Fin24

SAA balance sheet not good, MPs told

2012-05-29 16:07

Parliament - South African Airways' balance sheet is not looking good, but the national carrier's pilots are among the best in the world, MPs heard on Tuesday.

"Currently, our balance sheet does not look good at all. We are in the process of restructuring (it)," SAA audit committee manager Zakhele Sithole told parliament's public enterprises portfolio committee.

Alluding to a R6bn cash injection the airline is seeking for operational costs, growth and renewal of its aircraft fleet, he said the restructuring was necessary to deal with out-payments of capital.

An example was monthly payments for new aircraft.

"(Payments) were coming out of our working capital. It doesn't make sense to take the working capital and finance a long-term asset," Sithole said.

He did not provide any figures.

It is understood National Treasury and the department of public enterprises are looking into the "proper capitalisation" the airline is seeking.

Earlier this month, SAA CEO Siza Mzimela said the capital was needed for, among other things, the purchase of new aircraft.

On Tuesday, she told committee members that the global airline industry, including local carriers, was facing "very tough times" and was under great pressure.

"There has been a huge increase in fuel costs," she said.

Airport user fees, a drop in passenger demand and rising service costs, such as catering, were also adding to the pressure.

Mzimela said there was a further "double whammy" for African airlines.

"The majority of our revenue is actually generated in weaker currencies, while a significant portion of our costs are billed in US dollars and euros."

There was also a premium on fuel prices in African countries, and in some cases restrictive access to highly regulated markets.

Last year, SAA incurred a "dramatically larger" R1.3bn fuel bill, and the latest year-on year figure for the past 12 months was about R2.4bn.

On global commercial airline profitability, Mzimela said forecasts showed this was set to fall further.

"The future doesn't look any brighter," she said.

The airline's first female CEO said she was aiming "to achieve cost reductions and cost compression of over R1bn in 2012/13".

Significant investment was needed in more fuel-efficient aircraft "in order to stay sustainable as a business".

SAA would focus on increasing its yield and passenger volumes, and increasingly look to growing its cargo business.

Mzimela said SAA planned to replace its entire fleet of short-haul Boeing 737-800s by 2017.

Two Airbus A320s were delivered earlier this year, and delivery of 20 of the fuel-efficient aircraft would take place in the next five years.

On long-haul aircraft, she said the replacement programme had started, with six A330-200s delivered between February and December last year.

According to a document tabled at the briefing, SAA expects "to finalise a major aircraft order by year end to replace current non-efficient long-haul aircraft".

Mzimela said new strategies in place at SAA were starting to show results.

There had been a "solid" yield improvement of 17%, and passenger revenue was up 20% in the last quarter.

SAA chairperson Cheryl Carolus told the committee that although SAA recruited its pilots from all over the world, they were very well trained.

"You can get on an SAA flight, whether it's in London or Nairobi, and know you are safe. We don't take any chances. If we can't fly safely, we don't fly," she said.

Comments
  • franklyn.davies.1 - 2012-05-29 16:18

    Duh ! obviously apartheids fault !

      Boere - 2012-05-29 16:33

      Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

      gordon.trevat - 2012-05-29 17:45

      SAA has spent the past 10 or so years selling off their assets to justify their expensive leases and bonuses. Now the cash they "made" by selling off the assets is running dry, they're realising the leases are pretty ridiculous, and they're looking for the taxpayer to give them cash to make what they've done in the past disappear. Granted this is not Siza's fault, and she seems to be getting the house in order, but where did all the money go? Why is it not being recovered from past incompetence?

      Buzz - 2012-05-30 09:26

      How is this even possible ? Their fares are the most expensive in the world!

  • franklyn.davies.1 - 2012-05-29 16:18

    Duh ! obviously apartheids fault !

  • Johann - 2012-05-29 16:19

    like usual give the work to people that can actually do the jog and dont get selected because of their color.SAA just another bad exaple of poor BEE managment good on you ,wasting our tax money brilliat!!!!!

      Roberto - 2012-05-29 17:19

      BEE IS THE WAY TO GO.I had enough of racists WHITES in charge of procurement descriminating against us.I am refering to now currently long after 1994 and they still apply racism in procurement.I deal directly with them for years now and in many many cases my service exceeds the WHITE persons service and in costs inclued.I have been underestimated all along till now and it still goes on with no signs of stopping.Racism is still welll alive BEE IS THE WAY TO GO AND SHOULD BE NEG !!!!!!!!!!!!!!!!!!!!!!!!!

      mondli.botha - 2012-05-29 18:23

      I hope those people you're referring to the apartheid people. Lol

  • eyesears.handsfeet - 2012-05-29 16:22

    Why are we not surprised and everyelse yet again is to blame, except poor planning.

      Kevin - 2012-05-29 20:55

      Also poor management over some years.

      Kevin - 2012-05-29 20:55

      Also poor management over some years.

  • Mark - 2012-05-29 16:23

    No one can take away the proud heritage and impressive history of SAA. One of the oldest airlines in the world. We Taxpayers are not, though, impressed at the financial evidence at SAA of bad management and poor planning, that is now a noose around our necks - thanks to poor standard of Government meddling.

  • Boere - 2012-05-29 16:32

    Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

      Roberto - 2012-05-29 17:17

      BEE IS THE WAY TO GO.I had enough of racists WHITES in charge of procurement descriminating against us.I am refering to now currently long after 1994 and they still apply racism in procurement.I deal directly with them for years now and in many many cases my service exceeds the WHITE persons service and in costs inclued.I have been underestimated all along till now and it still goes on with no signs of stopping.Racism is still welll alive BEE IS THE WAY TO GO AND SHOULD BE NEG !!!!!!!!!!!!!!!!!!!!!!!!!

      Ian - 2012-05-29 20:00

      @roberto "inclued" really?

  • Boere - 2012-05-29 16:32

    Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

  • Boere - 2012-05-29 16:32

    Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

      AnthonyfromAfrica - 2012-05-30 08:19

      Editor, There seems to be a problem on some of your sites. Some comments are repeated a number of times, without one being able to delete these. Please fix this. It is very annoying !!!!

  • Boere - 2012-05-29 16:32

    Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

  • Boere - 2012-05-29 16:32

    Start by cutting your own enormous salaries and bonusses that takes up a huge portion. Secondly, STOP giving BEE preference when it comes to tenders, they take a huge cut and the work still ends up with the normal guy in the street doing the work for much less than the tender amount. Stop your huge sponsoring budget. You do not need to advertise, EVERYONE knows who SAA is. By doing the simpler things in life, millions can be saved on a monthly basis. Do your calc, how much money is pushed into BEE partnerships etc?

      Roberto - 2012-05-29 17:19

      BEE IS THE WAY TO GO.I had enough of racists WHITES in charge of procurement descriminating against us.I am refering to now currently long after 1994 and they still apply racism in procurement.I deal directly with them for years now and in many many cases my service exceeds the WHITE persons service and in costs inclued.I have been underestimated all along till now and it still goes on with no signs of stopping.Racism is still welll alive BEE IS THE WAY TO GO AND SHOULD BE NEG !!!!!!!!!!!!!!!!!!!!!!!!!

  • anthonycharles.williams - 2012-05-29 16:33

    Has the anc and government paid there bill,I,am sure that is were your loss is...the way they fly all over the world, using three planes and all.

  • mark.haupt.31 - 2012-05-29 16:48

    We know the pilots are good, it's you lot running the finances, the struggle accountants, who are useless. Ever thought of not giving all the ministers freebies, cutting the salaries of those responsible for the management of the airline - yes, you cadres - and cutting bonuses paid to self-same jerks? Or you could blame Apartheid, or the devil, or the taxpayers.......

  • Bomb - 2012-05-29 16:58

    PRIVATISEEEEEEEEEEEEEE!!!! SAA is a white elephant. There are enough foreign airlines covering the long international routes, and since their currencies are much stronger than the local one, let them fly these "expensive routes". SAA can then concentrate on improving and expanding their shorter and local routes passenger routes and concentrating on cargo. No need in sitting in a plane 50% full on a long haul flight. And stay away from the tax payers money. SAA runs to government every year with some sort of bailout request. Bleddie agents!!!!!!!

  • Michael - 2012-05-29 17:00

    Dont ever fly with this dogged airline...best use another

      marianne.greig - 2012-05-30 09:20

      I will NEVER fly SAA again,they are a useless lot.Twice my suitcase was broken open and a lot of valuables stolen. Could not even get through to SAA as their inbox was full.Their customer relations stink. I now fly Virgin,they reimburse me when things go wrong,and they make a PROFIT.

      marianne.greig - 2012-05-30 09:21

      I will NEVER fly SAA again,they are a useless lot.Twice my suitcase was broken open and a lot of valuables stolen. Could not even get through to SAA as their inbox was full.Their customer relations stink. I now fly Virgin,they reimburse me when things go wrong,and they make a PROFIT.

      marianne.greig - 2012-05-30 09:22

      I will NEVER fly SAA again,they are a useless lot.Twice my suitcase was broken open and a lot of valuables stolen. Could not even get through to SAA as their inbox was full.Their customer relations stink. I now fly Virgin,they reimburse me when things go wrong,and they make a PROFIT.

      marianne.greig - 2012-05-30 09:28

      I will NEVER fly SAA again,they are a useless lot.Twice my suitcase was broken open and a lot of valuables stolen. Could not even get through to SAA as their inbox was full.Their customer relations stink. I now fly Virgin,they reimburse me when things go wrong,and they make a PROFIT.

  • thenga.pfananani - 2012-05-29 17:24

    I wonder this people need 2 nationalize everything like Sekhunda whereas they are failing 2 manage the little they have. Government businesses are living dangerously bcoz of this day 2 day bailouts and this cud lead us 2 bankcruptancy as a nation.

  • thenga.pfananani - 2012-05-29 17:24

    I wonder this people need 2 nationalize everything like Sekhunda whereas they are failing 2 manage the little they have. Government businesses are living dangerously bcoz of this day 2 day bailouts and this cud lead us 2 bankcruptancy as a nation.

  • Joseph - 2012-05-29 17:36

    The few honest black people in the country will never get anywhere for the crooks remain in charge

  • jim.beattie.509 - 2012-05-29 17:49

    SAA is a 3rd world airline. Just try flying Emirates, and you will see how a well run and managed airline looks and feels like. SAA Business Class charge exorbitant fares and the service, food, and entertainment is very average, whilst the seats are old fashioned, with airlines like Emirates having exactly the opposite of SAA. I am a Lifetime Platinum member with SAA - yet i hardly ever fly them for the reasons above.

      Roberto - 2012-05-29 19:28

      I flew KLM;Air France;Lufthansa and they service is not out of this world.Getting Jet Fuel in the Middle East at less than half price from they base.How on earth can any business profitably compete on the same routes ????????Who is really making healthy profits ???? Do you home work before critisising or commenting other wise take a hike with Eugene Terblanche to heavens door

      AnthonyfromAfrica - 2012-05-29 19:59

      Roberto, WOW !!!!! Jim is just giving his opinion. Calm down....what is wrong with you ???

      jeanpierre.dumont - 2012-05-29 22:03

      You dont know what you are talking about. SAA is one of only 30 4-star airlines - same ranking given to the likes of BA, Lufthansa and Emirates. http://www.airlinequality.com/StarRanking/4star.htm

  • jim.beattie.509 - 2012-05-29 17:50

    SAA is a 3rd world airline. Just try flying Emirates, and you will see how a well run and managed airline looks and feels like. SAA Business Class charge exorbitant fares and the service, food, and entertainment is very average, whilst the seats are old fashioned, with airlines like Emirates having exactly the opposite of SAA. I am a Lifetime Platinum member with SAA - yet i hardly ever fly them for the reasons above.

      Roberto - 2012-05-29 19:29

      I flew KLM;Air France;Lufthansa and they service is not out of this world.Getting Jet Fuel in the Middle East at less than half price from they base.How on earth can any business profitably compete on the same routes ????????Who is really making healthy profits ???? Do you home work before critisising or commenting other wise take a hike with Eugene Terblanche to heavens door

  • ntjeke.wilfred - 2012-05-29 17:51

    i didn't know we have air buses here, thats good news for me,when can we expect a soul plane?

  • jim.beattie.509 - 2012-05-29 17:52

    SAA is a 3rd world airline. Just try flying Emirates, and you will see how a well run and managed airline looks and feels like. SAA Business Class charge exorbitant fares and the service, food, and entertainment is very average, whilst the seats are old fashioned, with airlines like Emirates having exactly the opposite of SAA. I am a Lifetime Platinum member with SAA - yet i hardly ever fly them for the reasons above.

      Roberto - 2012-05-29 19:29

      I flew KLM;Air France;Lufthansa and they service is not out of this world.Getting Jet Fuel in the Middle East at less than half price from they base.How on earth can any business profitably compete on the same routes ????????Who is really making healthy profits ???? Do you home work before critisising or commenting other wise take a hike with Eugene Terblanche to heavens door

      Simon Whittaker - 2012-05-29 19:56

      Jim, try BA!....Give me SAA anytime........but I agree about Emirates & Virgin.......Superb!

  • jim.beattie.509 - 2012-05-29 17:57

    SAA is a 3rd world airline. Just try flying Emirates, and you will see how a well run and managed airline looks and feels like. SAA Business Class charge exorbitant fares and the service, food, and entertainment is very average, whilst the seats are old fashioned, with airlines like Emirates having exactly the opposite of SAA. I am a Lifetime Platinum member with SAA - yet i hardly ever fly them for the reasons above.

      Roberto - 2012-05-29 19:29

      I flew KLM;Air France;Lufthansa and they service is not out of this world.Getting Jet Fuel in the Middle East at less than half price from they base.How on earth can any business profitably compete on the same routes ????????Who is really making healthy profits ???? Do you home work before critisising or commenting other wise take a hike with Eugene Terblanche to heavens door

      mapaseka.kanyane.1 - 2012-05-30 06:34

      Maybe you should come and join the SAA management team and show them how to run an airline.

  • Fhedzani Sadiki - 2012-05-29 18:09

    All I can say is its not from lack of trying that SAA finds itself in this position. The people at SAA are not incompetent, some of them have been there for 30 years. The airline business is very hard....everything is $ based, from the Leasing of the planes, fuel, paying for landing rights...its not easy...

  • jim.beattie.509 - 2012-05-29 18:18

    SAA is a 3rd world airline. Just try flying Emirates, and you will see how a well run and managed airline looks and feels like. SAA Business Class charge exorbitant fares and the service, food, and entertainment is very average, whilst the seats are old fashioned, with airlines like Emirates having exactly the opposite of SAA. I am a Lifetime Platinum member with SAA - yet i hardly ever fly them for the reasons above.

  • Ian - 2012-05-29 18:29

    Virgin Atlantic and other private airlines do not have free money like SAA but they still operate and are competitive. The fact of the matter is SAA can not compete. They are always cry babies. If they do not make profit they run the govt to get our money. It is the money that could be of better use elsewhere. They must privatized. What is the benefit to us if they are always operating at a loss. Instead they dip their hand into our money. Eskom should also be privatized.

  • shaun.cousins1 - 2012-05-29 18:40

    and you want to purchase a airbus 380

  • Ian - 2012-05-29 19:46

    Again, why do taxpayers have to fit the bill for incompetence and useless parastatals! If a company is useless and cannot adjust to market requirements and survive in the market it must close...or at least put competent people in charge!

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