Gaal unprofitable, likely to close shop, seeks investors

The non-profitable Gateway Airports Authority Limited (Gaal) might soon cease to operate or enter into public-private partnership as it is reportedly unable to sustain itself thus costing Government a lot of money each financial year.
This is according to Provincial Government spokesperson Phuti Seloba, who explained that it was still being discussed whether the entity was still needed or whether to look for investors to keep the entity operational. He said a lot of money was being taken from the public purse to fund an entity which is not generating money.
The directors of the entity are however convinced that adequate financial resources are available to continue operations for the foreseeable future.
Gaal’s annual report for 2017/18 stated: “The directors have satisfied themselves that the company is in sound financial position and that it has reviewed a strategic plan that will facilitate to meet its foreseeable cash requirements. The directors are not aware of any material changes that may adversely impact the company. We draw attention to the fact that on 31 March 2018, the company had a net loss of R12,7 million and that the company’s total current liabilities exceed its assets by R17,4 million. Furthermore, the company was provided with an additional grant of R5,2 million to cover salary costs for the month of February and March.”
It was further learnt that the entity had plans in place to generate revenue but the bulk thereof is tied up in a land ownership challenge. The land from where the entity operates is owned by the Department of Public Works and plans are in process for it to be handed over to Gaal to unlock commercial development opportunities, it was reported.
Factors highlighted in the report include that the directors considered supporting the entity for a period of 12 months ending in March next year with an annual grant allocation of R53 million to fund operational requirements for 2018/19 and a collected amount of R13,5 million in the previous year. It was further outlined that no supplier has withdrawn their support for the entity while one major supplier who was owed R8 million as on 31 March 2018 by the entity has agreed to a settlement agreement of R2 million for the current financial year.
The entity’s annual revenue collection in the previous financial year shows a decrease compared to 2016/17. Information contained in a report indicate a total revenue of R64 million for the previous financial year which is made up of an income of R16 million, R5,5 million for aeronautical, R10,5 million for non-aeronautical and government grant of R47,5 million.
In the 2016/17 financial year, Gaal collected a total revenue of R80,2 million made up of income of R20,3 million with aeronautical generating R5,1 million, non-aeronautical income was R15,3 million and R59,8 million from government grant. A total expenditure amounting to R61 million was recorded in 2017/18 and R80 million in 2016/17.

Story: ENDY SENYATSI
>>endy@observer.co.za