Fuel costs help SAA boost profits 41pc

South Africa’s South African Airways (SAA) has reported 41 per cent profitability growth for the year to March 31, 2010.SAA’s Australasian head Thevan Krishna said: “The period was exceptionally challenging for the aviation industry worldwide, with a large decline in passenger demand resulting from the continuing effects of the global economic crisis. We are pleased that in comparison to many other airlines and despite the decline in passenger numbers, SAA was able to report strong results.

“During the reporting year, some 6.7-million (2008/9: 6.8-million) passenger flew on SAA services, representing a 2.4 per cent decrease from the previous year. Domestic and international passenger numbers decreased by six per cent and five per cent respectively, while regional passenger numbers increased by nine per cent. Cargo tonnage also declined by 14 per cent from 130,000 in 2008/9 to 119,000 2009/10,” he said.

“We were able to work to reduce our operating costs from ZAR24.4-billion (A$3.5bn) in 2008/09 to ZAR21 billion (A$3bn) in 2009/10. The most significant contributors to the decline were in fuel costs, which fell by ZAR3.5 billion, (A$500m) and aircraft lease costs, which decreased by ZAR643 million (A$92m) Employee benefit expenses, consisting mainly of staff salaries, increased by 14 per cent or ZAR513million (A$73.3m).

The carrier reported significant improvements in hedging losses also contributed to an improved financial performance. During the reporting period, fair value movements and translation losses from hedging decreased to ZAR601 million (A$85.9m) (2008/9: ZAR1.6 billion) ($A228m) – a 62 per cent decline from the prior year.

“SAA’s operations continued on the positive path set in the previous year,” said Krishna. “On-time performance – the key measure of operational performance – improved. SAA reached the 80 per cent level consistently and achieved an overall 85 per cent on-time performance for the reporting period.

“In Australia, we are finding that with an increase in the activity of the mining industry in Africa and greater tourism and VFR as well as MICE activity, our forward bookings for 2010-2011 are more positive than a few months ago and we are looking to the future with renewed confidence.”

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