South African Airways in sound financial state

Monday, September 28, 2009

Johannesburg - Despite the current global economic crisis, the South African Airways (SAA) has reported positive financial results with net profit reaching R398 million between March 2008 and April this year.

Releasing the company's results on Monday, Acting Chief Executive Officer (CEO) Chris Smyth said considering the soaring oil prices and a tough trading environment, the airline did well financially.

The airline's operating profit grew to R1.9 billion against the breakeven in the previous year. The total income also grew by a strong 19 percent to R24 billion from R23 billion.

This is a huge improvement considering that SAA had reported loses in the past seven years and government was on more than one occasion required to bailout the airline. But since the departure of former CEO Khaya Ngqula and a lot of restructuring, SAA, which employs nearly 8000 people, seems to be back on its feet.

"SAA managed to not only survive these turbulent conditions but also to post a strong operational turnaround which was due largely to the deep and fundamental restructuring the airline embarked upon in 2007," Smyth said.

SAA's restructuring process which included cutting down the number of managers saw the company saving over R1.5 billion.

According to Smyth the financial performance of the past year will put SAA in a very comfortable position.

"This has been an extremely difficult year for SAA due to the global financial crisis and a drop in demand, but we have done very well," Smyth commented.

He said SAA's presence in Africa continued to grow strongly and regional operations have been less affected by the recession. SAA currently flies to 19 African countries and is hoping to increase the number in the near future.

"Africa has started to feel the pain however, and the strong regional growth experienced in prior years is waning, particularly in the oil-rich regions that rely whole on oil now that the sky-high prices that generated much of their growth have all but gone," added Smyth.

He said to prevent a downturn, SAA will continue to monitor its routes across the global network, particularly those which may under perform. "Flight frequencies on certain domestic and international routes have already been reduced and cutbacks on flight frequencies are foreseen for the rest of the year," Smyth said