In a major turnaround, Africa’s biggest airline, state-owned South African Airways (SAA) has posted its first operating profit since it was corporatised in 1999.
SAA president and chief executive Andre Viljoen, writing in the airline’s latest newsletter — under the headline ”We have done it!” — said cost cutting measures had resulted in an operating profit of R169-million for the first half of the 2002/2003 financial year.
The airline, which reported a R699-million loss in 2001, had been budgeting for a R101-million operating loss for the full financial year ending in March 2003.
”We have done it. For the first time since corporatisation, the airline has made an operating profit,” Viljoen enthused.
”Thanks to all the employees’ contributions, SAA has managed to control costs and to show an operating profit, before the sale of aircraft, of R169-million for the first six months of the financial year.
”This is a remarkable achievement, especially when you look at the budget and the figures for the same time last year. The budgeted figures for 2002 envisaged a loss of nearly R101-million, and R699-million loss was realised in 2001.
”However, staff’s continued dedication, focus and effort has turned the tide, despite the international meltdown in the aviation industry,” Viljoen added.
”Our teams on the domestic market have outdone themselves and are winning back market share that we have lost to low cost fares. Although the competition is getting tougher, SAA’s service is getting better. The next challenge is to offer our full service at lower costs to claim a bigger portion of domestic market,” Viljoen said.
He added that SAA was making great strides on the regional front.
”We have just clinched a deal with Air Tanzania for a 49% share in that airline. An open sky strategy for Africa is still a future prospect. SAA is already geared to establishing a hub in the West and the East of the continent which will give us more rights and enable us to increase our frequencies to more destinations.
”The revenue contribution from international activities are still growing. South Africa has become the destination of choice and SAA is concentrating its efforts on this lucrative market.”
The first A340-600 airbus, which was part of the airline’s long-haul fleet renewal, would be arriving in February 2003, Viljoen said. The airline has 41 Airbus planes on order, which will be delivered over 10 years at a cost of about $3,5-billion.
”The new planes will increase our frequencies and improve customer services, but it will also produce a couple of challenges. Changing a fleet is quite a complex process, but I believe that we can pull it off and ensure that SAA becomes the carrier of choice in all the markets that we serve,” Viljoen said.
”We are also looking at realigning SAA’s top structure to be more streamlined an integrated. External consultants and the SAA board are in the process to realign the current executive structures to reduce the number of direct reports to the CEO to five or six and to regroup certain business units to form a more integrated structure.
We have benchmarked with other airlines such as Delta, Singapore and Lufthansa to find the best solution,” he said.
As part of the realignment process, the airline would also be appointing a Deputy CEO. – I-Net Bridge