Acsa may need R11bn due to Covid-19 hit
• SOE does not have any government-guaranteed debt and has been profitable for 27 years
Airports Company SA (Acsa), one of the few profitable stateowned enterprises (SOEs) in recent years, says it may require new government-backed debt of up to R11bn as it battles a devastating hit from Covid-19induced travel restrictions.
In an online briefing to members of parliament’s transport portfolio committee to table Acsa’s strategic and annual performance plan on Monday, the company’s executives said about R3bn of guarantees would be required in the next three years. CFO Siphamandla Mthethwa told MPs the number would rise to R10bn-R11bn over the next five years.
Acsa, which runs SA’s airports, is just the latest business to feel the economic effect of the nationwide lockdown that has pushed two of its biggest clients, Kulula-operator Comair and state-owned SAA, into business rescue, depriving it of landing fees, passenger service charges and aircraft parking fees.
The airports operator said in its most recent results that one client that it did not name accounted for R857m or 10% of its revenue.
It also rents out retail space at its airports including OR Tambo, the busiest in Africa, that has been left unused since the government banned air travel as part of the lockdown that started on March 27.
The company’s woes come at a time when the government’s finances are under severe strain, with economists predicting that its budget deficit for 2020 could be double the 6.8% tabled in the February budget.
Even before the outbreak, ratings agencies flagged guarantees as the biggest risk to the economy. Years of mismanagement have left SOEs in a perilous state, with Denel in May failing to pay workers’ pension contributions or tax, while the Land Bank defaulted on some of its notes.
Acsa does not have any government-guaranteed debt and has been a rare bright spot among SOEs, having been profitable for most of its 27-year history. It made a R227m profit in 2019, down almost 60% from the previous year.
The company was also hit
with a credit downgrade into junk from Moody’s Investors Service in March, placing it on par with the sovereign rating.
The company told MPs the downgrade would further constrain its ability to access funding at sustainable rates, while revenue had taken a knock from the closure of SA’s skies. Current lockdown regulations only permit cargo airlines as well as chartered flights either repatriating South Africans stranded in foreign countries or transporting foreign nationals to their home countries.
Limited domestic air travel, with a restriction on the number of flights a day will only be possible at level 3, which President Cyril Ramaphosa said will come into force by the end of May.
Acsa was carrying about R6bn in debt at the end of March. The company told Business Day at the weekend that it was engaging with lenders on relaxing terms as it looks to tackle its dire financial situation.
Mthethwa told MPs lenders were jittery about providing funding to the aviation sector in general, so government support would be required.
About R3bn of guarantees will be needed during the medium-term expenditure framework period that will be used to tackle its liquidity problems, refinance debt that falls due over the period and for capital expenditure.
“What is positive is that we foresee ourselves being able to repay the debt based on the cash flows that we will generate post 2021,” Mthethwa said.
In the meantime, as part of measures to preserve cash, the company would halt recruitment for three months, do away with incentive bonuses, incur only essential expenditure for the year, and make no investment decisions for the next three to six months.