Competition takes R1bn from SAA

SA AIRWAYS is bleeding from the intense competition on the domestic market‚ with rivals gouging out R1billion in revenue in the second quarter of 2016-17, acting chief financial officer Phumeza Nhantsi told parliament’s finance committee yesterday.

Meanwhile, SAA’s low-cost subsidiary Mango made a R37-million loss in the year to end-March‚ a dramatic reversal from the R38-million profit it made the previous year.

SAA carried 159 000 fewer passengers – a 4% decline – compared with its budget‚ due to the entry into the market of two new low-cost carriers and because foreign airlines like Emirates‚ Ethiopian and Qatar are flying direct to Durban and Cape Town‚ neutralising domestic fares.

Mango’s financial results, normally hidden in SAA statements, were released for the first time to the committee after persistent pressure by DA deputy finance spokesman Alf Lees.

The loss came on revenue growth to R2.3-billion from R2.2-billion in 2014-15.

It has been claimed that Mango’s loss was due its being squeezed by SAA‚ but SAA chairwoman Dudu Myeni would not comment on this yesterday, referring queries to Mango chairman Rashid Wally.

Nhantsi said SAA’s loss in revenue was compensated for by R1billion in cost savings‚ particularly on fuel.

All in all‚ SAA was pleased with the performance in the second quarter compared with the performance of the second quarter last year, Nhantsi said.

Revenue in the second quarter rose by 5%‚ with average fares 16% higher than the same period last year, although interest costs of R288-million were 41% higher.

A bottom-line loss of R765-million was suffered compared with a budgeted R61-million loss.

Foreign exchange losses for the period amounted to R592-million‚ Nhantsi noted.

In the year to end-March, SAA made a R1.5-billion loss‚ an improvement on the prior year’s R5.6billion. – TMG Digital