SAA needs billions for turnaround strategy – CEO

2013-12-06 15:39

SAA needs billions of rands in government funding and won’t break even for four to five years, chief executive Monwabisi Kalawe has said.

The financing could come as a guarantee or a capital injection, Kalawe said in an interview with Bloomberg Africa TV to be broadcast tomorrow. “Like any company, whether it’s a private company or a publicly listed company – at some stage you go to your shareholders for financial assistance,” he said. “That’s what we’re doing.”

SAA is battling with loss-making routes, an aging fleet, rising fuel costs and a weak balance sheet. Its earnings report for the full year through March has been delayed amid discussions of further state support.

“It’ll take us between four to five years to break even or make a small profit, so when we announce our results we will tell the market that we made a loss again,” said Kalawe.

The airline is seeking to upgrade the engines of its aging Airbus SAS A340 wide-body fleet as part of a plan to lower fuel costs. The company wants about 30 new aircraft, yet can only afford to lease rather than buy the planes, said Kalawe.

“Because the balance sheet is weak, we have no option but to lease the planes,” he said. SAA is evaluating “tenders, and of course the delivery of the planes is going to take place over a 10- to 15-year period.”

SAA is shifting its focus to expand in faster-growing African economies after cancelling its unprofitable route to Buenos Aires and putting its Beijing flights under review.

One option “is to look at setting up a hub in West Africa,” said Kalawe. “That hub will allow us to connect southern Africa to West Africa and to the West. That’s really where our strategy is looking at.”

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.