- Airports Company South Africa CEO Mpumi Mpofu says although Covid-19 has knocked the aviation sector, it has also created opportunities to realise goals.
- ACSA wants to champion facilitating trade across the continent when the free trade area agreement kicks in.
- Its economic modelling shows a recovery by 2023 domestically.
Covid-19 may have knocked the aviation industry, but Airports Company South Africa CEO Mpumi Mpofu said it has also presented opportunities for the state-owned entity to pursue goals it aimed to realise in a couple of years to come.
Mpofu was speaking during a panel discussion on the challenges and opportunities of the post-Covid environment, as part of the third annual investor conference held this week. The conference is part of a drive to raise R1.2 trillion in five years. This year the conference secured R109.6 billion in new commitments, taking the total investments to R773.6 billion or 64% of the five-year target.
Mpofu was among other business representatives including Telkom and Aspen Pharmacare, which shared how Covid-19 impacted business.
ACSA had to reduce its capital expenditure substantially due to the Covid-19 pandemic as travel bans associated with lockdowns to curb the spread of the virus were instituted across the globe.
“Covid-19 has probably had the most devastating effect on global aviation,” said Mpofu. “2019 was probably one of the best performing years globally. Since then the sector has probably lost $104 billion,” said Mpofu. She highlighted that forecasts for the industry indicate a reduction in passengers and revenues of 60% this year.
Using these forecasts, ACSA has had to plan for its future. Apart from capital expenditure reductions, ACSA also had to cut operational expenditure. But it has also considered diversifying its revenue sources.
While passenger numbers declined, the cargo business also initially declined slightly before starting to increase, she explained. ACSA wants to increase its focus on cargo and facilitating trade, especially across the continent when the African Continental Free Trade Area comes to effect in January 2021. “We believe the long lead times in rail and road are not responsive to the trade agreement requirements,” said Mpofu. ACSA is ranked ninth out of 135 in terms of its air freight facilitation.
The facilitation of exports is currently not a significant as imports, she noted. ACSA plans to improve export capacity within two or three years. Thee could even be opportunities to facilitate tard with the US and the EU.
Other potential areas of diversification include operation management and technical assistant consultancies across the continent, especially as ACSA has core competencies in technologies and systems used in airports.
“For us we do not want to waste a good crisis,” said Mpofu.
ACSA’s economic modelling projects a recovery from 2023, which is in line with global practice, she said. The recovery would be likely first in the domestic market, followed by the international market.
Mpofu said a masterplan for the aviation industry would be welcomed, especially given that plans for other sectors have proven valuable.
ACSA recently released its financial result for the year ended March 31, 2020. It showed a slight decline of revenue by 0.03% to R7.12 billion. Profit increased to r1.2 billion compared to R224 million reported in the previous year.