South African Airways CFO Wolf Meyer and acting CEO Nico Bezuidenhout are seen at a briefing to Parliament’s public enterprises committee on the airline's 2011-12 financial results on Tuesday. Picture: TREVOR SAMSON
South African Airways CFO Wolf Meyer and acting CEO Nico Bezuidenhout. Picture: TREVOR SAMSON

THE latest long-term turnaround plan being formulated by state-owned carrier South African Airways (SAA) would differ from nine previous ones that were never implemented and were "gathering dust on the shelves", acting chairwoman Dudu Myeni said in Parliament on Tuesday.

In a briefing to Parliament’s public enterprises committee on the airline’s 2011-12 financial results, Ms Myeni said the difference was that the new strategy would be developed, owned and implemented by the troubled airline’s own executives.

The new turnaround plan is to be presented to the government, as the shareholder, at the end of March or in early April.

Widespread consultation with the government and stakeholders would feed into the strategy, which Ms Myeni said would span two decades and reflect modern thinking in the international air transport market, based on successful models from around the world.

The implementation of the strategy would be closely monitored by the board.

SAA acting CEO Nico Bezuidenhout said the need for a long-term turnaround strategy was clear in the fact that SAA had destroyed R12bn in capital over the last 10 years — R9bn from hedging losses and R3bn from operational losses.

This was not sustainable and there had to be a "proactive way" forward, which could only be through a long-term turnaround strategy rather than the adoption of a piecemeal approach.

He reported that baggage pilferage had been cut by two-thirds in the year to January when a rate of 0.29 per 1,000 baggages was recorded. This compared with the best in the world but the question now was how to sustain this.

He said there was room for improving internal risk controls and governance in the airline. In the year to end-March SAA suffered R128m in fruitless and wasteful expenditure, which indicated that its governance was not "mature".

He emphasised the need for a fuel-efficient fleet and a sound capital base, and for the state’s aviation assets to be integrated.

Ms Myeni appealed to MPs to have faith in SAA and its board and executives — who, she said, were working hard to deal with the airline’s challenges. Despite "all the noise" in the media about the airline, she gave her assurance that "the skies have never looked clearer" for SAA’s future.

She said the board would respond with "determination, due diligence and flexibility" to South Africa’s air transport requirements.

SAA chief financial officer Wolf Meyer was also confident the strategy would help SAA achieve its performance goals. He emphasised that the airline was undercapitalised and required "a permanent and appropriate capital structure" for it to fulfil its mandate.

SAA received a R5bn going-concern guarantee from the government last year, of which R1.5bn would be used for working capital. An amount of R1.2bn was still available from a previous guarantee.

Last year, the airline generated total income of R23.9bn, up 6% from the previous year’s R22.6bn, although the bottom line was hit by operating costs, especially fuel, which rose 17%.

The airline suffered a R1.3bn loss compared with the previous year’s R1bn profit, which translated into a loss of R843m (R779m) after tax provisions.