Acsa fears effect of tariffs on its profits
THE Airports Company SA (Acsa), which has reported a 20% increase in profits to R2bn, is expecting a decline in profits in 2017 because of a dip in airport tariffs imposed by the economic regulator.
Speaking at Acsa’s 2015-16 results announcement in Johannesburg on Friday, CEO Bongani Maseko said the regulating committee had written to the company to say it would soon finalise tariffs for the next five years and was waiting on certain issues it had to wrap up with the Treasury.
“We have had months of engagement with the new regulatory committee. We are hoping for a favourable outcome,” he said.
Acsa runs the country’s nine commercial airports, including OR Tambo International, and has been operating on an “interim tariff” based on a 0% increase on 2015 fees, while it waited for the minister of transport to sign the regulator’s proposed five-year structure. The structure was supposed to be finalised by May 2015.
Acsa has said the proposed tariffs, which advise slashing rates by 40%, would have an adverse effect on cash collections and create the risk of the entity breaching loan covenants on R11bn debt.
Breaching one credit agreement would trigger a domino effect and see other lenders lining up to collect their dues, which would force Acsa to ask for a state bailout or guarantees to honour the debt.
The regulator has proposed slashing tariffs 42% in the first year, followed by 4.1% and 15.8% hikes in the next two years. In the fourth year, the regulator would grant Acsa a 15.9% tariff hike, while in year five, the entity would be allowed to increase fees 4%.
Acsa chief financial officer Maureen Manyama said the company anticipated a decrease in returns in 2017. “We will continue to engage the regulator, given the risks that have been identified. We anticipate returns will decline, especially in 2017, because we anticipate tariffs will go down in year one.
“However, the final decision is with the regulator.”
Acsa declared a R312m dividend to shareholders for 2015-16. It reported a 6.8% rise in revenue to R8.3bn in the 2015-16 year, thanks to new routes and more passengers. New routes include Ethiopian Airlines flying to King Shaka International Airport in Durban. Emirates and British Airways increased frequencies on some routes, which drove up passenger numbers and kept Acsa revenue steady.
About 63% of revenue comes from aeronautical services including fees charged to passengers and airlines. Acsa wants to increase revenue from nonaeronautical services including retail and property, to 55% from 37% by 2020. This would allow it more control over its bottom line, making it less reliant on increasing tariffs airlines have to pay for using airports in SA.
Maseko said Acsa had won a management contract to run Mthatha Airport, which it does not own. Acsa is in talks with other airports including Wonderboom in Pretoria, about providing management services.
Manyama said Acsa concessions in Brazil and India, which form part of its nonaeronautical revenue, had recorded losses.
Acsa won a bid for the expansion, maintenance and operation of Brazil’s busiest airport, Guarulhos in São Paulo, in 2012. The concession spans 20 years, with Acsa providing management through a technical service agreement.