COVID-19: ACSA CEO reflects on a turbulent year for the business

Airports Company South Africa has reported a loss of R2.6 billion, marking only the second yearly loss in its 28-year history. The significant dip in revenue, which plummeted to R2.2 billion from R7.1 billion in the previous year, has been attributed to the adverse impact of the COVID-19 pandemic on the aviation industry. In an exclusive interview with CNBC Africa, Mpumi Mpofu, the CEO of Airports Company South Africa, shed light on the various measures taken to mitigate the financial challenges faced by the company amidst the turbulent times. In response to the unprecedented crisis brought on by the pandemic, Mpofu highlighted the urgent and pragmatic steps that were taken to safeguard the company's financial stability. One of the key initiatives involved the suspension of the capital program, with plans to defer it to a later date aligned with increased traffic demand. Additionally, the company explored various funding options, securing a loan from the Development Bank of South Africa and obtaining 2.3 billion in preference shares from shareholders. To bolster liquidity and reduce operating expenditure, stringent decisions were made to cut costs, including the reduction of staff through a voluntary severance program that saw 564 employees leaving the company. This move, amounting to approximately 20% of the workforce, played a significant role in curbing operating costs amid a subdued passenger traffic environment. Looking ahead, Mpofu outlined the company's strategy for recovery, foreseeing a gradual return to stability in the domestic market by 2023-2024, and a recovery in the international market to pre-2020 levels by 2025. The CEO emphasized the importance of key strategic initiatives aimed at driving growth, such as global strategy development, cargo strategy enhancement, and the development of airport cities around their facilities. In terms of revenue generation, Airports Company South Africa is eyeing tariff adjustments to support its financial recovery. While the company has not yet submitted its formal request for tariff increases to the regulator, Mpofu acknowledged the ongoing need for tariff support due to the challenging economic climate. However, the timing and extent of any potential tariff adjustments remain uncertain, pending further consultations with stakeholders and regulators. As the aviation industry continues to grapple with the lingering effects of the pandemic, Airports Company South Africa remains focused on navigating the turbulent business landscape with resilience and adaptability. The company's proactive measures and strategic planning reflect its commitment to overcoming the current challenges and emerging stronger in the post-COVID era.