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
"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
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
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
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.