Oct 17, 2012
Govt must support SAA, says LoubserBack
Eskom|Mango Airlines|Public Enterprises|South African Airways|Transnet|Wits University|Airline|Airline Industry|Cheryl Carolus|Russell Loubser|Wolf Meyer
Government, through the Department of Public Enterprises, is the sole shareholder in SAA and SA Express. SAA fully owns Mango Airlines.
"But seeing you've got three, why are you not supporting them 100% in every possible way, morally, and especially financially?"
Loubser was addressing students at Wits University in Johannesburg.
He was among the SAA board members – including chairwoman Cheryl Carolus – who unexpectedly quit last month before the annual general meeting when their term was due to end.
The AGM was held on Monday at which it reported a R1.3-billion operating loss for the year ended March 31.
SAA CFO Wolf Meyer said the airline's losses over the past decade amounted to R14.7-billion.
In early October, the National Treasury announced that SAA had been given a R5-billion government guarantee to recapitalise. This would enable it to borrow from financial markets and buy new aircraft.
However, Laubser said this guarantee would not help the struggling airline.
"Will a R5-billion guarantee help? No. A guarantee's not cash. It [SAA] has never been capitalised properly."
He said SAA was "an extremely difficult business" with a turnover of around R23-billion but only a two percent profit margin.
"So in a good year when nothing goes wrong, [SAA would make] round about R400-million profit. That's what the JSE made with a billion rand turnover."
He said a third of input costs were fuel – about R8-billion – and if the price of oil spikes from R90 a barrel to R115, that amounts to fuel costs of around R800-million.
"And double your margin is gone."
Loubser said it was easy for other airline companies to compete with SAA, unlike other parastatals, such as Eskom or Transnet.
"If you're not properly capitalised... you do nothing wrong but the oil price turns against you, and you've got no hope," he said.
Edited by: SapaComment Guidelines
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...