Airport Management Company Ltd Case Study - Accounting Assignment Help

Assignment Task:

Introduction 

The Airport Management Company Ltd (AMC) is listed on the Johannesburg Securities Exchange (JSE) and responsible for managing an international airport close to Johannesburg in the Gauteng Province, and seven regional airports spread across South Africa. AMC had experienced a decline in headline earnings and negative media coverage for a number of high profile events over the last two years. 

Governance 

AMC was also criticized in the last annual general meeting (AGM) by a corporate governance lobby group for not complying with the King Code of Governance with regard to risk management. The lobby group was quite vocal about the role of the audit committee, who also took responsibility for risk management oversight, and the concern that the internal audit function lacks independence as it also performed certain operational roles such as loss control and security. The board was also put under significant pressure to restructure the board and its sub-committees when it transpired that the main board were ignorant regarding the scope and impact of the events. 

AMC’s board has decided three years ago that the company must be the preferred airports management company in Southern Africa, and that the company will grow by acquiring small regional airports. AMC was very successful with the acquisitions, but the management and the board have become concerned with the operational capacity to successfully manage the enlarged portfolio of airports. A number of events at the flagship airport in Johannesburg have highlighted that management is stretched and has limited capacity to handle more crises.  

Operations 

The operations of AMC are divided into Aviation and Non-Aviation Services. Aviation Services consist of:

• Terminal and Traffic Management;

• Airport and aviation security; and 

• Ground services. 

Non-Aviation Services consist of: 

• Real estate management; 

• Airport retailing; 

• Parking management; and 

• Airport advertising. 

Aviation revenue consists of all-inclusive landing fees, which is R250 000 per international aircraft and R100 000 per domestic aircraft and a surcharge of 10% on the cost per litre. Non-aviation revenue consists of the letting of retail space, parking and retail services. AMC has experienced a number of incidents over the last financial year which made national and international headlines in the media and television. 

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