TRIS Rating Co., Ltd. has affirmed the company rating of Aeronautical Radio of Thailand Ltd. (AEROTHAI) at “AA” with “positive” outlook. The rating reflects the strategic importance of air navigation services to the country, the company’s status as the sole air navigation service 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 generating ability. In addition, implicit support from the government is a major factor enhancing the company’s credit profile. These strengths are partially offset by the substantial and increasing debt burden required to fund AEROTHAI’s investment projects even though these projects will further strengthen future operating capacity.
The “positive” outlook is based on the expectation that AEROTHAI will be able to maintain strong operating performance and recover the collection status in fiscal year 2008 after a huge investment and increasing expense to manage the new international airport at Suvarnabhumi.
TRIS Rating reported that AEROTHAI is a state enterprise, 91% owned by the government; the remaining 9% is held by various airlines. The Thai government, as a contracting state 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 including the systems and technologies for air navigation service, which are critical functions for air transportation safety. The company’s area of responsibility is the Bangkok Flight Information Region (BKK FIR). Its operations comply with ICAO standards and recommended practices. AEROTHAI’s operation is heavily influenced by government policy and the company’s investments are approved by both the Ministry of Transport and the Thai Cabinet. All budgets are approved by the company’s board of directors, most of whom are representatives of 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 of airline shareholders. The company’s air service charges must be approved by the Civil Aviation Board.
TRIS Rating said, AEROTHAI incurred substantial amounts of debt in 2004-2006 for its investment at Suvarnabhumi International Airport. As a result, the total debt to capitalization ratio increased from 64.4% in 2004 to 80.3% in 2006. In 2007, capital expenditures of Bt1,004 million were mainly financed by debt, pushing the total debt to capitalization ratio to 82.1%. The leverage ratio is expected to remain high over the next few years, as a substantial amount of investments is needed. The new equipment and systems will enhance AEROTHAI’s ability to qualify as a regional air navigation control provider.
In 2006, funds from operations (FFO) dropped substantially to Bt16 million due to the increasing cost of starting operation at Suvarnabhumi airport which resulted in an under collection of Bt438 million. In 2007, the company’s FFO increased to Bt582 million not only because of its raised flight charge per unit and multiplying factor but also because of increasing traffic volume. For the first three months of fiscal year 2008 (Oct-Dec 2007), AEROTHAI had an over collection which will help to improve the collection status. FFO to total debt ratio improved significantly from 0.4% in 2006 to 12.3% in 2007. Although AEROTHAI’s financial profile has not been as strong as other high credit profile corporates, the company maintains a strong credit profile because it will continue to receive strong government support as its role is critical for the country, said TRIS Rating. -- End
Aeronautical Radio of Thailand Ltd. (AEROTHAI)
Company Rating: Affirmed at AA
Rating Outlook: Positive
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Copyright 2008, 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 info
The “positive” outlook is based on the expectation that AEROTHAI will be able to maintain strong operating performance and recover the collection status in fiscal year 2008 after a huge investment and increasing expense to manage the new international airport at Suvarnabhumi.
TRIS Rating reported that AEROTHAI is a state enterprise, 91% owned by the government; the remaining 9% is held by various airlines. The Thai government, as a contracting state 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 including the systems and technologies for air navigation service, which are critical functions for air transportation safety. The company’s area of responsibility is the Bangkok Flight Information Region (BKK FIR). Its operations comply with ICAO standards and recommended practices. AEROTHAI’s operation is heavily influenced by government policy and the company’s investments are approved by both the Ministry of Transport and the Thai Cabinet. All budgets are approved by the company’s board of directors, most of whom are representatives of 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 of airline shareholders. The company’s air service charges must be approved by the Civil Aviation Board.
TRIS Rating said, AEROTHAI incurred substantial amounts of debt in 2004-2006 for its investment at Suvarnabhumi International Airport. As a result, the total debt to capitalization ratio increased from 64.4% in 2004 to 80.3% in 2006. In 2007, capital expenditures of Bt1,004 million were mainly financed by debt, pushing the total debt to capitalization ratio to 82.1%. The leverage ratio is expected to remain high over the next few years, as a substantial amount of investments is needed. The new equipment and systems will enhance AEROTHAI’s ability to qualify as a regional air navigation control provider.
In 2006, funds from operations (FFO) dropped substantially to Bt16 million due to the increasing cost of starting operation at Suvarnabhumi airport which resulted in an under collection of Bt438 million. In 2007, the company’s FFO increased to Bt582 million not only because of its raised flight charge per unit and multiplying factor but also because of increasing traffic volume. For the first three months of fiscal year 2008 (Oct-Dec 2007), AEROTHAI had an over collection which will help to improve the collection status. FFO to total debt ratio improved significantly from 0.4% in 2006 to 12.3% in 2007. Although AEROTHAI’s financial profile has not been as strong as other high credit profile corporates, the company maintains a strong credit profile because it will continue to receive strong government support as its role is critical for the country, said TRIS Rating. -- End
Aeronautical Radio of Thailand Ltd. (AEROTHAI)
Company Rating: Affirmed at AA
Rating Outlook: Positive
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Copyright 2008, 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 info