Bangkok: Airports of Thailand Public Company Limited (AOT) has clarified its position to the Stock Exchange of Thailand (SET) regarding its concession contract with King Power Group, stating that no amendments have been made to the agreement. Despite this clarification, AOT's share price experienced a significant drop, falling to a low of 41.50 baht this morning.
According to Thai News Agency, AOT addressed a headline from a daily newspaper dated February 14, 2025, which claimed that King Power might face liquidity issues that could lead to contract amendment negotiations. AOT confirmed that it has not altered the terms of its concession with King Power and intends to continue operating under the existing contract, adhering to principles of good governance.
AOT acknowledged concerns from analysts, including CGS International Securities (Thailand) and Kasikorn Securities (KS), who suggested that King Power's liquidity challenges could impact AOT's income if the situation persists. CGSI highlighted that such issues might necessitate renegotiations of the concession agreement, particularly concerning the annual minimum guarantee-a crucial income source for AOT. KS also noted that AOT is experiencing increased trade receivables due to the concessionaire's request to postpone payments for 18 months.
The liquidity problem stems from a letter sent by King Power Duty Free Co., Ltd. (KPD) to AOT in August 2024, requesting a deferment of benefit payments at several airports due to the ongoing impact of COVID-19 on tourism. The pandemic has led to a significant reduction in flights and passengers, affecting KPD's business operations and financial health. Despite AOT's assistance in deferring payments, KPD has continued to face financial difficulties.
KPD cited several challenges, including the need for substantial investments in airport infrastructure and stringent loan policies from financial institutions. These factors have compounded KPD's liquidity issues, leading to losses and the necessity to defer minimum benefit payments to AOT. KPD aims to restore liquidity and improve financial stability by extending payment deferments and capitalizing on the expected increase in tourist arrivals during the peak season.
AOT's decision to allow operators to adjust payment structures is seen as more beneficial than terminating contracts and seeking new bidders, as it ensures continued business operations and potentially higher benefits for AOT. The organization has implemented measures to support entrepreneurs facing liquidity issues due to economic downturns and geopolitical factors.
AOT's CEO, Mr. Keerati Kitimanawat, has confirmed ongoing negotiations with King Power regarding a reduction in late payment fines. The current contract stipulates an 18% annual interest rate for late payments, and discussions are focused on reducing this rate to no less than the Minimum Loan Rate (MLR) plus 2%. With King Power accounting for a significant portion of overdue compensation, AOT is working towards a resolution that ensures financial stability for both parties.