July 01, 2007

Plans to put SAA back into profit

There could be "no turning back" on the restructuring of SA Airways, chief executive Khaya Ngqula said yesterday, releasing SAA's results for the financial year ending March 31.

SAA posted an R883 million loss, with operating costs of R21.3 billion outstripping income, at R20.6bn. Restructuring was the only way to ensure the state-owned airline not only survived but became profitable, said Ngqula.

When it came to light in March that SAA needed R2.7bn to return to profitability, the government threatened to withdraw its support of the airline unless a turn-around plan was implemented.

It gave the airline a R1.3bn cash injection, subject to a return to profitability.

Ngqula said the turn-around plan - which was already being implemented - would ensure this happened within 18 months.

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 R5.7bn from R4.9bn; there was a 7.8% average rise in the rand/dollar exchange rate; and aircraft leases went up to R2.5bn from R1.9bn.

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.

The full of this article's can be read on the source at: Cape Argus

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