Acsa is looking up after secured funding bolsters its liquidity

AIRPORTS Company South Africa (Acsa), which has been hard hit by the Covid-19 related slump in airline traffic, has strengthened its financial position and secured funding to bolster its liquidity and sustain its business through to the 2023/24 financial year.

Chief executive Mpumi Mpofu said yesterday that the company’s estimate of the three-year funding support that may be required had fallen from mid2020 estimates of up to R4 billion, to about R600 million only in the 2023/24 financial year.

“We are in a better place than in mid-2020. While there is still a great uncertainty about a recovery in air travel, we have implemented most commitments in response to the impact of Covid-19 and are on track with further measures,” said Mpofu.

Revenue in the first half of the 2020/21 financial year was R685m, well down from R3.5bn for the same period in the 2019/20 financial year, due to the pandemic. The first half loss for 2020/21 came to R1.47bn, versus a first half profit in 2019/20 of R125m.

Core of its funding initiatives was to reduce annual operating expenditure of R1.2bn and the deferment of infrastructure projects of R14.5bn. Capital expenditure to 2024 was now capped at R1bn a year for essential maintenance and refurbishment, he said.

Chief financial officer Siphamandla Mthethwa said the funding position was bolstered by the sale of the 10 percent interest in Mumbai International Airport for R1.27bn after tax, while an offer was being considered for Acsa’s interest in Guarulhos International Airport in São Paulo, Brazil.

A process to monetise some of its R7.7bn investment property portfolio had started.

Acsa also issued R2.3bn in preference shares. The shares had been taken up by the national government, which holds a 74.6 percent stake in Acsa.

The other major shareholder is the Public Investment Corporation with a 20 percent shareholding, which is considering taking up the preference shares. Minority shareholders also had the option to take up preference shares.

Mthethwa said a key benefit of the preference shares instrument was that it was long-dated, which provided the company with the ability to roll-up dividends. This allowed the business sufficient space to recover while also guaranteeing shareholders a return on their investment.

Further funding initiatives included securing R3bn in short-term banking facilities and a loan of R810m from the Development Bank of Southern Africa.

A waiver of financial covenants until June 2022 from major lender Agence Française de Développement had also been received.

Acsa expected that its debt, including preference shares and funding initiatives, would peak at R9bn before dropping to R8bn by 2023/24.

Excluding preference shares, Acsa’s debt was expected to decline to R5bn over the same period.

The number of departing passengers in 2020 fell by 65.8 percent compared to 2019, from 21.6m to 7.4m passengers.

Domestic departing passengers fell 61.9 percent with international departing passengers falling by 74.6 percent.

In 2020, seats made available by airlines for destinations within South Africa and between the country and international destinations were 41 percent of the previous year’s levels. So far in 2021, seats published were at 74 percent of 2019 levels.

The optimistic recovery scenario prepared by Airports Council International had global traffic returning to pre-pandemic levels in 2023, and 2025 on a more pessimistic estimate.

Mthethwa said they were closely monitoring drivers of airport traffic specific to Covid-19.

These included travel restrictions, consumer health concerns, the sustainability of virtual business practices, passenger experiences, ticket prices, consumer spending and the global rollout of vaccination programmes.

He said the strategic focus up to 2025 was to extend and defend core businesses and to explore emerging businesses.