Chris Spillane
SAA is seeking government approval to replace an order for 10 Airbus Group A320 planes with a lease of five larger models as the state-owned carrier battles to repair its finances.
The preference for A330 planes would be more suitable for routes to the Middle East and would boost the balance sheet by about R2.8 billion in liquidity and impairment savings, acting chief executive Nico Bezuidenhout said yesterday. The changes are part of a 90-day turnaround plan that ended last week.
“The aircraft’s size and range suits SAA’s network, especially for these eight- to nine-hour flight ranges,” Bezuidenhout said. “That transaction allows us to remove that hangover that came with the A320s.”
SAA has a support guarantee from the Treasury to continue as a going concern even as net losses widened to R2.55 billion for the year to March 2014.
It closed unprofitable routes to Beijing and Mumbai this month and saved about R236 million renegotiating service contracts.
A plan to save R290m a year by reviewing the leases on eight Airbus A340 long-haul aircraft had become less urgent as the falling oil price lowered the cost of fuel, Bezuidenhout said. “We’ve got the luxury of a bit more time, but the problem remains and we’re going to have to resolve it.”
He was speaking after SAA’s first flight to Abu Dhabi from Johannesburg, which will be a daily service. The carrier has forged an alliance with Gulf carrier Etihad Airways PJSC and will share services on 49 routes. – Bloomberg