/ 2 June 2009

Restructuring saves SAA R2,5-billion

South African Airways (SAA) has saved R2,5-billion through its recently completed restructuring, Business Day reported on Tuesday.

It said the airline was on an operationally sound footing, citing acting chief executive Chris Smyth.

The initiatives had also put the airline in a prime position to weather the economic downturn and high fuel prices, Smyth told the newspaper.

”One of the biggest savings came from the grounding of SAA’s fleet of six Boeing 747-400s in November 2007,” the report said, adding that the grounding was expected to save the airline R600-million over the 18-month restructuring period.

Another achievement was the signing of a multi-year agreement with unions, which helped smooth labour costs as well as SAA’s often ”stormy” relationship with the unions.

However, Smyth told Business Day the general public cared about whether SAA made a loss.

”Weighed down by a fuel hedging loss and millions of rands in interest payments on its debt book, SAA is likely to post a net loss in the year to March for the third year running,” Business Day said.

Smyth told the newspaper SAA remained ”woefully undercapitalised” with its balance sheet crippled by numerous legacy issues.

He added that service standards had also improved.

”SAA cabin crew used to be regarded by passengers as rude and belligerent, but we have turned that around, with the latest surveys showing an 89% customer satisfaction rate.”

Smyth told Business Day SAA would continue to focus on expanding into Africa, but added it could no longer rely on its dominant position.

”It is true that the yields in Africa are generally better than anywhere else due to the greater demand for air transport.

”But we acknowledge that the skies are opening up and competition is increasing, putting pressure on those yields.”

SAA has also abandoned its plan for a mini-hub at Dakar in Senegal, the newspaper said. — Sapa