HILKA BIRNS / DURBAN
South African flag carrier succeeds in shedding $69 million from costs as it swaps Boeings for Airbus
South African Airways (SAA) is expected to post positive results next month following a R700 million ($69 million) cost-cutting drive by chief executive Andr‚ Viljoen. The airline suffered a R735 million loss last year.
Viljoen says SAA has more than R3 billion cash and a financial footing that is "sound and strong", due to reduced costs, upgraded products and a $3.5 billion fleet renewal.
SAA saved R40 million by reducing catering on domestic flights; R10 million by capping internal audit fees; R250 by cutting external consultants; and R100 million by reducing the short-haul fleet by nine aircraft. The airline has also axed 90 management positions.
The airline is replacing its ageing Boeing long- and short-haul fleet with 41 Airbus aircraft - A340-600s, A340-300Enhanced, A319s and A320s. Viljoen says that the A340-600 is 40% more cost-effective than the Boeing 747-400 in Johannes-burg's hot and high conditions.
Further savings followed by managing currency and fuel exposure through a hedging programme, resulting in a 30%reduction in fuel costs.
SAA plans to focus on core routes while increasing services to Hong Kong from four to seven a week under a codeshare with Cathay Pacific. Three weekly flights to Paris will return later this year while code-share discussions with Air France are under way.Meanwhile, Viljoen and SAA's parastatal parent, Transnet, have confirmed the cancellation of a proposed merger of SAA and its feeder airlines, South African Express Airways (SAX) and South African Airlink. Acquisition of SAX, a wholly-owned subsidiary of Transnet, is still possible, but it will have to restructure the carrier's R750 million debt - resulting from the US dollar-based purchase of Bombardier CRJ200s - and dispose of the aircraft before a purchase.
SAA owns 10% of SA Airlink, which earlier this year laid off pilots and grounded three of its 16 BAe Jetstream 41s.
Source: Flight International
