South African Airports expect good news for December holidays

The Airports Company South Africa (Acsa) has published its financial results for the year ending 31 March 2021, with the Covid-19 pandemic and lockdown clearly impacting the group’s operations.

Revenue was R2.2 billion for the 12 months, less than a third of the R7.1 billion generated in the previous financial year. While the company produced a profit of R1.4 billion in 2019/20, the result for FY20/21 was a loss of R2.6 billion. This was only the second loss in the company’s 28-year history.

In South Africa, Acsa’s passenger figures for the year fell by 78.2%, from 21 million to 4.6 million. Total air traffic movements for Acsa declined by 60%, from 249,519 to 99,880.

Other key figures include:

  • Aircraft landing fees were R368 million compared to R1.3billion the previous year; aircraft parking fees were R29 million compared to R55 million, and passenger service charges fell to R414 million compared to R2.38 billion.
  • Non-aeronautical revenue fell by 61% to R1.34 billion compared to R3.38 billion the previous year – this includes advertising, retail, parking, car hire, property rental and hotel operations.
  • The company disposed of its 10% shareholding in Mumbai International Airport for R1.26 billion, received a loan of R810 million from the Development Bank of Southern Africa, and received R2.3 billion from the issuance of preference shares to the government.

“These figures represent the low point in terms of pandemic impact because the 12 months involved either complete lockdown or significant restrictions on domestic and international flying,” said Acsa chief executive Mpumi Mpofu.

“Since the start of the current financial year on 1 April, there has been a continued gradual increase in domestic passenger figures, although off a low base. However, we are encouraged by developments of the past several weeks that suggest we can anticipate accelerated improvement.”

Mpofu cited South Africa’s removal from UK’s travel red list, with other key source markets such as North America and those within European Union having already removed travel restrictions for flying to and from the country.

“The increasing pace of vaccinations locally and in other countries, along with the advent of vaccination certificates, should encourage continued recovery in cross-border travel,” said Mpofu.

She said that conditions have improved to the extent that if Covid infection rates remain subdued, South Africa can anticipate a stronger summer holiday season in terms of domestic and international passengers than was thought possible at the height of the third wave of Covid infections in July.

Long-term sustainability

Mpofu said that Acsa had taken significant steps to support its long-term financial sustainability.

Capital expenditure projects that would have required investment of more than R14-billion were suspended in 2020. Operating expenditure has been cut significantly by R1.2-billion, and headcount has been reduced by 20% to date, she said.

“Most businesses have faced some very difficult decisions in responding to the impact of Covid-19 over the past 18 months. Acsa is no exception. We are, however, very much aware of the situations of our partners and stakeholders. We are trying as far as we are able to help them to mitigate the impacts that they are experiencing.

“Steps we have taken include moving quickly to introduce relief measures for airlines in the form of deferred payment arrangements and credit reprieves to enable long-term sustainability of our industry. We also provided rental relief for our retailers, many of which are SMEs, by moving from fixed to turnover-based leases,” she said.

Acsa’s recovery strategy for the period up to 2025 involves extending and defending core businesses, exploring emerging business and revenue opportunities. Capital expenditure will be only on maintenance and replacement of critical airport infrastructure.

“The company is in a comparatively sound position considering the challenges we were confronted with since early 2020. We hope that the recovery can be accelerated with global vaccine roll-out and a majority of countries reaching herd immunity,” said Mpofu.

Read: South Africa faces a vaccine problem ahead of a possible fourth Covid-19 wave

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South African Airports expect good news for December holidays