Airports Company South Africa (ACSA) says that the adverse impact of Covid-19 on global aviation led to a revision of its strategy and financial plan, which began in April 2020.<\/p>\n
As part of that strategy, the state-owned company announced on Monday that it sold its 10% equity holding in Mumbai International Airport Limited (MIAL) for approximately R1.2 billion.<\/p>\n
The company, which operates nine of South Africa\u2019s airports, said it engaged all key stakeholder indicating revenue losses because of the lockdown. It further indicated a requirement of R11 billion over six years to get back to its pre-Covid-19 performance levels.<\/p>\n
ACSA said it has since received some support from the government – its major shareholder – through the issuance of preference shares and by securing credit facilities from lenders.<\/p>\n
The company also this week issued a request for proposals for transaction advisory services to advise it on the potential monetisation of some of its investment property portfolio.<\/p>\n
“The monetisation process is likely to involve a variety of mechanisms proposed by a transaction advisor. However, Airports Company South Africa has no intention to sell or otherwise dispose of any investment property assets,” it said.<\/p>\n
The group\u2019s asset base of more than R30 billion includes an investment property portfolio of R7.7 billion. “Properties in this portfolio have consistently performed well above the cost of capital, thereby subsidising landing fees for airlines and passenger service charges for passengers,” it said.<\/p>\n
The company said it has already reduced annual operational expenditure by R1.2 billion, while capital expenditure of R14.5 billion has been deferred.<\/p>\n
\u201cIn responding effectively to the devastating impact of the pandemic we have adapted our strategy to focus on enhancing Airports Company South Africa\u2019s core aeronautical activities. Our strategic response includes a process to release wealth associated with non-core assets, said chief financial officer Siphamandla Mthethwa.<\/p>\n
\u201cThe monetisation of non-core investment properties will make cash available for core business activities as well as reduce the budget allocation to non-core activities.<\/p>\n
\u201cIn the process we are confronting tough choices and difficult decisions. However, we believe that our response is necessary to sustain Airports Company South Africa through the recovery in aviation which will take at least three to five years.”<\/p>\n
Mthethwa says that the sale of the stake in Mumbai International Airport Limited marks a successful and profitable exit for Airports Company South Africa from the investment the company made in 2006.<\/p>\n
The sale to Adani Airport Holdings includes the transfer of airport operator rights held by Airports Company South Africa to MIAL. This means that the company will also be released from providing an Airport Operator Guarantee that amounted to R700 million in the 2020 financial year.<\/p>\n