AOT rises on back of 'hike in passenger service charges'

Meanwhile, despite the discounts offered to low-cost airlines as incentives for their relocation from Suvarnabhumi Airport to Don Mueang Airport, stock analysts expect AOT to post only a slight decline in earnings during the fiscal years 2013-2015.
Thai AirAsia yesterday announced the relocation of its operations to Don Mueang on October 1.
AOT’s share price closed at Bt59.75 |yesterday, which is close to the five-year peak of Bt62.75 achieved on May 8.
Finansia Syrus Securities said in a research note that the reopening of Don Mueang Airport for international flights would benefit AOT in the long term.
Despite the discounts, AOT could reduce the depreciation cost for the old airport, which was tuned at nearly Bt4 billion, the securities house said, adding that it was maintaining the forecast that AOT’s net profit would reach Bt6 billion this year. It targets a stock price of Bt65 for the airports operator.
AOT’s management estimated that earnings would decline by Bt245 million during the fiscal years 2013-2015 under a worst-case scenario where no additional traffic uses the freed-up capacity at Suvarnabhumi Airport.
This is much shallower than Bualuang Securities’ previous assumption of a Bt900-million profit fall for the operator. The securities house is now convinced the earnings decline will be smaller, having heard the management’s estimate.
“If all the low-cost carriers were to relocate, passenger capacity at Suvarnabhumi Airport equal to 11 million people would be freed up,” Bualuang said. “The potential earnings accretion would more than offset the impact of the discounts offered.
“Don Mueang could potentially cater to more 21.5 million people after the relocation. This plan would reduce AOT’s capital expenditure needs of Bt12 billion for the construction of a domestic terminal at Suvarnabhumi Airport.”
Bualuang forecast a target price of Bt68.
On the passenger service charge, AOT’s management told analysts at a meeting last Friday that it is seeking the Civil Aviation Department’s approval of an increase. If approved, from the fourth quarter of 2013, the service charge for international passengers would be raised from Bt700 to Bt800, while that for domestic passengers would rise from Bt100 to Bt150.
At the meeting, the management also affirmed strong air-traffic growth in the third quarter of its accounting year, from April to June.
Even though air traffic in the quarter is expected to soften from the previous three months, because of seasonality, compared with the same period last year, air-traffic growth momentum has been sustained.
In the quarter, passenger numbers grew 12 per cent year on year, while aircraft movement rose 8 per cent year on year during April and May.
Traffic at Suvarnabhumi Airport during June 1-17 strengthened further compared with the same period last year, with 14-per-cent growth in international passengers and a 36-per-cent increase in domestic passengers, despite a runway-maintenance shutdown, AOT said.