AOT clarifies King Power payment terms amid industry-wide liquidity challenges
Airports of Thailand (AOT) has moved to clarify its position regarding duty free concession contracts following media reports about potential adjustments to agreements with King Power Group, while simultaneously announcing a new program to assist airport concessionaires facing liquidity challenges.
The clarification comes in response to a February 14 report in Kaohoon Turakij suggesting King Power was experiencing liquidity issues that could lead to concession contract adjustments. AOT emphasized that no changes have been made to its contract with King Power Group and reaffirmed its commitment to upholding strict corporate governance principles.
According to AOT, King Power Duty Free (KPD) submitted a letter in August 2024 requesting an 18-month postponement of Minimum Annual Guarantee (MAG) payments due between August 2024 and July 2025. The company cited ongoing impacts from the COVID-19 pandemic, substantial terminal investments, and current economic conditions affecting passenger spending. The company reported a loss of 651.5 million baht in 2023 and has been operating at a loss since January 2024.
The discussion surrounding King Power's request gained traction after reports of AOT's share price dropping 21.27% over five days, amid speculation about potential contract modifications. AOT clarified that no adjustments have been made to King Power's concession terms and that the review process aligns with the same considerations applied to other concessionaires.
After reviewing KPD's operating results, AOT confirmed the duty free operator's MAG obligations were "considerably high compared to current revenue" and approved a payment deferral for amounts due between September 2024 and February 2025, with an 18% annual penalty rate applied to the postponed payments. This move is in line with a broader trend, as over 70 operators across AOT's six airports have sought payment delays, installment plans, or operational adjustments. More than 50% of concessionaires currently pay more in MAG than they would under revenue-sharing agreements.
In response to these widespread difficulties, AOT's Board of Directors approved a new payment terms extension program in January 2025. The program allows qualifying concessionaires and airlines to postpone or split payments through January 2027, provided they meet specific criteria including advance application, maintaining adequate collateral, and paying monthly interest based on major Thai banks' minimum loan rates plus 2%.
"AOT considered the effects on AOT and found that the granting of permission for concessionaires for restructuring of payment will be more beneficial to AOT as well as better than contract termination and new bidding," the company stated, noting that new tenders could result in "significantly lower minimum guarantee than ever received."
The program requires participants to submit applications by September 30, 2025, and maintains AOT's existing 18% penalty rate for payment defaults, which the company notes exceeds both typical state enterprise penalties and Thailand's statutory 5% default interest rate.
AOT maintains that it continues to navigate these challenges while adhering to corporate governance standards and ensuring long-term financial stability.
