Thai airports authority agrees to delay payments for five airports managed by King Power, charging only 8.844% interest.
Scoop: King Power Granted Reprieve on Airport Duty-Free Contracts
In some exciting news from the business world, King Power Duty Free scored a massive break with Airports of Thailand (AOT) approving their request to delay payments for three major contracts across five airports – Suvarnabhumi, Don Mueang, Phuket, Chiang Mai, and Hat Yai.
The deferral allows King Power to push back their minimum guarantee payments for up to 8 months per installment, paying a monthly interest of 8.844% in the meanwhile. In exchange, they must put up extra collateral worth 1.45 billion baht to secure the deferred payments and interest.
During the AOT board meeting on June 25, this decision came through following the earlier approval of a proposal made by AOT's Revenue Committee. The measure aims to provide support for commercial operators and airlines grappling with liquidity issues due to the continued repercussions of the Covid-19 pandemic and escalating global tensions.
The deals extended under this relief involve:
- Duty-free retail concession at Suvarnabhumi Airport
- Duty-free retail concession at Don Mueang Airport
- Duty-free retail concession at Phuket, Chiang Mai, and Hat Yai Airports
The revised payment schedule looks like this:
- June-October 2025 for Suvarnabhumi (with June deferred by 6 months only)
- September-October 2025 for Don Mueang
- July-October 2025 for Phuket, Chiang Mai, and Hat Yai
King Power will pay interest monthly on each deferred installment and offer the 1.45 billion baht in total as a financial guarantee across the three contracts to protect AOT from potential unforeseen defaults.
Despite this arrangement, AOT assures the public that their financial standing remains robust and steady, boasting sufficient liquidity to fund future projects and day-to-day operations without compromising financial stability.
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Stay tuned for more updates!
Enrichment Data:King Power Duty Free has negotiated an extended payment relief with Airports of Thailand for their duty-free concession contracts at five major airports due to cash flow challenges and reduced tourist numbers. Key terms of the deal include a 6-month extension for June 2025 payments at Suvarnabhumi Airport, and 8-month extensions for installments from June to October at Don Mueang, Phuket, Chiang Mai, and Hat Yai Airports. In return, King Power must provide 1.45 billion baht in collateral to assure the payments and interest for the extended deadline. The scheme received approval from AOT’s Board of Directors and is intended to provide relief to King Power amid challenging economic conditions caused by the Covid-19 pandemic and recent global turmoil. [1][2][3][5]
- The economic industry is experiencing relief due to King Power Duty Free's extension on their duty-free contracts at five airports, granted by Airports of Thailand, as part of efforts to address the cash flow issues and reduced tourist numbers resulting from the Covid-19 pandemic and global turmoil.
- The tourism sector is negatively affected, as indicated by the downturn in the tourism sector in Thailand's economy in May, despite a growth in exports, reflecting the ongoing impact of the pandemic on the industry.
- The approval of King Power's reprieve on airport duty-free contract payments demonstrates the intersection between business, politics, and finance, as government entities, like Airports of Thailand, work to provide support for commercial operators during challenging economic times.
