Acsa seeks R11bn government guarantee after being humbled by Covid-19
JOHANNESBURG - One of the country’s profitable state-owned enterprises, the Airports Company SA (Acsa) yesterday managed to record profits during the year to end March despite flagging that the Covid-19 crisis hit its overall performance.
Acsa said that the pandemic and measures introduced to contain its spread saw its operations suffer as restrictions blocked travel from other countries.
The entity said that it would now require a R11billion government guarantee to meet its funding requirements over the next five to six years as the Covid-19 had impacted its revenue streams.
Acsa said that up to R3.5bn of this amount would be required in the next three years, given current assumptions about the anticipated traffic volumes.
The company reported that revenue for the year ended March 31 declined by 0.03percent to R7.12bn as the impact of the Covid-19 hobbled the aviation industry.
Chief financial officer Siphamandla Mthethwa said the dramatic downturn of the Covid-19 pandemic on the company’s earnings was set to continue in the next financial year.
Mthethwa added that Acsa experienced huge liquidity challenges in the last quarter as Covid-19 began impacting traffic volumes from other countries.
He said that the company’s liquidity challenges were exacerbated by the banks, which had become edgy in dispensing cash under such uncertain trading circumstances.
Mthethwa said that if it was not for Covid-19, Acsa would not be asking government for support. “Up to March 2020, we needed no support from the Treasury, but the impact of Covid was unprecedented. For the first four months of lockdown there was absolutely no trading.
“What makes our situation worse was a number of airlines going into business rescue as the industry started feeling the pressure, and that the industry is expecting to recover only in 2024. What we are asking the government for is not necessarily a direct cash injection (from the fiscus), but guarantees so our lenders can borrow us money.”
Acsa recorded a 1percent decline in departing passenger numbers to 20.9million, while aircraft landings for the year were down 4percent to 248519. The group experienced a 1.7percent fall in aeronautical revenue and no tariff increases, while operating costs rose by 2percent to R2.6bn.
The group said despite a difficult trading environment, it recorded a R1.2bn profit from R224million the prior year on accounting adjustments, the R721m fair-value adjustment to investment properties and R157m in rates refunds.
Revenue, however, declined by 0.03 percent to R7.12bn while earnings before interest, taxes, depreciation, and amortisation also fell to R2.6bn.
The group said it repaid R296m of debt and ended the financial year with cash reserves of R1.7bn. It said the debt amounted to R6.4bn, slightly down from R6.5bn in 2019, which resulted in a gearing ratio of 17percent.
Acsa generated sufficient cash flows of R2.5bn to fund its operations, investment in capital expenditure and servicing of debt.
In planning for the recovery from the pandemic, Acsa submitted an amended corporate plan to the Department of Transport and National Treasury in August and September, respectively.
Acsa chief executive Mpumi Mpofu said that the amended corporate plan was based on the company’s assessment of the impact of Covid-19 and travel restrictions on traffic volumes.
“We anticipate that the impact on traffic volumes and airline sustainability will be long-term,” Mpofu said.
“ responses that have been introduced to mitigate the impact of the anticipated traffic volume decline include considerable reductions in operational and capital expenditure.”