South African Airways Prepares To Execute Turnaround Plans

 - June 19, 2018, 9:35 AM
SAA Group CEO Vuyani Janara seeks some $1.2 billion in capital for South African Airways as part of a three-year turnaround plan.

The new management of South African Airways (SAA) seeks 21.7 billion rand ($1.6 billion) and three years to implement a new turnaround strategy at the loss-making airline.

SAA Group CEO Vuyani Jarana told AIN that he expects the funds to allow the airline to address the company’s mounting debt portfolio. “It is going to take us three years to take SAA back to profitability,” he explained. “By 2021 we should break even and start making a profit.”

Currently, SAA carries a debt profile of 9.2 billion rand. According to Jarana, the company seeks to meet the capital requirement through equity injection, debt, and the sale of a minority stake.

The South African government has made clear it does not want to fully privatize the airline but wants private participation. “We are discussing with the shareholder the amount of the stake that will be up for sale,” said Jarana. “It should be meaningful enough to attract private investment.”

At the moment the new management continues to work on route and fleet optimization. It is re-evaluating its international route network and improving the overall efficiency of its frequencies, according to the CEO.   

Layoffs appear inevitable for the cash-strapped airline, which employs about 10,000 people. Jarana told AIN that his management has begun working on a “staff rationalization” program. 

“We have to restructure the headcount ratio and align it with the size of the airline,” he explained. “We have to simplify the business processes.”

Jarana pointed out that SAA carries excess pilots and cabin crew, adding that it wants to lend cockpit and cabin crew to other international airlines. “We have excess pilots and cabin crew,” he said. “We are talking to airlines who can take [them].”