… Sees Green Shoots In Quarter 1 Performance
…Says Airline Will Not File For bankruptcy
South African Airways (SAA) has stated that the airline would not breakeven until 2021; three years from now.
This is just as the airline said that it turnaround strategy is on track with quarter one results showing that the company is ahead of the plan in its trading performance.
“We have always maintained that it will take us until 2021 to break even. This means that our costs will remain higher than our revenue until we reach the breakeven point. We continue to implement initiatives to drive costs down and improve revenue as part of the turnaround strategy. The quarter one results, reflect the Board and management’s commitment to turn the airline around despite the challenges,” the airline said.
An online statement issued by SAA Group Corporate Affairs, said that the company currently has access to financial facilities to support its working capital requirements.
The Board and the shareholder, SAA said are working round the clock to find a lasting financial solution to the company’s capital requirements.
SAA, the Group Corporate Affairs stated would continue to honour its obligations to all its travelling customers, suppliers and other creditors and would not file for bankruptcy.
The company’s airline operations, the statement further explained remain solid with its On-Time Performance ranking well amongst its peers, adding that quarter one results show material improvement in the trading performance of the company with some of the routes delivering positive gross profit margins for the first time in more than a decade, proof that the initiatives implemented are beginning to yield results.
“The airline has made some headway in the implementation of its turnaround plan to transform SAA into a commercially viable entity, which must have the ability to sustain itself financially and remain competitive operationally,” the statement reads in part.
The airline disclosed that at the recently held Board strategy session between 11 – 12 September 2018, the executive management presented to the Board a comprehensive strategy update reflecting on the present-day strategy execution achievements and challenges as well as the road map and options for the outlook of the business.
The statement said that no decisions have been taken to dispose of any SAA entities or assets at this stage and that options were merely presented to the Board for consideration.
It added that the full and meaningful implementation of the turnaround plan, which for the first time has been fully costed, will depend on the realisation of certain enablers.
These , the statement said include meeting the funding requirements of R21.7 billion over a three-year implementation cycle, aggressively containing costs through smart procurement and optimal organisation design, SAA Technical (SAAT) transformation to bring more efficiencies as well as revenue optimisation and network rationalisation.
The airline stated that since the implementation of one of the key initiatives on revenue optimisation and network rationalisation, SAA had seen encouraging positive financial performance for Quarter one of this financial year, adding that these results are borne out of network changes and capacity redistribution SAA implemented earlier this year in its route network.
The shareholder, SAA said is aware of the funding requirements and the matter is currently under consideration, stressing that there are ongoing engagements with the lenders, who in 2017 agreed to grant SAA conditional extension on its maturing loans, which are now due in March 2019.
SAA said that in April 2018 the lenders extended a R5 billion bridge facility to SAA.
“We remain focused on implementing the turnaround plan and we are seeing positive results, “ SAA said.