South African Airways is to ground its Boeing 747-400 fleet, revamp its long-haul network and split into seven separate units as part of a restructuring plan that aims to restore profitability within 18 months.
The Star Alliance carrier's wide-ranging restructuring plan targets achieving a R2.7 billion ($378 million) turnaround in the group's performance over the next 12-18 months. The carrier had reported a net loss of R652 million for the first half.
"In the face of a high cost base created by, among other things, uncompetitive ownership and aircraft lease costs, excessive headcount and fuel price volatility, SAA must overhaul its entire business if it wants to survive," says SAA chief executive Khaya Ngqula.
One of the chief measures is the grounding of its remaining Boeing 747-400s. It had already returned two aircraft last year, leaving it with six 747-400s - one of which it owns, the remainder it leases. "The fleet is an expensive, small sub-fleet of SAA with high costs versus the revenue generated by the aircraft," SAA says.
"SAA has also embarked on a comprehensive programme to consider its current fleet structure, having agreed to put the planned fleet upgrade and acquisition strategy on hold," it adds. The carrier had been looking at adding more Airbus A340s.
The carrier will also rationalise its long-haul route network, introduce cost savings across departments and reshape its corporate structure. This will see it split into seven separate units by the end of 2008 in a bid for greater transparency and accountability.
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Source: Flight International
