South African Airways’ (SAA) profits fell by 90% from R648-million last year to R65-million in the financial year ended March 31, the company said on Thursday.
Addressing reporters and guests in Kempton Park, SAA chief executive Khaya Ngqula said the reasons for the fall were a strike by airline staff last year, a 51% increase in the oil price and competition from low-cost airlines.
Ngqula said: ”We got what we deserved … We have no one to blame.”
But he said SAA has learnt from the experience and he is optimistic about future prospects.
”We have a team in place which has paid their school fees … and are all very keen to prove their worth and to do what this airline is capable of doing, going forward.”
He pointed out that the International Air Transport Association estimates that the global airline industry lost about $6-billion (about R43,2-billion) in 2005.
Despite having lost market share to low-cost carriers, passenger numbers grew by 4,5% to 7,2-million. But passenger revenue grew by only 0,8%, and passenger yields fell by 3,5%.
Ngqula said the company plans to launch its own low-cost carrier by the end of the year. ”If you can’t beat them, join them,” he said.
SAA will be recapitalised by the end of the year through private-sector finance. Nothing will come from the state, Ngqula said, without mentioning a date for the recapitalisation. ”I see some of the banks are here, hoping we want the money next week. We don’t,” he joked.
Asked whether SAA will sell shares to the public, Ngqula said he expects this will happen ”in our lifetime”, but that the recapitalisation has to happen first.
Acting chief financial officer Gareth Griffiths said that under the circumstances the results are a ”sterling effort”. He praised SAA personnel for their hard work.
The company had revenue for the year of R19,423-billion, 13% up from R17,186-billion the year before. Operating costs were R19,028-billion, up from R16,605-billion. Contributing to the operating costs was R4,933-billion in fuel costs, up from R3,257-billion.
R599-million was paid out in accommodation and refreshments, Griffiths said. ”Not for executives” but mainly to passengers affected by the strike — ”to make their experience less ropey”.
SAA also had to pay R111-million in penalties imposed by the Competition Tribunal for anti-competitive behaviour in the year under review.
The company has had a cost-cutting programme called Bambanani in place since 2004. This achieved cost savings of R500-million in the year under review. This was less than hoped, mainly because of the strike. However, the programme will continue, and an executive, Charl Pretorius, is in charge of it and will report directly to Ngqula.
Ngqula said SAA is planning ahead for the Soccer World Cup in 2010. He said Lufthansa has been ”a cornerstone” of the 2006 World Cup in Germany. SAA will do the same in 2010, and is learning from the German airline’s experience. — Sapa