SA Airline faces ‘possibly aggressive’ cost cuts in the next three months

Losses must end, says chairwoman Dudu Myeni, but there are no details yet: ‘We are going on a strategy review, we should be able to come up with measurable plans’ 

 

South African Airways will undertake a three-month short-term turnaround strategy that could include aggressive cost-cutting, chairwoman Dudu Myeni said on Friday.

SAA posted a R1.5bn loss for the 2015-16.

Speaking at a briefing following the conclusion of SAA’s 2016 annual general meeting, Myeni said recommendations on the appointment of a new CEO and chief financial officer would be delivered to the Treasury and Department of Public Enterprises in early 2017.
"SAA recorded losses of R5.6bn in 2014-15 and R1.5bn in 2015-16," she said.
"Although the airline has reduced its losses, the board and shareholder have recognised that the trend of reporting losses must end," Myeni said.

"The focus of the next few years will be returning the airline to financial sustainability."
A three-month plan to address finances would include "possibly aggressive" cost containment and a review of the sustainability of routes, Myeni said. She declined to go into further detail.
"We are going on a strategy review, we should be able to come up with measurable plans," she said.

SAA’s revenue has been stagnant for several years, and the board has endured sustained criticism due to high turnover of both board members and management.

Finance Minister Pravin Gordhan said during his medium-term budget policy speech on Wednesday that the new SAA board, appointed in September, had been given a mandate to bring financial sustainability to the airline and urgently to fill long-vacant senior executive positions.
Myeni said on Friday that a private equity partner for SA’s state-owned airlines was still on the cards, as was their rationalisation, announced by Gordhan in February. This would be either through a merger or the creation of a holding company.
Public Entrprises Minister Lynne Brown has said that the latter scenario is more likely.

Acting chief financial officer Phumeza Ntshanti said on Friday that losses were expected to narrow from the 2016-17 financial year until 2021, when SAA expected to break even.