South African Airways (SAA) plans to retire five aircrafts, reducing its flights by 23%, by the end of the year as part of a revamp aimed at getting the national carrier out of the red.
According to a presentation by SAA executives submitted to Parliament’s standing committee on finance on Wednesday, the move to reduce flights is part of SAA’s plan to cut costs and limit its losses.
The presentation noted that the carrier made a loss of R1.4 billion in the first quarter of the current financial year, however it was not all doom and gloom as the airline made a profit of R19 million in July compared with the budgeted loss of R207 million.
SAA said progress was being made in cutting costs but finance costs are high‚ amounting to R468 million in the four months to end-July compared with the R363 million in the same period last year.
The national carrier’s debt of approximately R6.8 billion matures on 30th September 2017 and according to Deputy President Cyril Ramaphosa will be resolved through a two-pronged approach which includes a R10 billion bailout and negotiations between SAA and its lenders to extend its maturing debt beyond September 2017.
Keeping SAA afloat
The Deputy President said any funds that were being considered to help address South African Airways (SAA) maturing debt would have to be appropriated through a special appropriations bill that would be introduced to Parliament.
On Wednesday the government drafted the bill to recapitalise SAA, which it hopes to table in a special parliamentary sitting. Speaking to the National council of Ramaphosa said it was urgent for SAA to get the funding.
This sentiment was reiterated by National Treasury Director-General Dondo Mogajane who told the finance committee there would be serious implications if the government failed to recapitalise SAA.