SAA: Gigaba reveals long-awaited turnaround strategy

Increased efficiency, fleet renewal, and cost savings are pillars of the turnaround plan. (Gallo)

Increased efficiency, fleet renewal, and cost savings are pillars of the turnaround plan. (Gallo)

The long-awaited 12-year strategy is aimed at bringing the national carrier back to a point where it could leverage off its balance sheet, Gigaba told Parliament's portfolio committee on public enterprises.

"The focus on domestic and regional African routes will have a direct financial impact on SAA," he said.

"It will be able to leverage off its balance sheet without the stringent conditions imposed by lenders due to a weak financial position."

The plan would be implemented in a "speedy and unyielding manner", the minister added, stressing that "failure is not an option".

Increased efficiency, fleet renewal, and cost savings were pillars of the plan, as well as an envisaged brief to all government departments to exclusively use SAA for work travel.

He said the latter would be modelled on the United States's Fly America Act but added that it would be "fruitless if [SAA] had a bad public service record".

Most comprehensive
Crucially, the strategy also envisages merging all the state's aviation assets – SAA, SA Express, and low-cost subsidiary Mango – into a single holding company to reduce running costs.

New chief executive Monwabisi Kalawe hailed the blueprint as the most comprehensive in the airline's history, but said details on routes, recapitalisation, and a company merger could not be given at this point. Neither would he put a timeframe on a return to profit for the embattled national carrier.

Merging the three airlines would entail complex legal processes and it would be clear only in early 2014 whether this could work, he told reporters.

SAA reported a loss of R1.25-billion last year and is being kept alive by a R5-billion National Treasury guarantee.

Asked when the plan envisioned SAA no longer needing state hand-outs, Kalawe answered: "We will only be able to answer that when we understand the quantum of recapitalisation from the stakeholder."

Respecting protocol
Democratic Alliance MP Natasha Michael said it was unacceptable that Parliament was not being told how much money was needed to implement the turnaround strategy, nor being briefed about the company's current profit sheet and which routes would be scrapped.

Kalawe said the routes were being discussed with the government departments which would be affected by cuts, and the company's financial statements could be released only once they had been shown to the stakeholder.

"We are not deliberately keeping information from this committee, we are respecting protocol."

Kalawe acknowledged that turning it around would be a big challenge given the "headwinds out there" of strong competition, high fuel costs, and a weak currency. – Sapa


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