There can be ”no turning back” on the restructuring of South African Airways (SAA), chief executive Khaya Ngqula said on Friday, releasing SAA’s financial results for the year ending March 31.
SAA posted an R883-million loss, with operating costs of R21,3-billion outstripping income at R20,6-billion.
Restructuring is the only way to ensure the state-owned airline not only survives, but becomes profitable, said Ngqula.
When it came to light in March that SAA needed R2,7-billion to return to profitability, the government threatened to withdraw its support of the airline unless a turnaround plan was implemented.
It gave the airline a R1,3-billion cash injection, with promises of more, subject to its return to profitability.
Ngqula said the turnaround plan — which is already being implemented — will ensure this happens within 18 months.
In its results, SAA attributed the 13,4% increase in operating costs mainly to a higher oil price, a weaker rand and a hike in aircraft leases.
Its fuel bill increased to R5,7-billion from R4,9-billion; there was an average rise in the rand/dollar exchange rate; and aircraft leases went up to R2,5-billion from R1,9-billion.
There had also been above-inflation increases in: employee benefits; staff accommodation and refreshments; distribution costs; materials; and navigation, landing and parking fees.
The 7,8% revenue increase was ascribed partly to passenger numbers, which went up 8% to 7,7-million as the airline regained market share lost in 2006 to low-cost and mainline carriers.
Passenger revenue grew more than 10% to R14,2-billion
Describing competition from other carriers as ”fierce”, SAA said its own low-cost carrier, Mango, had captured 10% of the domestic market since its launch in November.
The results showed overall average yields up 6,5%.
Freight and mail revenue swelled from R1,6-billion to R1,8-billion amid strong growth in cargo revenue on domestic and international routes.
However, other airline income fell to R3,58-billion from R3,78-billion, largely because of a decrease in the release back to revenue of unused tickets.
Earlier in June, the SAA board approved a turnaround plan that included rationalising international routes, grounding leased aircraft, freezing new aircraft purchases and increasing seat density on flights.
So far, SAA has grounded its leased fleet of B747-400 aircraft, the first of which will be returned early in July. — Sapa