AOT’s support of King Power

The Airports Authority of Thailand was formed in 1979 and, controlled by senior Royal Thai Air Force officers, and is rumored to have provided an endless flow of money into their pockets and into the RTAF. The official history of the AOT reads like a royalist history and is odd in that it jumps from 1914 to 2006 (there’s more in the Annual Report). It became a publicly-traded company in 2002.

Often the subject of complaints about airport problems, it has hit the headlines in a big way in recent days when its opaque dealings became public.

The Nation reported that “[a]lmost Bt80 billion was wiped off the value of … AOT … today when its stock price dropped 8.7 per cent to Bt49.75 per share following the board’s move to assist King Power Duty Free (KPD) without first consulting shareholders.”

The report states that “AOT’s board of directors approved King Power’s minimum guaranteed payment method based on the number of passengers at Suvarnabhumi Airport, which remains lower than the estimate of the duty free giant.” It also “extended the duty free area renovation period from September 28 this year to March 31, 2022, because KPD and its Suvarnabhumi operation were unable to contact trade partners to prepare for reopening of duty free outlets.”

In other words, the AOT board agreed to subsidize King Power without consulting shareholders.

A stock analyst said AOT’s actions meant “his brokerage would change its investment recommendations…”. It was added: “We advise investors to sell AOT stocks…”.

The Thai Enquirer looked at the issue and suggested that “SET-listed, state enterprise Airports of Thailand drew shades of the 1997 economic crisis this week by asking Kasikorn Securities to withdraw an unfavourable analysis on AOT’s stock and calling in the author for clarification.”

Kasikorn Securities “had argued that the accommodating moves made by the AOT toward King Power would cost the company up to 130 billion baht.”

The report noted that “industry insiders” said that AOT’s behavior towards Kasikorn Securities was highly unusual.

Of course, all of this comes when “[b]oth the AOT and King Power have experience unprecedented losses in recent months due to the pandemic, with both companies heavily reliant on incoming tourists from abroad.”

What kind of public company is AOT? PPT looked at its website and Annual Report for 2019 for more information. In fact, while publicly-listed, AOT is essentially a state-owned company. While it has a registered capital of 14,285,700,000 Baht, the “Ministry of Finance is the major shareholder with a 70% stake…”. The next largest shareholders are institutional investors. The Board of Directors, despite having people listed as “independent director,” this is a nonsense as almost all currently work as Ministry officials or are recently retired or serving military officers or senior bureaucrats. The Chairman of the Board is Permanent Secretary of the Ministry of Finance. For those directors who attended all meetings, the Annual Report 2019 lists salaries and allowances of 825,000 to over 1.3 million baht. Each director received a bonus payment of 1.5 million baht. Then there are “Remunerations of Directors of Subsidiaries and Associated Companies,” which add a further 1-2 million baht to directors’ remuneration.

These are not huge corporate salaries, but nice little earners for bureaucrats. We can only wonder if there are other payments that might top up salaries even more.

So if the AOT is essentially a state enterprise, can we assume that the regime – government – approved of the subsidy to King Power?