Barry Streek
South African Airways (SAA) has indicated to the government that it will approach it for assistance to cover the increased insurance costs of its aircraft following the terror attacks in the United States.
A government spokesperson on Thursday said the plea would be sympathetically considered.
Business Day reported this week that SAA stood to lose an additional R70-million because of higher insurance costs.
This comes against the background of a R735-million loss for the 2000/01 financial year and threatens hopes for a small profit in 2001/02.
The US government has announced a $15-billion bail-out for its carriers. The governments of Belgium, Switzerland, Norway, Denmark and Sweden are also taking relief action.
Ian Phillips, special adviser to Minister of Public Enterprises Jeff Radebe, said SAA could not blamed for the economic fallout of the attacks.
“The government will discuss the matter with SAA. This was a wholly unintended tragedy. Obviously the government will lend an ear to its claims,” he said.
Phillips said at this stage SAA had not suffered the devastating losses experienced by US and European airlines as a result of sharply reduced traffic volumes in the US in both domestic and international flights.
Although SAA had lost R16-million in cancelled transatlantic flights, its domestic volumes were unaffected and it was not exposed to the sharply downward trend in the US.
US carrier Delta Airlines announced 30000 retrenchments this week, adding to the 150000 workers who have already lost jobs.
Phillips pointed out that Delta was SAA’s partner in the US. Its much-reduced flight activity could have economic implications for SAA.
He said SAA had already expressed concern to the government about increased insurance costs and would approach the government through its holding company, Transnet, once these had been quantified.
The airline announced this week that it intended cutting costs by at least R600-million over the next two years, after it reported a headline loss of R735-million in the financial year, which ended in March, from a headline loss of R32-million the previous year.
Although turnover grew 17% to R10,8-billion from R9,3-billion, this was offset by a more than R3-billion, or 34,5%, increase in operating costs in 2000/01.
SAA CEO Andre Viljoen said: “Most of [SAA’s] costs are US dollar-denominated and were severely impacted by the rand’s devaluation against that currency.”