SAA revenue grows 12% to reach R30bn

2015-01-31 09:54

SA Airways group revenue grew 12% to reach R30.3 billion, according to its financial results for the year 2013/2014.

“During the period in review, the SAA Group has realised growth in revenues by 12% (from R27.1 billion to R30.3 billion) with an operating loss (EBITDA) of R374 million reported (R425 million FY 2012/13),” said SAA yesterday.

EBITDA stands for “Earnings Before Interest, Taxes, Depreciation and Amortization”.

Cost containment during the reporting period yielded sustainable savings of R453 million.

“The SAA Group’s domestic operations remain profitable with 10% growth in its profit contribution from R722 million to R791 million.”

African routes grew 17%, from R648 million to R761 million.

“SAA’s long-haul intercontinental operations recorded an increased loss from R1.3 billion in the previous financial year (2012/13) to R1.6 billion in losses reported for the 2013/2014 financial year.”

However re-configurated routes to Beijing and Mumbai were expected to significantly improve performance.

The weakened rand and high fuel prices had affected the financials for period review. Also, revaluation of seven wide-body aircraft owned by SAA resulted in an impairment of R782 million – as well as an extra R192 million write down on related spares and inventory.

There were further impairments relating to the delivery of four new A320 aircraft, part of a 2002 legacy agreement, renegotiated in 2009, for 20 planes.

“However, the contract provides for annual escalations which resulted in the purchase price exceeding the market value at date of delivery – thus leading to a further impairment of R369 million.

Future deliveries on the contract were expected to lead to further impairments, said the airline group.

“SAA’s remaining capital commitment for these purchases is R822 million.”

SAA was one of three state owned companies transferred to the Treasury from the department of public enterprises on December 12 last year after Minister in the Presidency Jeff Radebe said Cabinet was concerned about their performance.

Last week the finance ministry announced that Minister Nhlanhla Nene had approved an additional R6.488 billion guarantee for SAA, taking the total guarantees granted to the airline to R14.3bn, subject to certain provisos.

The release of SAA’s financial statements for the 2013/14 financial year had been delayed because it was technically insolvent. The guarantee allows SAA to borrow more money.

“It is the intent of the Board (reconstituted in October 2014) and SAA management to reduce the reliance on guarantees and return the business to relative stability,” said SAA.

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