More route clo­sures, more fi­nan­cial losses

CityPress - - Business - – Xolani Mban­jwa

Cash-strapped SAA could post losses on its in­ter­na­tional routes for a fifth year in a row when it an­nounces its fi­nan­cial re­sults this year af­ter it can­celled the un­prof­itable route be­tween Jo­han­nes­burg and Abu Dhabi.

The sus­pen­sion of the Abu Dhabi route came only 11 months af­ter SAA in­tro­duced it, and fol­lows the air­line’s R1.6 bil­lion loss in­curred on its in­ter­na­tional routes in 2014.

SAA spokesper­son Tlali Tlali would not spec­u­late on how the fi­nan­cials would look, but in­di­cated that there was no other in­ter­na­tional route that the air­line wanted to close.

The state-owned air­line made the sec­tion 54 ap­pli­ca­tion to Na­tional Trea­sury, which ap­proved the can­cel­la­tion of the Abu Dhabi route.

How­ever, Tlali said that SAA con­stantly as­sessed all routes to en­sure prof­itabil­ity.

“SAA is prof­itable on the do­mes­tic and re­gional seg­ments of our global route net­work. It is only the in­ter­na­tional routes that are prov­ing to be a chal­lenge to us. We are look­ing at a num­ber of op­tions to cure the sit­u­a­tion.

“Some of the in­ter­ven­tions we have in mind are of a sen­si­tive na­ture and, if we were to dis­close them pre­ma­turely, they could eas­ily give our com­peti­tors an edge over us,” said Tlali.

Last year, SAA canned its non­stop ser­vices to Bei­jing and Mum­bai due to heavy losses.

The Bei­jing route made a loss of R1 bil­lion from when it was in­tro­duced in 2012 un­til it was can­celled last year, and ac­counted for 21% of the losses aris­ing from in­ter­na­tional op­er­a­tions.

The only SAA in­ter­na­tional routes that made a profit in 2014 were Frank­furt, Mu­nich and Perth.

From 2011 to 2014, SAA made an ac­cu­mu­lated loss of R4.4 bil­lion.

Tlali said SAA would con­tinue with its route per­for­mance as­sess­ments to iden­tify new op­por­tu­ni­ties and cease loss­mak­ing op­er­a­tions.

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