The Airports Company of South Africa (ACSA) is facing net losses of R5 billion between now and 2023 as the coronavirus pandemic slashes its revenue.
In a presentation to parliament on Tuesday, National Treasury said ACSA had been profitable before the pandemic hit, generating cumulative profits of R7.9 billion between 2013/14 and 2018/19, with the company showing ‘sound financial performance’.
However, ACSA, which manages South Africa’s major international airports, has been heavily impacted by the COVID-19 pandemic, and in June this year only generated revenue of R304 million, which is 83% below what was generated in June 2019.
The loss of revenue has resulted in losses of R492 million in June 2020, whereas profits of R380 million were generated in June 2019.
Treasury warned that air traffic volumes may decline by over 50% in 2020/21 and that ACSA now forecasts cumulative net losses of R5 billion over the 2020 Medium Term Expenditure Framework up to 2022/23 and a cumulative R10.2 billion loss by 2025/26.
In response to deteriorating conditions, over the next 5-6 years ACSA will be reducing operational expenditure by R1.2 billion per annum (including R300 million employee costs) and capital expenditure by at least total R1.4 billion in 2020/21 to alleviate forecast liquidity pressures.
As ACSA is not wholly owned by the state, Treasury said complications would arise should a direct shareholder injection be chosen (ACSA is 74.6% owned by the South African government, 20% by the PIC and 5.4% by minority shareholders).
Due to COVID-19, ACSA has requested a 3 year R3.5 billion guarantee. ACSA will be unable to repay the guaranteed debt without an injection from shareholders and has thus also applied for a R3.5 billion equity injection for 2020/21, Treasury said.
ACSA is the largest airport operator in Africa, with more than 40 million passengers usually passing through ACSA’s nine airports every year before the coronavirus pandemic. ACSA has enabled more than 80% of South Africa’s commercial air travel by overseeing operations at OR Tambo International Airport, Cape Town International Airport, King Shaka International Airport, George Airport, Bram Fischer International Airport, Upington Airport, Kimberley Airport, Port Elizabeth Airport and East London Airport.
Although ACSA is primarily charged with managing South Africa’s primary airports, it also offers its technical advisory services and support and airport management to countries around the world, and operates concessions in India (Mumbai Chhatrapati Shivaji International Airport), Brazil (Guarulhos International Airport), Munich (Munich Airport) and Ghana. In 2018 ACSA signed an agreement with Thailand covering airport management and operations. ACSA is also involved in Zambia, Mozambique, and Liberia.