No plans to dispose of SAA assets

Thursday, September 27, 2018

There are no plans to dispose of any of the assets of South African Airways (SAA), the national carrier said on Wednesday.

“No decisions have been taken to dispose of any SAA entities or assets at this stage. Options were merely presented to the Board for consideration,” said SAA.

Media reports at the weekend claimed the airline, which falls within the ambit of the Department of Public Enterprises, was considering selling its assets as banks refused to loan it any more money.

In a statement, the carrier said at a recently held Board strategy session management presented the board with a strategy update reflecting on various achievements and challenges. The two-day session held from 11 to 12 September also presented a road map and options for the outlook of the business.

“Options were merely presented to the Board for consideration,” said SAA.

The airline said green shoots emerged in its first quarter performance.

It is on track with its turnaround strategy with quarter one results showing that the company is ahead of the plan in its trading performance. SAA said it had always maintained that it “will take us until 2021 to break even”.

“This means that our costs will remain higher than our revenue until we reach the breakeven point. We continue to implement initiatives to drive costs down and improve revenue as part of the turnaround strategy,” it said.

Funding requirements

The full and meaningful implementation of the turnaround plan, which for the first time has been fully costed, will depend on the realisation of certain enablers including funding requirements of R21.7 billion over a three-year implementation cycle.

It will also depend on aggressively containing costs through smart procurement and optimal organisation design, revenue optimisation and network rationalisation, among others.

SAA’s shareholder, the Department of Public Enterprises, is aware of the funding requirements and the issue is under consideration.

In addition, there are ongoing engagements with the lenders who in 2017 agreed to grant SAA conditional extension on its maturing loans, which are now due in March 2019. In April 2018, the lenders extended a R5 billion bridge facility to SAA.

SAA currently has access to financial facilities to support its working capital requirements.

“The Board and the shareholder are working around the clock to find a lasting financial solution to the company’s capital requirements.”

The national carrier, which was transferred back to the DPE in August after its initial move to National Treasury in December 2014, said it continues to honour its obligations to all its travelling customers, suppliers and other creditors.

It will not file for bankruptcy.

“The company’s airline operations remain solid with its on-time performance ranking well amongst its peers. Quarter one results show material improvement in the trading performance of the company with some of the routes delivering positive gross profit margins for the first time in more than a decade.” -