SAA CEO discusses the airline’s huge operating loss and how Treasury will assist

(Click here to read "4 steps Government is taking to save SAA")

SAA’s latest results, released on Friday, show continued losses on international routes and R200-million damage from fuel hedging after the unexpected drop in oil prices.

The airline reported a R374-million operating loss for the year ending March 2014, down from R425-million for the year ending March 2013.

Why cheap oil isn’t helping

“While the oil price has come down, the rand has weakened substantially," explains acting SAA CEO Nico Bezuidenhout.

About a decade ago SAA lost billions in an attempt to hedge itself against oil price movements. It still buys protection against rising oil prices; and is still losing a lot of money doing so.

“We can hedge up to 60 percent of volumes 18 months out,” says Bezuidenhout. “We’re currently hedging about 40 percent, so we won’t see the full effect of cheaper oil in ticket prices.”

SAA needs newer, more fuel efficient airplanes

Fuel contributes about 37 percent of all SAA’s costs while the global average is closer to 27 percent.

“Treasury wants to know what our network is going to look like before they’re willing to provide more money for newer planes,” says Bezuidenhout. “It’s a stance that makes sense, which is why we’re firming it up by cutting lossmaking routes.”

Listen to the complete interview for more detail:

How Treasury will assist SAA

Finance Minister Nhlanhla Nene recently said that recapitalisation is not on the cards for South African Airways (SAA).

The national air carrier is currently in its 90 day turnaround action plan, part of a long-term mission to make SAA profitable again.

Minister Nene said that that government would consider selling property; direct and indirect shareholdings in listed firms and non-strategic government holdings in state companies to raise funding for state-owned firms which qualify for governement assistance.

Listen to CapeTalk’s Kieno Kammies interview Bezuidenhout about how National Treasury is assisting SAA:

(Click here to read "4 steps Government is taking to save SAA")

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
How to overcome the fear of failure (and other tips from a serial entrepreneur)

How to overcome the fear of failure (and other tips from a serial entrepreneur)

Nic Haralambous knows a thing or three about starting a small business with almost no money. He offers this advice…

What a three-way Olympic swimming tie says about our strange measuring system

What a three-way Olympic swimming tie says about our strange measuring system

The metric system defines the world around us, but those definitions are not what you think they are.

Meet Keith Kirsten, guru of gardening and world-renowned horticulturist

Meet Keith Kirsten, guru of gardening and world-renowned horticulturist

Bruce Whitfield interviews Kirsten about his 30-year-long career and his new franchise concept, Keith Kirsten Garden Centre.

How a single township internet café grew into a nationwide IT franchise business

How a single township internet café grew into a nationwide IT franchise business

Meet the inspirational Luvuyo Rani, Social Entrepreneur of 2016. Learn about his fascinating business and the lives he’s changing.

Auschwitz concentration camp liberated on this day (27 January) in 1945

Auschwitz concentration camp liberated on this day (27 January) in 1945

The Red Army liberated Auschwitz - Nazi Germany’s largest concentration camp – on this day, 72 years ago.

4 steps Government is taking to save South African Airways

4 steps Government is taking to save South African Airways

SAA’s latest turnaround strategy is taking shape and, unlike the ones that came before, it’s rather radical.

Popular articles
"Case against President Zuma is strong, it is sound and ready to go to trial"

"Case against President Zuma is strong, it is sound and ready to go to trial"

Barry Bateman, EWN reporter in the Supreme Court of Appeal's ruling to reinstate charges and what this means for President Zuma.

V&A Waterfront responds to claims of sewage water on customer's car

V&A Waterfront responds to claims of sewage water on customer's car

A customer was not happy to find her car in a huge puddle of effluent water after doing her shopping at the V&A Waterfront.

Heroic fire fighter saves drowning child while on holiday

Heroic fire fighter saves drowning child while on holiday

It's not clear how long the little girl (3) spent underwater but it took ten minutes to resuscitate her.

De Waal Drive is now renamed after Philip Kgosana, but who was he? Here's a look

De Waal Drive is now renamed after Philip Kgosana, but who was he? Here's a look

Cape Town's well-known bend has been renamed in honour of PAC stalwart Philip Kgosana, but very few know his historic importance.

A list of words that people need to 'basically' stop using

A list of words that people need to 'basically' stop using

These words have become so overused and pretentious that listeners believe that they've lost their meaning.

3 emergency numbers you should have on speed dial and how they work

3 emergency numbers you should have on speed dial and how they work

These are the emergency numbers you should have on your cellphone and this is what you must understand about how they work.