air transportation
safety. Currently, AEROTHAI is the sole provider of Thailand’s air traffic services. The company’s responsibility area is the Bangkok Flight Information Region (BKK FIR). Its operations comply with international practices, which are set by the ICAO. AEROTHAI’s operation is heavily influenced
by government policy and the company’s investments are approved by the Ministry of Transport and
the Cabinet. All budgets are approved by the Board of Directors, which mostly consists of representatives
from the Ministry of Finance, the Ministry of Transport, and the Royal Thai Air Force. The government appoints nine of the eleven board members, while two members are representatives from airline share-
holders. AEROTHAI’s air service charges must be approved by the Civil Aviation Board.
TRIS Rating said that AEROTHAI incured substantial debt-financed capital expenditures during
2000-2006, with funds earmarked for the construction of a new air traffic control complex and air
traffic control system at Suvarnabhumi Airport. The total investment cost for facilities at the new
airport is approximately Bt3,110 million. AEROTHAI’s total debt to capitalization ratio, therefore, will
surpass 80% in 2006. The funds from operations (FFO) to total debt ratio is likely to deteriorate even
though the company is expected to achieve strong operating performance. Although AEROTHAI’s
financial status will weaken in the short term, the company maintains a strong credit profile because government support enhances its creditworthiness. — End
Aeronautical Radio of Thailand Ltd. (AEROTHAI)
Company rating: Affirmed at AA
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
control to the country, AEROTHAI’s status as the only air traffic control provider in Thailand, and its
capable and experienced management team. The rating also reflects increasing demand for air transportation
in the Asia-Pacific region in the medium to long term, which is expected to improve AEROTHAI’s
cash generation in the future. In addition, implicit support from the government is a major factor enhancing
the company’s credit profile. These strengths are partially offset by the recent deterioration in cash
flow protection due to an increased gearing ratio, which will remain high because of the substantial
investment requirement at the Suvarnabhumi Airport .
The “stable” outlook is based on the expectation of continued support from the government because
of AEROTHAI’s status as the nation’s sole air traffic control operator, its strong operating profile,
and improving internal cash generation. AEROTHAI’s outlook and/or rating will be revised after operations
at the new airport are running smoothly and the company is able to improve its financial profile.
TRIS Rating reported that AEROTHAI is a state enterprise, 91% owned by the government, the
remaining 9% is held by airlines. The Thai government, as a member of the International Civil
Aviation Organization (ICAO), is responsible for providing air transportation safety over Thailand. AEROTHAI has been appointed by the government to operate the country’s air traffic control service
and aeronautical telecommunication services, which are critical functions for air transportation
safety. Currently, AEROTHAI is the sole provider of Thailand’s air traffic services. The company’s responsibility area is the Bangkok Flight Information Region (BKK FIR). Its operations comply with international practices, which are set by the ICAO. AEROTHAI’s operation is heavily influenced
by government policy and the company’s investments are approved by the Ministry of Transport and
the Cabinet. All budgets are approved by the Board of Directors, which mostly consists of representatives
from the Ministry of Finance, the Ministry of Transport, and the Royal Thai Air Force. The government appoints nine of the eleven board members, while two members are representatives from airline share-
holders. AEROTHAI’s air service charges must be approved by the Civil Aviation Board.
TRIS Rating said that AEROTHAI incured substantial debt-financed capital expenditures during
2000-2006, with funds earmarked for the construction of a new air traffic control complex and air
traffic control system at Suvarnabhumi Airport. The total investment cost for facilities at the new
airport is approximately Bt3,110 million. AEROTHAI’s total debt to capitalization ratio, therefore, will
surpass 80% in 2006. The funds from operations (FFO) to total debt ratio is likely to deteriorate even
though the company is expected to achieve strong operating performance. Although AEROTHAI’s
financial status will weaken in the short term, the company maintains a strong credit profile because government support enhances its creditworthiness. — End
Aeronautical Radio of Thailand Ltd. (AEROTHAI)
Company rating: Affirmed at AA
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.