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SAA looking at three years till break-even Today's News

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eTNW originally published this article stating that SAA would  continue to cut and reduce loss-making routes. However, Tlali Tlali, hod media relations for SAA, said this week that these reports had been taken out of context and that ceo, Vuyani Jarana, was referring to cuts that had already taken place.

The airline is embarking on a three-year recovery plan.

Vuyani, who became SAA’s first permanent ceo in three years when he started in November, says: “We now have a clear strategy and clear path to profitability defined by the board. We are looking at a three-year window to get to a break-even point. We continue to revise the strategy as we see new opportunities.”

Last month, SAA halved the number of flights between Johannesburg and London’s Heathrow Airport. Last year, the airline cancelled or reduced the frequency of flights to African capitals including Abuja, Luanda and Kinshasa. SAA has a fleet of more than 50 aircraft and flies to cities in 25 countries, according to its most recent annual report.

A turnaround of the state-owned airline is among the most pressing items in the in-tray of newly appointed Finance Minister, Nhlanhla Nene. He is seeking to avoid a repeat of the government bailout approved by his predecessor, Malusi Gigaba. In the year through March 2017, the airline’s nett loss increased more than three-fold to R5,6bn, with liabilities exceeding assets by about R17,8bn, according to a document signed by South Africa’s Auditor General, Kimi Makwetu.

Last week, the Auditor General said the company might not be able to operate as a going concern. “Six consecutive years of operating losses have further eroded the capital base and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment,” he said in a report, which was dated December 8, 2017, and filed to Parliament on March 8. 

Furthermore, SAA has suspended two executives, including cfo, Phumeza Nhantsi, following unspecified allegations made against them in a forensic probe of the state-owned airline. The airline plans to hold its annual general meeting before the end of March and has not yet tabled its financial report to Parliament as it has been given an extension until the end of April to do so.

This story has been updated since first publication.

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