Airports Company SA reports R1.2bn profit boost, here’s how the pandemic impacted the business

Airports Company South Africa (ACSA) recently released its results for the year ended March, reporting revenue of R7.12 billion, EBITDA of R2.6 billion, and a profit of R1.2 billion. However, these numbers do not fully encompass the devastating impact of the COVID-19 pandemic on the business. The company's CEO, Nompumelelo Mpofu, discussed the challenges faced by ACSA due to the weak economy and ongoing effects of the pandemic during an interview with CNBC Africa. Mpofu highlighted that while the COVID impact was primarily felt in the last quarter of the financial year, the decline in air traffic movements began as early as February, with the pandemic starting in China and spreading globally. This led to a decrease in travel demand, affecting ACSA's operations. Despite operating in a weak economy with South Africa already in a recession, ACSA managed to sustain profitability for most of its operations. In 2019, demand for transport services was high, with load factors at around 95%, indicating robust business for airlines and passenger travel. However, the impact of the lockdown measures imposed in response to the pandemic severely hampered performance. The total lockdown in March led to a significant reduction in air travel, with only repatriation and evacuation flights in operation, accounting for less than 5% of revenue. As restrictions eased, domestic travel gradually resumed, contributing to a recovery in performance. Yet, the absence of major carriers like South African Airways and Comair has hindered the full potential recovery of the domestic market. International travel remains restricted to essential purposes, further impacting revenue. ACSA's airport operations are currently operating at about 50% capacity at major airports like O.R. Tambo, Cape Town International, and King Shaka due to low demand. To stimulate demand, ACSA is considering mothballing parts of the airport precinct and limiting capital expenditure programs. The company plans to reduce investment in capital expenditure to focus on managing liquidity in the short term. ACSA has already secured a R3 billion facility for 12 months and is seeking an additional R810 million facility for capital projects. However, ACSA is also awaiting a response from the government regarding a guarantee for funding. Despite the challenges faced, the company remains optimistic about managing liquidity and navigating the uncertain aviation landscape.