Acsa shrugs off 35.5% tariff drop, upbeat on profit
But subdued domestic passenger growth kept Airports Company SA’s gains in check
Airports Company SA (Acsa) still expects to post a profit in 2017 despite a 35.5% drop in airport tariffs that took effect in April.
Acsa had been facing the prospect of a 42% tariff decrease in 2015, but after two years of an interim tariff freeze during which new talks took place, it announced in December 2016 a decrease in April to be followed by increases of 5.8% and 7.4% in 2018-19 and 2019-20.
Acsa, which is the company that operates all of SA’s major airports, reported a 10.2% increase in profit to R2.2bn for the year to end-March.
It increased revenue 3.4% to R8.6bn in the previous financial year, after subdued domestic passenger growth and a 6.1% increase in international departures, although aircraft landing volumes for international flights only increased 2.5%.
For the first time, Cape Town International Airport reported a total of more than 10-million passengers, with King Shaka International Airport reporting a total of more than 5-million passengers, also for the first time.
Acsa has not escaped the current focus on patronage networks in state-owned entities, with the EFF putting pressure on its board in recent months. This ultimately led to the resignation of board member John Lamola in July, after reports emerged that the controversial Gupta family had allegedly had a hand in his appointment.
On Monday, Acsa CE Bongani Maseko said that management had confidence in governance at the company, noting it had no issues with the auditor-general and had received an unqualified audit.
The tariff decrease was expected to hit revenue, he said. Acsa is pursuing a strategy of increasing management and consulting contracts at international airports. More emphasis was being placed on consultancies than concessions, as most countries were seeking to retain sovereignty over ports of entry, said Maseko.
“Currently there are two countries we are speaking to on the African continent … as well as a third that recently expressed interest,” he said. Aeronautical revenue contributed 63% of total revenue during the 2016-17 financial year. Return on equity decreased to 11.3% compared with 11.5% in the previous period. Capital expenditure was reduced by 31.3% to R893m.
“The overall financial position of the company therefore remains healthy despite regulatory uncertainty and difficult economic conditions,” he said. The company reported a total of 20-million departing passengers from the nine airports it operates, 600,000 more than the previous year.
Debt, primarily in the form of bond issues, stood at R9bn at the end of the period, down from R17bn in 2012. As a result, the company’s gearing ratio is down from 59% in 2012 to 25% in the 2017 financial year.