Acsa seeks state guarantees for $594m in new debt

African airlines could lose $6 billion in passenger revenue in 2020, the International Air Transport Association said last month.
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Airports operator Acsa needs treasury support to finance up to R11 billion ($594 million) of new debt by 2025, the state-owned company said on Monday.

Since late March when South Africa declared a state of disaster to contain the new coronavirus, major domestic airports such as the continent’s busiest OR Tambo in Johannesburg have closed, knocking revenue at Airports Company SA (Acsa).

African airlines could lose $6 billion in passenger revenue in 2020, the International Air Transport Association said last month.

“New debt of R10 billion to R11 billion is required in the next five years and this will require shareholder support in the form of government guarantees,” Acsa said in a presentation to lawmakers.

The operator, which also holds concessions at Sao Paulo’s Guarulhos International Airport and Chhatrapati Shivaji International Airport in Mumbai, said about R3 billion in guarantees would be required over the next three years.

Between 2021 and 2023 its capital expenditure budget is seen at R17.9 billion as it develops major projects, such as a new runway and terminal at Cape Town airport, Acsa said.

In March ratings agency Moody’s downgraded Acsa to Ba1 from Baa3 with a negative outlook as expected passenger traffic was seen falling by at least 30% in the financial year to March 2021.

Struggling state-owned companies including bankrupt national airline SAA and power utility Eskom rely heavily on government bailouts which are straining tight public finances as Africa’s most industrialised economy faces the prospect of a prolonged recession.

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ACSA, just ask Pravin. He has the solution for resuscitating an utterly moribund airline that has destroyed dozens of billions of rands over the years. Well-run airlines around the world are shutting down, but overstaffed, mismanaged SAA is going to fly again making us all feel very proud of our ‘state airline.’ So ACSA, I repeat, just ask Pravin. He obviously knows how. Communism is very successful at business, you know. I mean, just look at all the successful Communist countries today. There is North Korea, and….and….

End of comments.

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