Government guarantee

Business: Airport management company says it may need R10 billion in government guarantees

Airports Company SA (Acsa), which manages and operates nine airports in SA, says it expects it will need about R10 billion in government guarantees over the next five years in order to obtain bank loans to continue operating.

The airport management company and the SA Civil Aviation Authority on Tuesday briefed Parliament’s portfolio committee on transport on their strategic plans for the 2020/21 financial year.

Acsa predicts it will need about R1 billion in government guarantees for the 2020/2021 financial year and about R3 billion over the next three years.

Current sentiment and flight bans brought about by the coronavirus pandemic, as well as Acsa’s and South Africa’s sovereign debt downgrade to sub-investment grade by Moody’s in March, was threatening its ability to raise funding, it said.

Although Acsa expects that it would be able to repay loans once flight operations start to expand again, it foresees that banks will not be willing to lend it money at the moment unless the loans are backed by some form of government guarantee.

Interventions to save money in light of the pandemic’s impact – such as a freeze on recruitment for the next three months and the disposal of non-core investments – will not bring about enough savings.

Acsa and Sacaa both told the committee that when they compiled their strategic and performance plans earlier in the year, the state of the aviation sector and their financial positions were totally different.

Since March the pandemic has led to widespread flight bans that have just about halted SA’s aviation industry. Only repatriation and cargo flights are currently being undertaken.