PEFINDO has affirmed the ratings for PT Angkasa Pura I (APAI), its Bond I, and shelf- registered (SR) Bond I at idAA+

(June 13, 2022)--At the same time, PEFINDO has also affirmed its idAA+(sy) ratings for APAI’s Sukuk Ijarah I and SR Sukuk Ijarah I. The outlook for the corporate rating is maintained at negative, reflecting APAI’s ongoing pressure on its cash flow and liquidity and its capacity to services its debt will largely depend on the management’s restructuring plans with its creditors, expected to conclude in the third quarter of 2022, and aimed at reducing any short-term vulnerabilities by reprofiling its principal payment and current maturities, including interest payment deferral, to correspond with the cash flows and recovery prospects. Despite our medium-term expectation of strong recovery of passenger traffic volumes, resulting in better operating cash flow, in the near term its operating cash flow generation is expected to remain small relative to its debt service obligations.

The corporate rating reflects strong government support for APAI due to the strategic importance of airports, strong economy of service area, and solid track record in aero and non-aero revenue. The rating is constrained by its weak financial profile due to pandemic.

We may lower the rating if passenger demand falls significantly below our expectations of a sustained recovery, hindering the turnaround of APAI’s earnings. We may also lower the rating if signs of constrained liquidity and weakened financial flexibility are present. The rating may also be lowered if we view a weakening in government’s commitment to providing extraordinary support.

We may revise the outlook to stable once APAI is able to reach an agreement with its creditors on the debt restructuring as it will reduce the pressure in the cash flow available to serve its financial obligations.

APAI operates 16 airports, majority of which are located in the central and eastern parts of Indonesia. It is the operator of I Gusti Ngurah Rai International Airport in Bali, which is the second busiest airport after Soekarno-Hatta International Airport, serving an average of around 23 million passengers in in 2017-2019. In 2021, APAI, through a joint venture with Incheon International Airport Corporation and state-contractor PT Wijaya Karya (Persero) Tbk, was rewarded a 25-year contract to construct, expand, and operate the Hang Nadim Airport in Batam.

APAI is 99% owned by PT Aviasi Pariwisata Indonesia (Persero) (Aviata), a state-owned enterprise appointed by the government as the holding company for aviation and tourism-related enterprises, and the remainder 1% owned by the government through a golden share. (ends)