Bail-out looms if tariff cuts clip Acsa’s wings
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 2015-2016 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 had with lenders.
A breach in one loan agreement would make its entire R11-billion 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.
Acsa general manager for corporate finance Dirk Kunz said sharp moves in the tariff created uncertainty for investors and would also increase borrowing costs.
“It’s not just a liquidity issue. These decisions create uncertainty because when we sit in front of funders it is difficult to give .”
However‚ Department of Transport spokesman Tiyani Rikhotso said 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.”
He said the proposed tariff was still subject to “rigorous consultation”.
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.
Acsa’s debt burden soared to more than R18-billion 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 2009-2010 there was an 18.5% increase in airport tariffs‚ followed by 33% in 2010-11 and 34.8% in 2011-12.
The 2013-2014 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 it reported its highest profit after tax‚ of R1.7-billion‚ which it said was due to an increase in international passengers and aircraft landings‚ as well as receipts from tariffs.