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.
- SA heads SADC defence and security body
- SANDF Reserve shines in military skills competition
- Hot pursuit OK, but only if done by police
- South Africa has trained more than 7 000 DRC soldiers
- There is a future for the Rooivalk - Denel
- Denel has turned the corner and the future looks good
- 'Prime Evil' apartheid killer contests South Africa parole delay
- SANDF planning for implementation of Defence Review
- SANDF will only go back to CAR if asked by the AU
- South Africa to combat poaching by moving Kruger rhinos
US-Africa Summit 2014: Africa on the agenda or too little too late?
by Paramount Group, 20 August 2014
A revitalised viewpoint on Africa, and its challenges and opportunities for investors, should take centre stage at US-Africa Summit 2014, says Paramount Group.
Airbus Defence and Space improves air surveillance capabilities of Indonesian Air Force
by AIRBUS Defence & Space, 19 August 2014
The company has provided the Indonesian Air Force with the latest aircraft identification and air surveillance equipment.
Sustained revenue growth, strong order book drive Denel's new growth era
by Denel Corporate, 18 August 2014
The company's financial results show revenue growth of 17%, improved profit and the largest multi-year order book in its history.
Atlantis Aviation offers air-land integration, close air support, airborne ISTAR training to Africa
by Atlantis Corporation, 14 August 2014
Close Air Solutions is a single source for international training services in all aspects of close air support.
Reutech Group to exhibit at Africa Aerospace 2014
by Reutech, 14 August 2014
Products on display at the show will include Reutech's new Tactical Communications network suite and the Ngada border surveillance radar.
Nautic Africa celebrates ISO milestone
by Nautic Africa, 14 August 2014
The South African maritime company has successfully been recommended for ISO 9001:2008 certification after its first attempt.