There’s ways to blow money – and then there’s South African Aircraze.
South African Aircraze (SAA) pissed away R5.67bn in its 2017 financial year, that €388.7m, in civilised terms.
Despite the staggering losses SAA Group Corporate Affairs said in a statement: “SAA Group’s performance for the year ending March 2017 needs to be seen in the context of the important role the airline plays in the aviation sector and the broader South African economy.”
The airline that used to be Africa’s pride but is now being outperformed by several African airlines such as Ethiopian Airlines, recorded losses of R5.67bn (€388.7m) for the financial year – a decrease of R26m in revenue growth to R30.716bn (€2.11bn). Operating costs rose by R3.36bn (€230.3m) of which R1.8bn (€123.4m) related to translation losses on foreign currency balance sheet items – 11% higher than the previous year.
SAA linked the nominal revenue increase to the “difficult macro-economic conditions with fluctuating currency and Brent crude prices, and a fiercely competitive environment, which constrained revenue generation. The nominal increase in revenue year-on-year was less than anticipated. The increase compared with the previous year (FY2016), is largely a result of the local currency weakness, but does reflect an increase in airfares on all our routes”.
SAA Group CEO, Vuyani Jarana mumbles: “One of the key reasons for the underperformance was an overt focus on cost reduction without adequately addressing operating model constraints, as well as limited commercial and business skills to drive revenue growth.” The airline was also dogged by management turbulence and increasing debt levels, as well as multiple failed attempts at restructuring the SAA Group, during the 2017 financial year.
TourismUpdate, a website notorious for finding the good in any old bad story says despite the losses, the national carrier did record some positives. These were:
- 34 000 jobs created and/or sustained in South Africa;
- R9.2bn (€630.6m), representing approximately 0,3% contribution to the national GDP annually;
- Employed 10 071 staff (SAA 5 752; Mango 713);
- Maintained its safety record;
- Received numerous awards as affirmation of operational excellence;
- Africa’s first commercial biofuel flight made history;
- On-time performance consistently above the 87.2% target; and
- AMOS (application software) implemented at SAA Technical.
The airlines said it is confident about the future outlook, “a view which has been bolstered by the early positive signs that are beginning to emerge in the form of improved performance, especially of the domestic and regional routes”. It is forging ahead with its turnaround strategy, with the aim of turning the airline into a financially sustainable entity. Until then, dear tax payer, you will be funding this joke.