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News

MD & A

(Translation)

Ref. No. 1275

14 February 2008

Re: Management Discussion and Analysis

Attn: President, The Stock Exchange of Thailand

Management Discussion and Analysis for the three-month period ended December 31st,2007 and 2006 for Airports of Thailand Public Company Limited and its subsidiaries

1. Operating results of Airports of Thailand Public Company Limited and its subsidiaries (AOT)

1.1 Operating results for the 1st Quarter of fiscal year 2008 (Q1/2008)compared to the 1st Quarter of fiscal year 2007 (Q1/2007)
In Q1/2008 (October 1st - December 31st, 2007), AOT has total operating revenuesof Baht 5,414.85 million, a year-on-year increase of Baht 1,337.05 million or a 32.79% rise;total operating expenses of Baht 4,261.94 million, a year-on-year increase of Baht 362.63 million or a 9.30% rise; total operating income of Baht 1,152.91 million, a year-on-year increase of Baht 974.42 million or a 545.93% rise, and net profit of Baht 340.76 million, a year-on-year decrease of Baht 164.59 million or a 32.57% drop, as follows:

Aeronautical Revenues An increase in aeronautical revenues of Baht 3,822.22 million, a year-on-year increase of Baht 1,083.69 million or a 39.57% rise, is due to continuous growth of air traffic of all six airports under the supervision of AOT when compared to the previous year. The number of aircraft, passenger and cargo movements increased by 9.19%,7.98% and 10.64% respectively. Low-cost carriers' movements, especially, represent 28.2% of total flight volume, a year-on-year increase of 20.3%, and 22.0% of total passenger volume, a year-on-year increase of 14.5%.

An increase in the passenger service charges (PSC) since February 1st, 2007 and the landing and parking fees since April 1st, 2007 is also a part of the increase in AOT's revenues.

Non-aeronautical Revenues An increase in non-aeronautical revenues of Baht 1,592.63 million, a year-on-year increase of Baht 253.36 million or an 18.92% rise, is due to increased revenues of office and state property rental, limousine services, parking fees, and concession of landside and repair and maintenance services.

Total Operating Expenses AOT has total operating expenses of Baht 4,261.94 million, a year-on-year increase of Baht 362.63 million or a 9.30% rise.

As AOT recognized the consequences of increased expenses incurred after one-year commercial operation of Suvarnabhumi Airport, AOT's Board of Directors has therefore set out a policy to reduce expenses. However, despite a 9.30% rise in total operating expenses,AOT's operating expenses of Q1/2008 have considerably dropped by Baht 53 million,comprising such expenses as overtime, outsourcing, utilities and advertisement. Repair and maintenance expenses (on baggage handling conveyors, runways/taxiways, electrical equipment, lifts/escalators and moving walkways), especially, have decreased by Baht 32.90 million or a 22.67% drop.

As a result, AOT's operating income of Q1/2008 has increased by Baht 974.42 million or a 545.93% rise. However, since the foreign exchange gain has decreased by Baht 1,051.20 million or a 95.70% drop along with interest expenses of Baht 647.79 million and income tax expenses of Baht 462 million, including previously unrecognized revenues from the duty-free and commercial activities as remarked by the Revenue Department, therefore, AOT has net profit of Baht 340.76 million, a year-on-year decrease of Baht 164.59 million or a 32.57% drop and the basic earning per share of Baht 0.24, lower than the previous year which was at Baht 0.35

1.2 The comparison between key operating results of Q1/2008 and Q1/2007

Operating Revenues

Aeronautical Revenues AOT has aeronautical revenues of Baht 3,822.22 million, a year-on-year increase of Baht 1,083.69 million or a 39.57% rise, comprising:

1) Landing and Parking Fees of Baht 1,090.84 million, a year-on-year increase of Baht 142.52 million or a 15.03% rise.

2) Passenger Service Charges of Baht 2,624.32 million, a year-on-year increase of Baht 940.60 million or a 55.86% rise.

3) Aircraft Service Charges of Baht 107.06 million, a year-on-year increase of Baht 0.57 million or a 0.53% rise.

Non-aeronautical Revenues AOT has non-aeronautical revenues of Baht 1,592.63 million, a year-on-year increase of Baht 253.36 million or an 18.92% rise, comprising:

1) Office and State Property Rental of Baht 342.54 million, a year-on-year increase of Baht 48.34 million or a 16.43% rise, due to rental charges of office at Suvarnabhumi Airport.

2) Service Revenues of Baht 806.97 million, a year-on-year increase of Baht 175.15 million or a 27.72% rise, due to limousine services, service charges, utility charges and parking fees.

3) Concession Revenues of Baht 443.12 million, a year-on-year increase of Baht 29.87 million or a 7.23% rise, due to landside and repair and maintenance services.

Operating Expenses AOT has operating expenses of Baht 4,261.94 million, a year-on-year increase of Baht 362.63 million or a 9.30% rise, comprising:

1) Operating Expenses of Baht 1,348.39 million, a year-on-year increase of Baht 64.67 million or a 5.04% rise, due to such expenses as fuel cost, insurance premium, and passenger service charge collecting fee.

2) Repair and Maintenance Expenses of Baht 112.24 million, a year-on-year decrease of Baht 32.90 million or a 22.67% drop, due to repairs on baggage handling conveyors,electrical equipment, lifts and escalators.

3) Depreciation and amortization of Baht 1,941.36 million, a year-on-year increase of Baht 213.50 million or a 12.36% rise, due to more investments in assets.

Foreign Exchange Gain AOT has foreign exchange gain of Baht 47.26 million, a year-on-year decrease of Baht 1,051.20 million or a 95.70% drop, due to a gain from foreign exchange rate adjustments at the end of Q1/2008 of Bath 76.64 million and loss from cross currency swap of Baht 29.38 million. The difference between the foreign exchange rates of Yen and US$ for Q1/2008 and Q1/2007 is as follows:

Interest Expenses AOT has interest expenses of Baht 647.79 million, a year-on-year increase of Baht 59.30 million or a 10.08% rise, partly due to interest expenses of Baht 624.98 million to be paid for loans borrowed for construction of Suvarnabhumi Airport.

2. The financial statements of Airports of Thailand Public Company Limited and its subsidiaries as of December 31st, 2007

Assets As of December 31st, 2007, AOT has total assets of Baht 142,902.33 million, a decrease from the end of fiscal year 2007 (September 30th, 2007) of Baht 574.58 million or a 0.40% drop. The assets comprise current and non-current assets, which account for 13.69% and 86.31% of total assets respectively. The assets can be elaborated in details as follows:

Current assets have increased by Baht 413.73 million or a 2.16% rise, partly due to increased bank savings.

Non-current assets have decreased by Baht 988.31 million or a 0.79% drop, mainly due to:

Property, plant and equipment-net have decreased by Baht 1,237.51 million, due to the depreciation of Suvarnabhumi airport and the expiration of some assets. Assets under construction have increased by Baht 139.16 million or a 2.38% rise, due to increased construction work at Suvarnabhumi airport and regional airports.

Liabilities As of December 31st, 2007, AOT has total liabilities of Baht 72,865.02 million, a year-on-year decrease of Baht 924.73 million or a 1.25% drop as follows:

Current liabilities of Baht 9,216.52 million, a year-on-year decrease of Baht 1,781.87 million or a 16.20% drop due to the repayment to contractors who are responsible for the construction of Suvarnabhumi Airport and the accrued payment of bonus for fiscal year 2007.

Non-current liabilities of Baht 63,648.50 million, a year-on-year increase of Baht 857.14 million or a 1.37% rise, comprise:

1) Long-term loans have increased by Baht 808.93 million or a 1.53% rise, due to the disbursement of loans for the construction of Suvarnabhumi Airport.

2) Other non-current liabilities have increased by Baht 48.21 million or a 0.88% rise, partly due to the awaiting recognition of revenues from additional contracts with private fims.

Shareholders' equity, as of December 31st, 2007

Cash and cash equivalents totals Baht 12,077.69 million, an increase from the beginning of fiscal year 2008 of Baht 1,846.30 million or an 18.05% rise. The details of the sources and uses of funds are as follows:

- Net cash received from operating activities accounts for Baht 1,521.57 million

- Net cash payment for investing activities accounts for Baht 548.73 million,mostly in investments in construction at Suvarnabhumi Airport.

- Net cash received from financing activities accounts for Baht 873.46 million.Repayment of long-term loan totals Baht 151.60 million and an additional disbursement of Baht 1,025.06 million.

3. The consequences of a change in a recording policy for investments in subsidiaries and associated company

AOT has changed its recording policy for investments in subsidiaries and associated company presented in the company financial statements from previously under equity method to under cost method in Q1/2008 (ended December 31st, 2007), to be in accordance with the Accounting Standard No. 44. AOT has also applied retrospective method to the company financial statements for the prior period that presented comparatively. However,investments in subsidiaries and associated company presented in the company financial statements were essentially recorded at original cost. The change in such policy resulted in the difference between the net profit in the company financial statements and that in the consolidated financial statements. The net profit of Q1/2008 in the consolidated financial statements accounts for Baht 340.76 million, while that in the company financial statements accounts for Baht 318.85 million. More details are as follows:

1. Net profit in the company financial statements of Q1/2008 has decreased by Baht 21.91 million, while that of Q1/2007 has increased by Baht 39.55 million. This is because the gain and loss from investments recorded under equity method was not included.

2. The consequence on other items in the company financial statements for the period ended December 31st, 2007: investments in subsidiaries and associated company and retained earning in the balance sheets have increased by Baht 580.83 million, as shown in "The consequence of investment accounting policy" in the statement of changes in shareholders'equity.

However, the change in the accounting policy only influences the accounting transactions relating to investments in subsidiaries and associated companies in the company financial statements, but does not influence the preparation of the consolidated financial statements and business operations of AOT.

Please be informed and further proceed with public disclosure accordingly.

Yours sincerely,

SUWANNEE SAMRONGWATANA
Company Secretary

Authorized person

Accounting Department
Tel. 0-2535-1594
Fax. 0-2535-1855

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