SAA to continue to cut, reduce routes

Vuyani Jarana, ceo of South African Airways, has announced that the airline will continue to cut or reduce loss-making routes and transfer unneeded aircraft to profitable low-cost carrier, Mango Airlines, as it embarks on a three-year recovery plan.

Vuyani, who became SAA’s first permanent ceo in three years when he started in November, says: “We now have a clear strategy and clear path to profitability defined by the board. We are looking at a three-year window to get to a break-even point. We continue to revise the strategy as we see new opportunities.”

Last month, SAA halved the number of flights between Johannesburg and London’s Heathrow Airport. Last year, the airline cancelled or reduced the frequency of flights to African capitals including Abuja, Luanda and Kinshasa. SAA has a fleet of more than 50 aircraft and flies to cities in 25 countries, according to its most recent annual report.

A turnaround of the state-owned airline is among the most pressing items in the in-tray of newly appointed Finance Minister, Nhlanhla Nene. He is seeking to avoid a repeat of the government bailout approved by his predecessor, Malusi Gigaba. In the year through March 2017, the airline’s nett loss increased more than three-fold to R5,6bn, with liabilities exceeding assets by about R17,8bn, according to a document signed by South Africa’s Auditor General, Kimi Makwetu.

Last week, the Auditor General said the company might not be able to operate as a going concern. “Six consecutive years of operating losses have further eroded the capital base and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment,” he said in a report, which was dated December 8, 2017, and filed to Parliament on March 8.

SAA plans to hold its annual general meeting before the end of March. The airline has not yet tabled its financial report to Parliament and has been given an extension until the end of April to do so.

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