Troubled SAA may cut flight routes

Feb 19 2013 15:29

Last month, the national carrier reportedly received a R550m bank "facility" to cover fuel and other short-term commitments. (Picture: Shutterstock)

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Cape Town - Troubled carrier SAA's turnaround plan to be presented to the government at the end of next month might involve cutting some flight routes, MPs heard on Tuesday.

SA Airways (SAA) board acting chairperson Dudu Myeni said the plan would be the ninth developed by the ailing airline in 13 years.

"When the board assessed all the existing strategies of SAA, developed since 2000, we discovered that we had... eight strategies... that were developed by various well-known companies, but they were put on the shelf, gathering dust, and not being implemented."

However, SAA's new board - a number of board members unexpectedly quit last year before the annual general meeting in October - was "hard at work" finalising a new plan, which would be presented to the government on either March 28 or April 2.

Myeni was briefing members of parliament's public enterprises portfolio committee.

She described the 20-year plan as "cutting-edge", and vowed it would be more successful than its predecessors because "it will be developed and owned by our own people".

Responding to questions about why the latest plan would be more credible than previous ones, SAA acting CEO Nico Bezuidenhout said the latest "holistic" strategy aimed to achieve "sustainable" business.

"We cannot continue to come back looking for further capitalisation. If nothing else, it's embarrassing," he said.

Last month, the national carrier reportedly received a R550m bank "facility" to cover fuel and other short-term commitments.

The airline's losses over the past decade amount to R14.7bn.

Bezuidenhout, who is the CEO of Mango, was appointed acting CEO of SAA earlier this month, after the previous incumbent, Vuyisile Kona, was suspended.

Kona replaced then CEO Siza Mzimela in October, after the airline reported a R1 25bn operating loss for the year.

Bezuidenhout said the new strategy aimed to take the best elements of the previous ones, "developed, in the past, at great expense", and implement them.

"In my subjective opinion, 70% of the issues [with the airline to date] have been directly related to failure to implement."

SAA was also set to take "a very hard look" at the routes it flew.

"If our... mandate is to connect up with the countries we do trade and tourism business with, then our route networks should be informed solely by that... mandate."

The airline was in the process of looking at its existing routes and seeing which did not "fit" and should not be operating.

"This may mean we have to cut certain routes."

Bezuidenhout also called for changes to SAA's fleet. According to its 2011/12 annual report, the carrier operates 53 aircraft.

"If we have the wrong tools for the job, we're not going to make it. Our long-haul fleet will not be profitable unless we adapt and change our fleet," he told the committee.

"At the same time, we cannot expect our shareholder to provide us with one cent of additional capital unless we show that we will safeguard that additional capital through a sustainable long-term plan."

Myeni called on members to "have faith" in the national carrier.

"We implore members... give us an opportunity to do the work. We are very passionate and patriotic about the national airline," she said.

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