State-owned Airports Company South Africa (Acsa), an entity of the Department of Transport, reported on Thursday that it was seeking to monetise assets and activities, to improve its liquidity and significantly decrease its capital and operational expenditure. This was to help it respond to the damage inflicted upon global aviation by the Covid-19 pandemic and governmental measures to try and contain it.
“In responding effectively to the devastating impact of the pandemic we have adapted our strategy to focus on enhancing (our) core aeronautical activities,” explained Acsa CFO Siphamandla Mthethwa. “Our strategic response includes a process to release wealth associated with noncore assets.”
Acsa had an investment property portfolio of R7.7-billion. This formed part of a total asset base worth more than R30-billion. The group had already cut its yearly operational expenditure by R1.2-billion and had deferred R14.5-billion in capital expenditure.
“The monetisation of noncore investment properties will make cash available for core business activities as well as reduce the budget allocation to noncore activities,” he pointed out. “In the process we are confronting tough choices and difficult decisions. However, we believe that our response is necessary to sustain (Acsa) through the recovery in aviation which will take at least three to five years.”
One investment asset that the company had just disposed of was its 10% share in Mumbai International Airport Limited, in India, which brought in some R1.2-billion. This represented a profitable return on Acsa’s investment, originally made in 2006. Furthermore, as it was no longer the operator of the airport (these rights having been transferred to Adani Airport Holdings), the South African company no longer had to provide an Airport Operator Guarantee, which came to R700-million during the 2020 financial year. Acsa was proud of its achievements at Mumbai.
“Before Covid-19, (Acsa) enjoyed a reputation as a well-run State-owned company,” highlighted Mthethwa. “We believe that this reflects qualities embedded in our culture that position (Acsa) to manage through the crisis in the best way possible.”