State-owned South African Airways (SAA) said on Tuesday its restructuring plan was on track but rising oil prices and a volatile exchange rate posed big challenges.
The airline said in September last year it was seeking to save R638-million in labour costs in a bid to return to profitability and could shed more than 2 000 jobs as part of a restructuring exercise announced last June.
”SAA’s operational performance has improved but once-off restructuring costs will push the airline into the red for 2007/08,” chief executive Khaya Ngqula said in a presentation to the media on Tuesday.
”The restructuring is on track but SAA faces massive challenges with soaring oil prices and exchange-rate volatility,” Ngqula said.
South Africa’s rand has lost over 10% of its value against the dollar since the start of the year, putting pressure on imports.
Last week the South African Chamber of Commerce and Industry said rising global prices for crude oil were also exerting pressure on local companies’ operations.
SAA posted an operating loss of R603-million in the financial year to March 2007, compared with a profit of R425-million in the previous year. — Reuters