SAA Adds Wings in Fresh Plan

[LazyLion]

http://www.iol.co.za/business/companies/saa-adds-wings-in-fresh-plan-1.1495166

The state will have to inject more money into troubled SAA before the implementation of the recently released turnout strategy that is reported to promise self-sustenance for the national carrier.

SAA had a pending request with the government for funds to acquire a new fleet of fuel-efficient airplanes, which, along with rising fuel costs would require a recapitalisation of the airline to implement some of the proposals in the new strategy.

The national carrier said the strategy aimed to ensure that the airline, which has gone through nine previous such proposals and received a series of bailouts from the government, became “financially viable and even profitable”.

Ministerial spokesman for the Department of Public Enterprises Mayihlome Tshwete said as the strategy spoke about mitigating negative market forces such as rising fuel prices on SAA’s balance sheet, it proposed that this would be achieved by procuring new, fuel-efficient aircraft.

Reviewing the airline’s routes with the intention to abandon non-profitable ones was another way to achieve this goal.

The strategy was received by Public Enterprises Minister Malusi Gigaba on Tuesday.

But in procuring the new fleet, SAA indicated last year that it would require recapitalisation from the government.

However, Tshwete could not give the recapitalisation amount SAA sought.

“We will take the strategy to the National Treasury and when it has made its endorsement it will then go to the cabinet,” Tshwete said.

SAA said that, among other things, the new strategy aimed to ensure that any recapitalisation programme would sustain the airline both in the short term and in the long term.

Last year Gigaba said the government as a shareholder had a responsibility to back SAA on recapitalisation as it was convinced the airline needed to procure the new fleet.

The new strategy was expected to outline the exact number in the required fleet and how much it would cost.

Airbus South African representative Linden Birns said that the first of a fleet of 20 new-generation A320s to be used on local and regional flights was due for delivery to SAA in the next two months.

The airline has been in discussion with Airbus about the new Airbus A350 extra wide-bodied aircraft, which is expected to go into production for commercial use in two years’ time, but no order has yet been made.

The DA spokeswoman for public enterprises, Natasha Michaels, said she would write to Gigaba asking that he present the strategy in Parliament to clarify whether it signalled yet another bailout for SAA.

“We cannot afford another bailout. Parliament must know what is planned,” she said.

In the past 20 years, SAA has received a total of R16.8 billion in capital injections from the government.

The entire aviation industry has been hit by soaring fuel prices and increased taxation.

But SAA was at a disadvantage compared with some of its competitors because of the weakness of the rand and South Africa’s distance from its main markets.

Because of this, some industry commentators have speculated that the turnaround strategy might include a plan put forward by the former board and former chief executive Siza Mzimela to set up hubs in other countries nearer to SAA’s main markets.

Under this plan, SAA’s low-cost division, Mango, and state-owned SA Express would also operate from these hubs.

Chris Zweigenthal, the chief executive of the Airlines Association of Southern Africa, said being a member of the Star Alliance of 27 airlines, SAA could look at using hubs of alliance partners and there would not be much additional costs. To reduce the cost further, the airline could look at using common lounges.

In regions where SAA did not have alliance partners, it could arrange with airlines it had code share with such as Emirates in Dubai.

“You don’t always have a hub on the other side if you have point-to-point market like SAA has in London. So there really isn’t much additional cost,” he said.

SAA has had nine turnaround strategies since 2000, none of which were properly implemented.

“The minister has proven that the new approach by the department is to hold all its entities accountable for what they’ve agreed to do,” said Tshwete. He said Gigaba was still studying the strategy and various stakeholders would also review it before it was implemented.

Dudu Myeni, acting SAA chairwoman, said there would be a three-phase implementation of the strategy with continuous monitoring over a 20-year period.

She said the effect would be felt from the first year of the plan’s implementation.

 

[Hosehead]

I see the begging bowl is out yet again. It happens more and more with alarming frequency. The last bailout was this past Xmas. FFS how many times do they (SAA) promise this will be the last time and we'll be on our feet?
That's why no private airline can successfully compete in SA with SAA and SAA family feeders (AirLink, Mango, and SA Express) and before you say Comair (Kulula, BA) do ...realise that Comair has survived in the main, thanks to their longstanding British Airways Franchise agreement. Without it they'd have gone the ways of Flitestar, Sunair, Nationwide, and Onetime.
Now it's a monopoly of the skies between Comair and SAA. A spot check last night of ticket prices between Cape Town and Durban for 1 adult and 1 kid leaving today and returning Sunday showed little to no availability in economy but average fare was R6000-R7000 return (direct) broken down on SAA to segments from CPT to JNB to DUR return for the same days and in economy it was a mind boggling R16,600-00. Talk about getting ripped a new one during the school holidays. (Sunday) being the last day before Cape schools resume...

 

[The_Unbeliever]

Just kill SAA off and get it over and done with.

Or sell it off to the highest bidder.

 

[Mila]

oh spaghetti monster a new leach.