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Airports Company might opt to fly on stock exchange
The listing of SA's most profitable parastatal will depend on further efficiencies achieved by management, writes SVEN LUNSCHE
Government sources said the public flotation of the most profitable of South Africa's parastatals would depend on further efficiencies achieved by management after the strategic equity partner was on board. Five to six of the world's leading airport operators have expressed an interest in acquiring the minority stake, which could raise an estimated R2-billion for government. Transport Minister Mac Maharaj said this week negotiations were continuing, and he hoped to announce details about a strategic partner in the near future. Deutsche Morgan Grenfell is advising the company on restructuring. Unlike many other parastatals, the Airports Company has managed to bring its unions on board and, according to managing director Dirk Ackerman, there is unanimity on the desirability of an equity partner. The eventual listing of the company would lead to further dilution of the state holding, but the government source stressed this would be done only with the full co-operation of staff and unions. He stressed that listing was the most prominent of many options for the long-term future of the group. The company, which runs South Africa's three international and six major domestic airports, has experienced solid growth since government decided to commercialise it three years ago. The group's annual report, released this week, showed a rise in taxed profit of 19% to R159-million for the year to end-March on a 27% improvement in turnover to R577-million. The company handed Maharaj a cheque for R36.3-million as its first dividend payment. The balance sheet shows that shareholder capital rose from R982-million to R1.1-billion during 1996/97. Ackerman said the results were a reflection of the continued buoyancy of the tourist market, coupled with the company's efforts to expand income from property and retail activities. Foreign tourists departing from the company's international airports increased to 2.1-million passengers in the period from 1.9-million previously, while the total number of passengers rose from 7.5-million to 8.1-million. Ackerman said the group was still relying heavily on aeronautical income (landing and passenger fees), which accounted for 72% of income, but was showing growth in its retail and property divisions. In order to boost retail space at airports and surrounding land, the group has embarked on a R2.3-billion expansion over the next three to five years, including the upgrading of terminals and parking facilities. A divisional breakdown shows Johannesburg International accounts for two thirds, or R199-million, of the company's pre-tax earnings of R298-million, followed by Cape Town with R44.4-million and Durban with R24.7-million. With the exception of Port Elizabeth, which reported a R5.4-million pre-tax profit, most other domestic airports reported a loss last year, but Ackerman believed this situation would be reversed once the airports had diversified into retail and property.
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