Acsa’s R20bn for infrastructure

PROFITABLE TIMES: IT ABSORBED 35% DROP IN TARIFFS

Chief executive officer Maseko says the aviation company will be funding the programme from its own balance sheet for the next three years.

Airports Company SA (Acsa) will be spending about R20 billion on infrastructure in the next three years, at three of its major airports. The biggest projects have been funded and are ready to go on tender, Acsa chief executive Bongani Maseko told Moneyweb.

The aviation company recorded revenue of R6.6 billion for the year ended March 31, 2018, down 20% from 2017 due to a 35.5% drop in aeronautical tariffs.

These tariffs are determined by the regulator and the drop followed an over-recovery in the previous years. The tariffs provided for the recovery of infrastructure spend that Acsa planned to do, but which was delayed, says Maseko.

Acsa’s non-aeronautical revenue, from streams like parking, retail, advertising, and property rental, balanced the lower tariffs.

The lower tariffs were further mitigated by cost containment, improved performance from operations outside South Africa, the appreciation of the investment portfolio and improved passenger numbers at Cape Town and King Shaka International airports.

Nonetheless, some non-aeronautical portfolios could have performed better.

Acsa’s acting financial director Dirk Kunz says: “We are investigating the drivers in those portfolios to understand how we can improve their performance.”

Acsa’s profit dropped 58% to R843 million. Its gearing ratio improved from 48 in 2014 to 22 in the reporting period.

Its Mumbai operations made a positive contribution, while losses from the Guarulhos International Airport in Brazil narrowed by R481 million.

Maseko said Acsa will be funding the infrastructure drive from its own balance sheet for the next three years. Acsa doesn’t currently have government guarantees. It has an investment grade rating from Moody’s.

The programme includes a R4.5 billion realignment of the runway at Cape Town International and the construction of a new domestic arrivals terminal valued at R750 million. The international departures terminal will also be redeveloped to increase capacity, strengthen security and enhance retail, commercial and passenger lounge facilities.

At OR Tambo International, Acsa will increase aircraft parking facilities at a R2 billion cost and expand Terminal A arrival facilities at about R1 billion.

A smaller project at King Shaka International will expand the runway and provide for increased aircraft parking.

Acsa’s results have not been approved by the AGM, which was postponed to October 12.