South African Airways (SAA) stated (13-Mar-2018) it "remains optimistic with strong operations intact" and the board and management are taking "urgent steps" to address issues raised by the South African Auditor-General's Office in its FY2016/17 audit report. The airline confirmed a net loss of ZAR5.57 billion (USD472.4 million) for FY2016/17 and stated the financial situation "will not be much different for FY2017/18". CEO Vuyani Jarana said: "The majority of the airline's operations are sound, and we are building on this to ensure we break the loss-making cycle and transform the airline into a viable and sustainable entity. The board has developed and approved a clear strategy and five year plan to turn the airline around, and we are working closely with the board and the shareholder to ensure we succeed". The airline already implemented "a number of significant steps" as part of the turnaround strategy, with the aim to achieve profitability in the medium term. The five year plan will require support and funding from South Africa's Government and the parties are "evaluating the appropriate terms for such support". Mr Jarana noted: "SAA has never been properly capitalised, and any company has a defined maximum debt capacity beyond which debt becomes a burden. We need to do more and work closely with the shareholder to find lasting solutions that will materially improve SAA's equity position". The immediate focus is on liquidity management, balance sheet restructuring, cost management and revenue optimisation to "stem the losses and drive profitability". Steps already taken include:
- Improving governance by strengthening the board and its structures;
- ZAR10 billion (USD848.5 million) capital injection in late 2017 to improve the balance sheet and equity position;
- Filling key executive vacancies and hiring a chief restructuring officer;
- Key market facing initiatives aimed at stopping ongoing losses;
- Domestic, regional and international network optimisation to improve yields. London service will feature an upgraded product and frequency will be reduced to daily. The network "remains under intense scrutiny with clear defined minimum profit margin target at route and network level".
Mr Jarana added: "SAA has had many previous turnaround strategies which have not been implemented before. This time it is different: we believe the vision outlined by the board is absolutely correct, and are committed to ensuring it is put into practice. We need a clean break with the past and a new approach to the future, and that is precisely what we are doing. We are acting with urgency to ensure the viability and sustainability of this crucial national asset". [more - original PR]