ACSA reveals the proposed changes to its corporate plan following Covid-19. Picture: Clinton Moodley.
ACSA reveals the proposed changes to its corporate plan following Covid-19. Picture: Clinton Moodley.

Acsa reveals that government support of up to R3bn may be required in next 3 years

By Travel Reporter Time of article published May 19, 2020

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Airports Company South Africa (Acsa) revealed the proposed changes to its corporate plan compelled by the travel restrictions due to Covid-19 pandemic. 

The company informed the Parliament’s Portfolio Committee on Transport that it has been revising its corporate plan in line with the potential impacts of Covid-19 and travel restrictions on traffic volumes and its financial performance and position.

The company developed potential future scenarios to respond to the sustainability of airlines and the traffic volume demand post-Covid-19. In the company’s “new normal” scenario, which is its worst-case scenario, it anticipates that the impact on traffic volume demand and airline sustainability will be long-term. Under this scenario, traffic volume is estimated to decline by up to 50 percent in 2020/21, an unprecedented impact on the global aviation sector. 

The New Normal scenario further includes significant responses introduced by management to mitigate the impact of the traffic volume decline anticipated. These include reductions to operational expenditure and limitations to capital expenditure.

Previously planned capital expenditure of R17.9-billion over the next three years will now be capped at R1-billion a year. Reports that the reduction is from R41-billion to R5.8-billion are therefore incorrect.

The result of this scenario leads to a funding requirement over a five- to six-year period of up to R11-billion. Of this amount, government support of up to R3-billion may be required in the next three years. Acsa revealed that the financial position of the company was solid before Covid-19. 

"The company had no intention of requiring government support. The company emphasised that the support would be in the form of guarantees and not bailouts," it stated in a press statement. Acsa also set out the implications of the recent downgrade of its debt by Moody’s Investor Service, which also put Airports Company South Africa on notice for a review.

CEO of Airports Company South Africa Mpumi Mpofu said the aviation industry was hit the hardest by the reduction of commercial flying both in South Africa and around the world.

“Airports are complex operations where fewer than 10 percent of the people working are directly employed by Airports Company South Africa.

“We are therefore acutely aware of the Covid-19 impact on our entire ecosystem. Our efforts to mitigate the business impact of Covid-19 are essential if we are to help preserve the livelihoods of thousands of people in the sector,” said Mpofu.

She said ACSA believed the aviation sector’s most critical issue is the sustainability of airlines worldwide. She refers to the situation with SAA, SA Express and Comair under business rescue.

Mpofu said ACSA made proposals on the resumption of domestic services, but the Department of Transport had the final say when it issues regulations for Level 3 arrangements.

“The situation in aviation is fluid. New estimates of the impact of Covid-19 are emerging almost daily. However, it is essential to take steps now to mitigate the impact. We will be guided by unfolding events and revisit plans accordingly.

“Airports Company South Africa has taken pride in its standing as a well-run state-owned company that has made a profit in all but one of its 26 years. While the circumstances in which we now find ourselves are extremely challenging, we will continue to apply the commitment and discipline that has served us well,” she added. 

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