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Travel revival lifts AoT profit 171%

BackAug 26, 2006

But Suvarnabhumi will mean higher costs


Airports of Thailand Plc (AoT), the operator of the country's five international airports, sprang back financially in its third fiscal quarter to June with a 171% jump in net profit to 2.08 billion baht, or 1.56 baht a share. The earnings for the fiscal third quarter were much higher than most market forecasts, driven by a 14.4% rise in passenger traffic and as well as a 6.26% rise in aircraft movements.

The April-June result reflected a strong recovery compared with the same period last year when AoT earned 769.4 million baht, or 0.54 baht a share, at a time when it was still dealing with the impact on travel from the december 2004 tsunami.

The company's revenue for the third quarter rose 8.11% year-on-year to 3.95 billion baht, but operating costs increased 16.5% to 1.83 billion, primarily due to higher staff costs as the company gears up for the opening of Suvarnabhumi Airport on Sept 28.

For the nine-month period to June, AoT had a net profit of 9.11 billion baht, up 74.7% from the same period of the previous year, while revenue rose 10.4% to 12.24 billion baht.

Challenges lie ahead for AoT to maintain high profitability in its fourth quarter, given industry executives' concerns about the readiness of Bangkok's new airport.

Over the long term, Suvarnabhumi is expected to generate more revenue and profit for AoT than the existing Don Muang airport. However, short-term performance could be affected by its decision to delay a planned 15% increase in landing and parking fee by six months to April 1 next year.

However, AoT president Chotisak Asapaviriya expressed optimism that the postponement should not have a major impact on AoT's earnings as it would be offset by income derived from the extra traffic coming through Suvarnabhumi.

AoT earlier projected its revenue would grow by 15% this year to 17 billion baht, from 14.8 billion in fiscal 2005.

But analysts expect a slight drop in AOT's full-year 2005-06 net profit, and up to a 40% slide in the next financial year, due to rising depreciation costs associated with the new airport.

The International Air Transport Association (IATA), which represents more than 260 carriers, remains opposed to the fee increase, which would follow a 20% rise in charges in January 2005.

AoT maintains that the fees at Suvarnabhumi would still be substantially lower than those charged at competing airports in the region, such as Hong Kong and Singapore.

AOT shares closed yesterday on the Stock Exchange of Thailand at 57.50 baht, up 50 satang, in trade worth 64.34 million baht.

Saturday 26 August 2006, Bangkok Post