SAA posts R596 million pre-tax profit

“It has been an exceptionally tough year for the aviation industry globally,” recently appointed CEO Siza Mzimela told a results presentation in Kempton Park, east of Johannesburg.However, hedging losses declined to R120 million from the previous year’s R1.04 billion, while cash generated from operations increased significantly to R1.7 billion from a deficit of R1.8 billion in the previous year.

“We are also happy to report that at the end of the financial year we were able to resolve our long outstanding issue with the Airbus A320 agreement. We have obtained approval from the department of public enterprises to take delivery [of the planes] from 2013 to 2015.”

Mzimela said the major drivers of the airline’s improved performance were energy costs for the group, which declined 41 percent to R5.1 billion from R8.6 billion; aircraft lease costs, which decreased 30 percent to R1.6 billion from R2.3 billion; and staff costs, which were kept within acceptable parameters. Mzimela said total airline income fell 16 percent, from R26.4 billion in 2008/09 to R22.3 billion in 2009/10.

This decline underlined the importance of SAA’s determined approach to contain costs, she said.While SAA’s fundamental route network was well-defined and established, for it to remain strong, the airline had to continue to seek out opportunities, particularly in Central and West Africa.

“We will be in a position to make announcements on this shortly,” Mzimela said.SAA had identified five primary objectives over the next three years to ensure financial sustainability. These included focusing on generating sustainable earnings, restoring the balance sheet, providing consistently high-quality service and enhancing corporate governance.

Asked how the airline viewed its progress of legal action against former CEO Khaya Ngqula, chairman Cheryl Carolus said:“The law must take its course and we’re quite happy with this.”According to Carolus, SAA had taken a number of steps to strengthen its legal and compliance environment.“This environment was not tight enough when the slip-ups occurred.”

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