SA Express to present government with options on replacing its ageing fleet
South African Express (SAX) would submit a set of options to government by the end of the week on replacing its ageing fleet which is costing the struggling airline dearly in maintenance and operating costs, MPs heard on Wednesday.
“We’ve gone through the first process of the in-principle notification to the shareholder…our business case to replace the fleet, said SAX board chairperson George Mothema.
Mothema said he would not immediately divulge the fleet replacement options until they’ve met with the shareholder – government.
SAX CEO Inathi Ntshanga said the set of proposals to government would include funding options.
“We’ve got suggested options on how do we fund the fleet and one of them could be operating leases…,” said Ntshanga.
He told MPs the ageing fleet was leading to higher operating costs, specifically with regard to maintenance.
“The aircraft tend to have more snags,” said Ntshanga, adding that this did not mean they were compromising on safety, but choosing rather to ground planes temporarily even if slight problems were picked up.
Ntshanga said some of the airplanes were discontinued, meaning they had to source parts overseas at dollar prices.
These challenges, in addition to reduced demand and increased competition, were affecting profit margins.
SAX made a total loss of R132-million in 2015, compared to a loss of R10-million in 2014.
Ntshanga did, however, tell ANA on the sidelines of the meeting that the airline would be posting a profit, albeit a slight one, at the end the financial year in March.
“Yes, we are hoping to break even. To date we are making a profit. I’m pretty sure it will leave us at break-even profit, meaning no major losses,” he said.
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