It needs higher tariffs to pay back the costs of airport upgrades done ahead of the 2010 soccer World Cup.
Draft new tariffs that have been gazetted by the Department of Transport put forward a 42.5% decrease for the 2015-16 year, followed by increases of 4.1% and 15.8% in the next two years, respectively. An increase of 15.9% would be applied in the fourth year and 4% in the fifth year.
Acsa said the hefty initial drop in tariffs would significantly decrease its cash collections and breach loan covenants it has with lenders. A breach in one loan agreement would make its entire R11bn debt book payable, Acsa said. Last year Acsa generated 64% of its revenue from aeronautical operations in the form of tariffs on aircraft landing and parking and a passenger service charge. Retail revenue brought in the rest.
Acsa GM for corporate finance Dirk Kunz said sharp moves in the tariff created uncertainty for investors and would also increase borrowing costs. "It is not just a liquidity issue. These decisions create uncertainty because when we sit in front of funders it is difficult to give surety," said Kunz.
However, Department of Transport spokesman Tiyani Rikhotso said that the sharp 42% decline was "the result of a regulatory clawback". "A regulatory clawback is embedded in every economic regulation framework and is applied from time to time in cases where the economic projections are below the actual economic figures. It is more of a correction mechanism to address variances" Rikhotso said.
He said the proposed tariff was still subject to "rigorous consultation".
Mr Rikhotso said spikes in airport tariffs could not be completely eliminated as they followed "economic events". "They can, however, be ameliorated in such a way that they do not create uncertainty to the users, and this is what the enhanced regulatory frameworks addressed" he said.
He said Acsa would not default on its obligations because the tariff determination process was tested for all the possible financial implications. "This is, however, done with the emphasis that the company also has to be efficient in the way it handles its business."
Acsa's debt burden soared to more than R18bn after it upgraded facilities and moved Durban's main airport for the 2010 soccer World Cup. The state-owned company was not allowed to increase tariffs ahead of its airports upgrade programme for the tournament but was assured that it would be able to recoup the costs once all the work had been completed.
There have been several years of above-inflation increases as Acsa sought to claw back its investment in new airport infrastructure.
In 2009-10 there was an 18.5% increase in airport tariffs, followed by 33% in 2010-11 and 34.8% in 2011-12. The 2013-14 tariff increase was 5.5%.
Acsa has previously taken the airport regulator to court after it granted the company tariff increases lower than what it required.
Last year the company reported its highest profit after tax, of R1.7bn, which it said was due to an increase in international passenger numbers and aircraft landings, as well as receipts from tariffs. It reduced its liabilities 10% in the 2014 financial period.
Source: Business Day
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
