Acsa disposes some of its assets to raise R2 bn after losses due to impact of Covid-19
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AIRPORTS Company South Africa (Acsa) is on a drive to dispose of some of its assets to raise at least R2 billion in a bid to shore up its liquidity position after it swung into a R2.6bn loss for the year ending March 31 owing to the impact of Covid-19.
Acsa yesterday became the latest firm to reveal how the Covid-19 pandemic had wreaked havoc on the aviation and tourism sector as passenger traffic plummeted in 2020.
The State-owned company swung into a loss, down from a profit of R1.4bn the previous year, as demand for air travel remained significantly subdued.
This was the second loss in the company’s 28-year history after the R220 million loss it suffered in the 2011 financial year on delayed tariff increases.
Acsa’s revenue fell to R2.2bn for the 12 months, less than a third of the R7.1bn generated in the previous financial year, as all revenue streams were impacted heavily.
To boost its liquidity, Acsa disposed of its 10 percent shareholding in Mumbai International Airport for R1.26bn, and received a loan of R810m from the Development Bank of Southern Africa.
It also received R2.3bn from the issuance of preference shares to the government.
Acsa contained employee costs by reducing its headcount by 20 percent and implemented zero-salary increases and no incentive bonuses, and reduced recruitment costs.
Capital expenditure projects that would have required investment of more than R14bn were suspended in 2020 while operating expenditure has been cut by R1.2bn.
Acsa chief financial officer Siphamandla Mthethwa said the company remained solvent and had sufficient liquidity to continue operating for the foreseeable future, notwithstanding the significant loss recorded for the year.
Mthethwa said they were progressing with the disposal of Guarulhos International Airport investment and monetisation of the investment property portfolio.
“We have a net assets value of R20bn, and the asset disposal is a tiny portion of that. It will fetch R2bn, maximum. We intend to have completed it by June 2022,” Mthethwa said.
“These are (fringe) assets like hotels, cargo and fuel infrastructure, so they are not attached to our normal operations of aircraft and passenger business.”
Mthethwa said the company’s outlook was still uncertain in the medium term, and that it could take up to five years to restore it to profitability.
He said engagements for a possible tariff assistance were ongoing, but Acsa would not be requiring any government bailout.
“We are in a very uncertain period because of the looming fourth wave of Covid-19 if the vaccination programme is not accelerated,” Mthethwa said.
“We expect to start breaking even in the 2023/24 financial year, and we see a very gradual recovery to pre-Covid profitability at around the 2025/26 financial year.”
In the year ending March, departing passenger numbers in South Africa fell by 78.2 percent, from 21 million to 4.6 million, year-on-year due to the multiple national lockdowns.
However, the operating environment has since improved after the reporting period, with a significant increase in air traffic movements and commercial activities due to the easing of restrictions. Acsa chief executive Mpumi Mpofu said that Acsa’s recover and sustain strategy for the period up to 2025 involved extending and defending core businesses, exploring emerging business and revenue opportunities.
She added that capital expenditure would only be on maintenance and the replacement of critical airport infrastructure.
“The company is in a comparatively sound position considering the challenges we were confronted with since early 2020,” Mpofu said.
“We hope that the recovery can be accelerated with the global vaccine rollout and a majority of countries reaching herd immunity.”