SAA reported an operating loss of R991m for the financial year 2012/2013. This compares to a loss of R1,25bn for the previous financial year.
Presenting the results to the media on Wednesday, SAA CFO Wolf Meyer attributed the losses to the weakened rand, adding that 60% of the airline’s costs were dollar denominated costs. He pointed out that the rand had weakened 13% year on year. According to him, the airline would have recorded a profit if the rand had not weakened. He also pointed out the airline had increased revenue by 14% and improved on the losses reported during the previous financial period.
Meyer said increasing levels of competition and Middle Eastern carriers capitalising on the liberalisation of the African market had also characterised the period reported.
Monwabisi Kalawe, SAA Group CEO, said the airline was implementing its long-term turnaround strategy (LTTS) and had achieved a cost compression of R220 million. According to him, this had seen the airline cancel its Kigali route in December and it would cut its Buenos Aires route in March. The airline announced last year that all its long-haul flights were loss making, however, it had to retain routes that were of strategic importance to its shareholder, government, such as the route to Beijing.
The acquisition of fuel efficient wide-body aircraft for the carrier’s long-haul routes is viewed as key to it achieving profitability and fleet renewal is part of the LTTS. However, the airline has yet to order the wide-body fleet, for which it requires the financial support of Treasury.
Malusi Gigaba, Minister of Public Enterprises, said that while the Treasury had extended the airlines R5bn loan, it had not approved the cash injection required for the wide-body fleet renewal. According to him, he was dissatisfied with an initial proposal for fleet acquisition because it failed to demonstrate compliance with the required policies of infrastructural development and localisation.
According to Gigaba, a task team would prepare a long-term funding model as well as an aviation plan which would be presented to Treasury before a decision was made on the form or level of funding the state would offer to support the airline. He would not put a number to the figure, saying he did not want to jeopardise negotiations.
Kalawe said the aviation plan would take into account issues including the required transit visa, which threatened SAA’s position as it made OR Tambo an unattractive transit airport. Gigaba added that negotiations were underway with the Chinese government to secure a better landing time for the Beijing route, which would help bring it into profitability.
Kalawe said the airline was looking to establish a West African hub, but stressed that OR Tambo would remain the airline’s primary hub. He would not respond to speculation that the hub would be based in Nigeria, saying only that there were a number of countries under consideration.
