SAA, clouded by controversy, says restructuring successful
South African Airways CEO Chris Smyth told ATWOnline at last week's IATA annual general meeting in Kuala Lumpur that he expects the airline to post an operating profit for its fiscal year started April 1 and that the carrier's two-year restructuring is largely complete.
"Now we have to be sustainable," he said. Smyth, who spent several years as Kenya Airways´ CFO, earlier this year replaced Khaya Ngqula, who was ousted in February by SAA´s board after it commissioned an independent investigation of alleged improprieties. The South African Transport and Allied Workers Union, representing SAA employees, initiated the investigation in January when it alleged in a formal complaint to the board that the suspect awarding of contracts pointed to Ngqula´s "mismanagement" (ATWOnline, Feb. 13).
The investigation is ongoing, and South Africa´s The Times reported last month that the probe goes beyond just Ngqula as "more than ZAR5 billion [$617 million] worth of tenders and procurement deals awarded by [SAA] over the past six years are being investigated by external auditors commissioned by the airline´s board."
But Smyth said the restructuring initiated by Ngqula in 2007, which included "unbundling" the company into seven units, has been successful, slashing ZAR2.5 billion in annual costs. The carrier has not reported results for its fiscal year ended March 31; Smyth has acknowledged that it likely will report a loss, citing fuel hedging losses and other costs. It reported a ZAR1.09 billion loss for the fiscal year ended March 31, 2008.
He said SAA will phase out six A330-200s and is looking at options for a new long-haul fleet. "We are studying A350s or 787s," he said, adding that "a decision will be made after the [global financial] crisis." Deliveries likely would be between 2015 and 2020.
It is also considering options for a potential single-aisle aircraft order. In addition to the A330-200s on their way out, SAA currently operates 17 737-800s, 11 A319s, six A340-300s and nine A340-600s. Its six 747-400s were all victims of the restructuring.