ACSA expects to return to profit in 2012

In view of the tough operating climate, Airports Company South Africa (ACSA) is expected to return to profitability and improved financial position in the current financial year, having posted a lower than expected net loss of R220 million for the year ended March 31, 2011.

“The financial loss is largely attributable to the economic regulatory challenges, particularly the lack of finalisation of the 2011 to 2015 Permission, resulting in significant financial constraints for the Group. With the regulatory regime partially resolved, we are confident that the business will return to profitability and stronger financial position for the 2012 financial year,” said Priscillah Mabelane, ACSA’s finance director.

ACSA has two sources of revenue: aeronautical and non-aeronautical. The former is derived from regulated income such as passenger service, aircraft landing and parking charges. The latter comes from commercial activities. Driven by an increase in traffic, the group experienced solid revenue streams from both aeronautical and non-aeronautical activities. Revenue grew by 32% to R4,6bn, with the non-aeronautical revenue component (retail, advertising, parking, car rental, property and consultancy) rising by 22% to R2,23bn.

ACSA has experienced an upswing in total departing passengers for the period under review, with year-on-year traffic showing a positive increase of 6% to 17,5m compared to the previous year. This improvement in traffic is attributable to the global economic recovery (i.e. the increase in disposable income and improvement in the global real GDP rate) and most certainly to the 2010 FIFA World Cup.

The period under review  saw the completion of ACSA’s largest ever infrastructure expansion programme, including the opening of the brand new King Shaka International Airport, in time for the prestigious 2010 FIFA World Cup.

The massive level of capital expenditure since 2006 has caused a structural shift in the balance sheet. These investments have been financed largely through debt. Gearing of 62% at March 31 was an improvement when compared to 64% in the previous year.

Acsa’s managing director, Monhla Hlahla, said that the year under review was an endorsement of Acsa’s expansion programme and ability to support the world-class infrastructure with outstanding customer service. This was ably demonstrated through the flawless execution and support of the World Cup programme. Bringing King Shaka International Airport into operation shortly before the tournament completed ACSA’s countrywide network of state-of-the-art airports.

Hlahla commented that, in anticipation of the next Regulatory Permission, which is due to start on April 1 2013, the Department of Transport has developed a roadmap to address the shortcomings in the current regulatory framework, as well as the formulation and promulgation of regulations to support the purposes and intentions of the Airports Company and Air Traffic and Navigation Services Acts. The roadmap also aims to review the funding model for both companies.

In the short-term, she continued, the need is recognised for an improvement in the group’s financial position and credit metrics.

“There is no immediate need for infrastructure delivery in the medium-term, however, the group will monitor the demand and need for capacity to ensure that a responsible and timely delivery of infrastructure will be delivered in line with growth expectations,” she added.

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