UNDERSTANDING OUR NEW NORMAL

In the final month of the year under review, disruptive global shifts due to COVID-19 had an unprecedented and unexpected impact on our ability to execute our strategy, forcing us to come to grips with a new normal and to adapt accordingly.

To survive this challenging time, the current strategy is being reviewed considering the new realities of COVID-19 as well as the Medium Term Strategic Framework (MTSF) and Ministerial Priorities, resulting in a new strategy. As we enter a new business environment, navigating our new normal goes beyond cost reduction, it also focusses on innovating our business model to adapt to our operating context. Considering this, we have commenced with a full revision of the overall strategy, operating model, governance framework and organisation structure.

Transformation

The current challenges we face do not detract from our commitment to pursuing our transformation agenda. In these dire times, we have adopted a maintenance approach to prevent regression in the progress we have made. This includes heightened monitoring and reporting of our FY2020/21 B-BBEE scorecard performance targets, monitoring of FY2020/21 sector plans, enhanced preferential procurement spend performance tracking and reporting, maintenance of enterprise development and supplier development initiative agreements and the utilisation of B-BBEE champions.

Run airports

How we run our airports will be our main strategic focus area as we recover and sustain from the impacts of COVID-19. As a result, we will revise our approach to operating airports by improving operational efficiencies, rebuilding passenger confidence, adjusting tenant rental obligations and reducing infrastructure footprint to
air-traffic. At all times we will ensure the health of staff, stakeholders and airport users. We will also revise our financial plans including reducing operational costs and identifying opportunities to grow the business.

Develop airports

While a reduction in demand is expected in the short, medium and long term, we will revise our approach to the development of our airports away from capacity expansion towards a focus on innovation, alignment, integration and replication of successful developments. Accordingly, we will utilise and repurpose existing infrastructure and equipment until the end of their working lives; develop airports biased to investments that reduce the cost of doing business; prioritise opportunities that are adjacent and complimentary to our business such as conference facilities, transportation nodes, cargo and logistics platforms; and put capital expenditure projects that are dependent on the increase in passenger traffic, on hold. Revising our financial plans to account for our new normal required that we prioritise our capital expenditure in line with affordability.

Our reductions in the revised financial plan will not be enough to weather the storm ahead and we will therefore seek shareholder and government support, engage rating agencies, banks and investors on debt support as required by our revised financial plan.

Grow footprint

Prior to the emergence of COVID-19, growing our footprint was a crucial part of our strategy. In the current climate, however, we must revisit the timeline we have set to grow as well as our approach. We are now considering new ways to grow ranging from off balance sheet funding and financing, to 100% ownership and strategic partnerships. We are also re-evaluating strategic investments and identifying underdeveloped areas of growth such aerotropolis, cargo as well as training and consulting services, among others.

Business enablement

Our employees are an essential part of our ability to overcome the challenges posed by COVID-19. We will therefore review our operating model and operating structure to optimise our human resource organisational capacity through capacity re-allocation, job rotation, multi skilling, secondment, employee engagement initiatives as well as deliver leader-led change management.

In the short term, a shift towards a digitised travel experience is expected resulting in touchless travel from departure to destination. In adapting to this shift, we will improve our organisational IT capacity by rolling out prioritised airport management projects and artificial intelligence thermographic solution for all terminal entrances.

MOVING FORWARD TOGETHER

As this new chapter starts in the aviation industry, the importance of our stakeholder relationships and our reputation has been enhanced. We know that in this time what we do and how we communicate with our stakeholders is of paramount importance. Through our COVID-19 stakeholder engagement plan, we will inform stakeholders of our recovery plans and the financial impact of COVID-19, so as to partner with stakeholders, get input and find solutions together, resulting in a roadmap that seeks to collaborate efforts of growth in the sector.

While confronting this new normal may seem daunting, we will execute our strategic response by creating and implementing a detailed take off plan, engaging our stakeholders, providing passengers with safety processes and assurances to restore trust, ensuring employees’ wellbeing, stimulating demand, adapting our use of IT and technology, restarting our operations with care and by continuing to create value for our business, people, society and the environment.