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South African Airways (SAA) says no decisions have yet been made about disposing of any SAA entities in order to help the embattled state-owned airline.
It said in a statement on Wednesday that such options were merely presented to the board of SAA for consideration at a recent board strategy session.
City Press reported on Sunday that SAA was considering selling off assets after banks refused to lend it any more money – and its debt ballooned to R15bn more than its assets at the end of July.
The Sunday paper reported that the airline’s management was looking at a number of aggressive cost-cutting measures, including selling off its catering arm and outsourcing or selling SAA Cargo.
Break even
In its statement, SAA said it had claimed all along that it would take until 2021 for the airline to break even.
According to SAA, it is still on track with its turnaround strategy, and its first quarter results show it is ahead of the plan in terms of its trading performance.
Until 2021, however, SAA expects that its costs will remain higher than its revenue.
The airline said it continued to implement initiatives to drive costs down and improve revenue as part of its turnaround strategy. According to the statement, SAA currently has access to financial facilities to support its working capital requirements.
It said first quarter results showed material improvement in the trading performance of the company, with some routes delivering positive gross profit margins for the first time in more than a decade.
SAA sees this as proof that the initiatives implemented are beginning to yield results.
At the same time, the airline said the full and meaningful implementation of its turnaround plan would depend on "enablers" like meeting funding requirements of R21.7bn over a three-year implementation cycle; aggressively containing costs; transforming SAA Technical (SAAT) to be more efficient; optimising revenue; and rationalising its network.
The airline said it had already seen positive financial impacts from network changes and capacity redistribution implemented earlier this year in its route network.
"The shareholder is aware of the funding requirements and the matter is currently under consideration. 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 R5bn bridge facility to SAA," the airline statement said.
In August this year President Cyril Ramaphosa transferred the administration of SAA from the minister of finance to the minister of public enterprises. This meant that Pravin Gordhan - under whose portfolio the airline fell before he was axed as minister of finance during the Zuma era - once again has oversight of the state-owned airline.
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