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Suvarnabhumi » AOT seeks more foreign-denominated income

Sunday, July 20th, 2008

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Airports of Thailand Plc (AOT) is studying a plan to seek more foreign-denominated income in a bid to match the diversification of its long-term yen-currency debts into several major foreign currencies.

The company is also planning to develop an entertainment complex on 160 hectares near Suvarnabhumi Airport in an effort to boost its non-aeronautical revenue, as air-travel-related income is declining.

AOT president Chotisak Asapaviriya said the company was likely to collect more foreign-currency income as foreign air travel was expected to grow more rapidly than local air travel.

This trend matches the company’s plan to diversify its debts into several major currencies to reduce the risk of owing in a single foreign currency. As of June, the company had long-term yen debts, guaranteed by the Finance Ministry, equivalent in value to Bt57.5 billion. At the same time, its baht-denominated debts were Bt920 million. Repayment of the foreign debts began in 2003 and is scheduled to finish in 2040. The domestic debts, partly due in 2008, were taken on to construct a hotel.

“It is risky to owe in a single foreign currency, so we have to adjust our income into a structure that matches a basket of foreign-denominated debts. If we receive income in US dollars, Japanese yen or euros, then matching this with foreign-currency debts will spontaneously prevent currency risks,”.

Airports of Thailand will approach airlines using the new Suvarnabhumi Airport to see if they prefer to pay fees due to AOT in foreign currencies.

Similarly it will ask shops and restaurants at the airport, which also generate foreign-currency income, if they want to pay their rent in foreign currencies, Chotisak said.

Meanwhile, the AOT wants to diversify its income sources so that, in the future, 60 per cent of its revenue comes from non-aeronautical sources, executive vice president Kulya Pakakrong said.

“The airlines are likely to fly with larger airplanes, such as Boeing 747s or Airbus 380s, to obtain economies of scale. So we expect a constant income from airport fees,” he said.

These aeronautical revenues are expected to account for 53 per cent of AOT’s total revenue after Suvarnabhumi opens, assuming that a 15-per-cent increase in landing and parking fees is postponed until April next year.

In 2008, it will rise to 55 per cent of total income, based on assumptions of a 5-to- 6-per-cent increase in passengers and a 15-per-cent increase in the company’s income, Kulya said.

The company plans to develop 160 hectares of land “in the area of Suvarnabhumi Airport” as an entertainment complex, including a shopping centre, movie theatres and hospitals.

Kulya said the company expected the project would attract interest from investors because of its location. Moreover, AOT hopes to join with foreign investors to manage airports in other countries.

Suvarnabhumi Airport is scheduled to open for commercial operations on September 28.

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