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 (150 word limit)
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...