PT Angkasa Pura I (Persero) rating affirmed at “idAAA” with negative outlook

(August 13, 2020)-- PEFINDO has affirmed its “idAAA” rating for PT Angkasa Pura I (Persero) (APAI). We have also affirmed our “idAAA” rating for APAI’s Bond I Year 2016 and “idAAA(sy)” rating for its Sukuk Ijarah I Year 2016. We also maintained its “negative” outlook for the corporate rating to anticipate lower revenue in the near term due to the Coronavirus Disease (COVID-19) pandemic, which inevitably impacted the airport industry as a result of a severe toll on consumer’s willingness to travel combined with additional restrictions in air transportation worldwide. We are of the view that the pandemic will negatively impact APAI’s operating cash flows in the near term due to the lower revenue and the significant portion of fixed operating expenses. Our projection assumes significant cash inflow drops in 2020 and the growth of COVID-19 new infections to slow down at the end of the first quarter in 2021 (1Q2021). We expect APAI’s performance to improve gradually in 2021. We are also of the view that it will likely utilize its credit facilities to finance its working capital during this pandemic. It is currently implementing a survival strategy by optimizing the revenue of its subsidiaries and implementing operating expense efficiency strategies that still prioritizes operational and security aspects. It is also proposing to its main banks to broaden the purpose of its unused investment loan to finance its working capital and to adjust the interest payments schedule to maintain its cash flow. We will keep monitoring the COVID-19 pandemic impact on the Company’s performance and the government support to APAI during the pandemic.

An obligor rated idAAA has the highest rating assigned by PEFINDO. The obligor’s capacity to meet its long-term financial commitment, relative to that of other Indonesian obligors, is superior.

The suffix (sy) means the rating mandates compliance with Islamic principles.

The corporate rating reflects strong government support for APAI due to the critical role of airports, a strong competitive advantage from its economy of service area, and a well-diversified revenue. The rating is constrained by its high financial leverage in the near to medium term.

The rating may be lowered if the industry’s unfavorable conditions continue to persist longer than anticipated, and there is a material downward shift in term of likelihood of government support in maintaining APAI’s overall credit profile. the industry's unfavorable conditions remain longer than expected and the government support during the COVID-19 pandemic is lower than expected. The rating could also be lowered if PEFINDO views a reduction in government support, such as through a material divestment of ownership.

The outlook could be revised to stable if the APAI’s revenue starts to recover and records positive growth month-over-month on a sustained basis.

A state-owned enterprise (SOE) engaged in airport and airport-related services in the central and eastern regions of Indonesia, APAI operates 15 airports, including I Gusti Ngurah Rai International Airport in Bali, Juanda International Airport in Surabaya, Sultan Hasanuddin International Airport in Makassar, Sultan Aji Muhammad Sulaiman Sepinggan International Airport in Balikpapan, Yogyakarta International Airport in Kulonprogo, and International Sentani Airport in Jayapura. It was fully owned by Indonesian government as of June 30, 2020. (ends)