Airports Company South Africa (Acsa) significantly narrowed its losses in the 2022/23 financial year, and is now eyeing out profitability through operational efficiencies, diversification and new commercial initiatives.

The company presented its audited financial results on Tuesday, September 12.  Earnings before interest, tax, depreciation and amortisation amounted to R2bn (€98.3m), compared with R342m (€16.8m) in the 2021/22 financial year.

Revenue was R6bn (€295m) for the 12-month period under review, up by 55% from the R3.9bn (€191m) reported in the previous financial year.  

High credit losses on trade receivables and fair value losses on investment properties, however, impacted profitability. This resulted in an after-tax loss of R143m (€7m), a significant reduction from the R1bn (€49.1m) loss in 2021/22. 

Acsa CEO Mpumi Mpofu said: “The results reflect the Group’s steady trajectory towards recovery and a move closer to profitability, following the turbulent trading conditions brought on by the COVID-19 pandemic.”

While Acsa’s Recover and Sustain Strategy and the revised Financial Plan provided a structured management approach and a means of resourcing the business, this has enabled the Group to secure and safeguard its long-term sustainability. It is now implementing a growth strategy that will see it return to profitability by next year. 

“To ensure profitability, we need to ensure operational efficiency, full utilisation of our R30bn (€1.4bn) asset base, diversify our revenue streams and grow the business through new commercial initiatives. Our 76% recovery for the year under review compared with 2019 levels and our performance on aeronautical and non-aeronautical revenue ensure that in the next financial year we are projecting to achieve marginal profits,” said Mpofu. 

She added that, while some factors that influenced recovery, such as economic and geopolitical aspects, were beyond Acsa’s control, the Group would continue to monitor these closely while focusing on the factors that it can control, such as working closely with airlines and the Department of Transport for route development. 

“In partnership with the airlines, we have to ensure that the conditions are favourable for airlines to want to travel through our airports. So that is the one thing we can certainly control,” said Mpofu. 

Increase in aircraft movements

Aeronautical revenue improved significantly by 64% from R1.8bn (€89m) to R3bn (€149m). This was due to a 20% increase in aircraft movements from 176 817 to 211 787, and a 50% increase in the number of departing passengers from 10.5m to 15.8m. The implementation of the 3.1% tariff increase approved by the Regulator also contributed to the increase. 

Non-aeronautical revenue followed a similar trend, increasing by 46% from R2.1bn (€103m) to R3.1bn (€152.5m). The bulk of this income was derived from R982m (€48.3m) in property rentals and R848m (€41.7m) in retail activities. 

Mpofu noted that Acsa had been looking to maintain an ideal 50:50 split between aeronautical and non-aeronautical revenue but said the constraints on the two revenue streams were largely interdependent because non-aeronautical revenue was driven by aeronautical activity. 

“Going forward, we will efficiently manage our investment property portfolio, but to divorce non-aeronautical revenue completely from aeronautical revenue is impossible, because this portfolio contains retail properties, which is highly dependent on the footprint of passengers at the airports.” 

Airport maintenance

Capital expenditure was limited to airport maintenance and resilience during the financial year, with most uncontracted and capacity-related projects remaining on hold until funding is secured. A total of R422m (€20.7m) was spent on those projects in the current financial year, which is down from the R546m (€26.8m) spent in 2021/22.

Mpofu added that, as part of Acsa’s recovery, all facilities that were mothballed during COVID-19 had been brought back online.

“We have consistently won several awards for being one of the best airport management companies on the continent. We want to maintain that position and start featuring in the global airport top ratings, which means that we have to maintain world-class facilities,” she said.

With Acsa celebrating its 30th anniversary earlier this year, Mpofu said the company was built on a solid foundation of sound financial management controls and maintaining prudent financial management discipline.

“In the 30 years, Acsa has transformed small airport terminal buildings to world-class airport facilities through solid financial footing and a balance sheet that allowed for investors to trust us with their monies,” concluded Mpofu.