“South Africans now have a national aviation asset that is well on its way to relative stability,” says SAA acting CEO, Nico Bezuidenhout.
He was speaking at a media briefing earlier this month, where he provided feedback on the conclusion of SAA’s 90 Day Action Plan. The plan, which concluded on March 24, was a roadmap to stabilise the carrier and resume full implementation of a refined Long-Term Turnaround Strategy, he said. “There is no doubt that while we have achieved significant milestones during the 90-day period in review, the real task of full implementation of a refined LTTS is at the starting block.”
Within the 90 days, the airline managed to implement and effect several changes that address some of its major financial issues. Total annualised EBITDA improvement, from the commencement of its new financial year on April 1, would amount to R 1,25bn as per the initial target as agreed in November, Bezuidenhout said.
SAA expects to save around R440m per annum as a result of cutting its direct flights between Johannesburg and Beijing and Johannesburg and Mumbai.
The airline has also renegotiated a deal with Airbus, first made in 2002, to receive 10 of the 20 A320 aircraft it had on order. SAA will no longer receive 10 A320s, rather, it will take delivery of five A330 wide-body, fuel-efficient aircraft that will better serve its medium-haul African routes. These will come on stream in 2016 and will save the airline R1,4bn.
The airline realised R290m savings relating to fleet financing/composition changes and R425m from reviewing onerous agreements, including over 150 procurement contracts. “Anyone who has a contract with SAA that is up for renewal should expect a 15% reduction in costs as part of SAA’s new procurement structure,” Bezuidenhout said.
The SAA Board has investigated several future funding models for the business and will table recommendations to National Treasury. This includes plans to privatise parts of SAA operations as well as pursue a public listing of its subsidiary, Mango. Bezuidenhout said there was buyer interest in some of the constituent parts of the group and that government would make a decision in the first quarter of the new financial year, which began this month.
Regarding recent reports that suggested SAA was in talks with both Air China and HNA Group’s Hainan Airlines that could see the airlines take a stake in SAA, Bezuidenhout said SAA was “not in talks about selling itself to any other airline right now”.
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“I accept that the selling of SAA is the most interesting thing we can talk about,” Bezuidenhout said. “But that does not change our business, our operations. What we, as a management team, need to focus on is having an efficient and effective entity that ideally you would not want to sell.”
