Oct 17, 2012
Govt must support SAA, says LoubserBack
Eskom|Mango Airlines|Public Enterprises|South African Airways|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
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of 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 steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
This Week's Magazine
The Electronic Systems Laboratory (ESL) of the Department of Electrical and Electronic Engineering at Stellenbosch University is strongly reaffirming its position as one of South Africa’s leading centres for satellite technology and expertise. It is currently...
The world’s lowest-cost diesel-electric locomotive is not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m2 plant. The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer (OEM)...
The South African Defence Review 2012, released to the public at the end of last month (despite the year given in its title) recommends the creation of the post of Chief Defence Scientist. This official would be responsible for the management of defence technology...
AltX-listed engineering technology company Ansys has been awarded an R188-million contract by Transnet to supply integrated dashboard display systems to the freight rail utility’s locomotives. Black-owned and controlled Ansys developed the bespoke integrated system...
South Africa’s sole nuclear power station Koeberg, which is located in the Western Cape, breached a major operations milestone on April 4, which marked the thirtieth anniversary of Unit 1 having been connected to the grid. Eskom, which operates the two-unit plant,...