ACSA downgrade

MOODY’S changed outlook for Airports Company South Africa (Acsa) to negative from stable is likely to increase costs for airlines, which may be passed on to the consumer.

The global credit rating agency’s reasoning was that Acsa could not be rated higher than government, which owns74,6% of the airports company.

Acsa’s fall from stable was also attributed to regulation oversight and its overflowing debt in domestic financial markets. A more attractive credit rating is constrained by the company’s ties with the SAA group, “which relies on financial support from the South African government”, the agency says on its website.

This is bad news for Acsa but also for the aviation industry, the economy at large, and – at the end of the day – the consumer, says md of Airlink, Rodger Foster.

“A Moody’s downgrade would impact the cost of capital to all lenders and, in turn, borrowers in SA. This means the cost of money will be more expensive, which will then be passed on to the consumer. Acsa is the owner and operator of the main airport infrastructure in South Africa and, as such, is a key component of our national air transportation system. It leverages its balance sheet and incurs debt to build infrastructure. If it costs more money to borrow money this could directly affect the consumer,” adds Rodger.

June Crawford, ceo of the Board of Airline Representatives of South Africa, says the downgrade may impact Acsa’s ability to secure loans for infrastructure projects, and that airlines may be concerned because there may be changes in landing and parking fees paid to Acsa.

Chris Zweigenthal, ce of the Airlines Association of Southern Africa, believes there won’t be much impact on passengers and travel agents. The damage is mainly investment related, he says.