The Chief Executive of South African Airways (SAA), Vuyani Jarana, said that the national airline is expected to return to the path of profitability by 2021.
He disclosed this whilst briefing the Committee on Public Enterprises on progress in implementing the turnaround strategy aimed at changing the fortune of SAA by his management team.
“The 2017/18 financial year SAA incurred more losses than budgeted due to its inability to execute its strategy,” Jarana said.
He added that the key issues facing SAA are weak balance sheet and negative equity, liquidity challenges, negative publicity about SAA, previous board dynamics which are not helpful, suppliers have lost confidence in SAA, forensic reports pointing to rampant corruption and banks closing credit lines to the national carrier.
SAA informed the committee that it has since revised its strategy and turnaround plan to build a commercially focused airline with customer experience as its cornerstone. The approved 2019/2023 corporate plan forecasts to break even by the 2021 financial year.
“The airline will incur financial losses of R5.2 billion and R1.9 billion for the financial years 2018/19 and 2019/20, respectively and thereafter SAA expects to be profitable for the remainder of the 5-year period”, Jarana said
Responding to the presentation, the committee said the previous board has been implicated in state capture. Members of the committee inquired if the current board will compile a report and hand it over to the Zondo Commission on the outcomes and findings of the various forensic investigations that are currently being undertaken by the airline.
During the Medium Term Budget Policy Statement, the airline received an additional R5 billion special appropriation to help the airline pay off its debt. On the government guarantees that the airline requires, the committee questioned if the guarantees required will be able to keep SAA liquid.
Public Enterprises Minister, Pravin Gordhan, said banks want government guarantees but also want to know the plans that are in place to be able to turn the national carrier around. The comments were in response to questions posed by the committee on how the airline is able to get loans from the banks.