SAA revenue up but losses continue for 2013
Written by defenceWeb, Thursday, 06 February 2014
In its recently released 2012/13 Annual Financial Statements, SAA reported total revenue of R27.1 billion in the year under review against the previous financial year's R23.9 billion, representing a 14% increase in total income attributed to a 7% increase in airfares despite competition from the Middle East region; an 8% increase in revenue passengers; and a 3% increase in available capacity.
The carrier said that new destinations and frequencies launched during 2011 and 2012 are now maturing and making positive contribution to the airline's improving revenue.
SAA delivered a 40% improvement in EBITDA (earnings before interest, taxes, depreciation and amortisation) from a loss of R705 million in 2012 to a loss of R425 million in 2013. After depreciation, amortisation, finance costs and investment income, the airline reported a 14% improvement in the loss before tax from R1.4 billion to R1.2 billion. Total operating loss for 2012/13 was R991 million, down from the previous year’s R1.252 billion. Loss for the year, after tax, was R1.168 billion.
Some of the challenges the carrier faced were high fuel costs and the weakening rand against the dollar (13% year-on-year). The average fuel price was at levels in excess of $110 which further eroded route profitability, the carrier said. While operating cost reflect a 12% year-on-year increase, fuel remains the single biggest cost to SAA having increased from 34% to 35% of operating cost. For the period under review, fuel cost increased by 15% to R1.3 billion. Operating costs, excluding uncontrollable costs, decreased by 2%.
READ MORESAA receives first new A320s
Solidarity takes legal action over SAA cadet programme
Profitability ‘on the horizon’ – SAA
SAA top management on charm offensive
During the year under review, SAA embarked on a cost cutting programme ranging from saving energy by switching off unnecessary lights, to more complex projects such as fuel-saving initiatives to optimise fuel by utilising dynamic flight plans and alternative landing rights, and reducing the weight of on-board items. SAA reported that it had achieved 97% of the R1.3 billion budgeted reduction in costs, removing in excess of R1 billion in costs from the business, “which was unfortunately to a large extent offset by the weakening rand.”
SAA said other costs increased as well, with maintenance costs rising by a third (from R1.7 billion to R2.3 billion) and leasing costs rising by 17% (from R1.8 billion to R2.1 billion). Regulatory costs (which include navigation, landing and parking fees) increased by 18% from R1.5 billion in the previous financial year to R1.8 billion in the current year.
Other increases were commissions and network charges (13%), electronic data (11%) and employees (3%). “Operating costs over the past five years have remained well contained compared with the significant increases in fuel and regulatory costs, said SAA Chief Financial Officer, Wolf Meyer.
SAA CEO, Monwabisi Kalawe, said that, “We are confident that we will be able to turn this business around. We have the Long Term Turnaround (LTTS) strategy in place to make certain that we secure survival as a commercial airline while quickly focusing on the successes that we are beginning to realise. Clear and measurable targets have been outlined in the LTTS and a strong and empowered Leadership is in place to ensure we realise our long term goal of turning this business towards profitability.”
Part of the turnaround strategy involves replacing the ageing long haul fleet, with plans to buy 20 new aircraft, either Boeing 787s or Airbus A350s.
- SAAF wins bid to train Omani pilots
- Treasury takes over SAA reins
- R145 million for military veterans’ education support
- No Seriti cross-examination for Hlongwane
- True rhino poaching death statistics are 30 per cent higher
- Air Defence Artillery history publication in the pipeline
- NCACC 2014 third quarter report
- Stolen firearms far outweigh lost ones
- First Solaris aviation biofuel crop ready for harvest
- AHRLAC logs 50 incident-free flying hours
Operator of Finnish nationwide Tetra network VIRVE once again relies on Airbus Defence and Space
by AIRBUS Defence & Space, 15 December 2014Finland continues to invest in Tetra technology to guarantee users uninterrupted network performance and quality of service.
Airbus Defence and Space reveals Tetrapol evolution path towards mission-critical broadband standard
by AIRBUS Defence & Space, 12 December 2014
The 4G-ready Tetrapol technology adds broadband capabilities via dual-mode platforms.
The Swedish Defence Materiel Administration has signed an agreement with Airbus Defence and Space on Tetra upgrades
by AIRBUS Defence & Space, 11 December 2014
Airbus Defence and Space has signed a three-year care agreement with the Swedish Defence Materiel Administration.
Poynting moves offices
by Poynting Antennas, 11 December 2014
Poynting Defence and Specialised moved premises to new offices in the N1 Business Park in Centurion.
Saab to supply new-generation AT4 to the French armed forces
by Saab, 11 December 2014
The company has been awarded the contract by the French Ministry of Defence procurement branch, the Direction Générale de l'Armement.
Enstrom offers factory standard technical training course in Africa
by Safomar Aviation, 8 December 2014
The course was presented in co-operation with Safomar Aviation, the sole distributor of the Enstrom helicopter range in Africa.