South African Airways (SAA) released its annual results in Johannesburg overnight. The airline has shown a strong turnaround with double-digit growth and a return to profitability after a major restructuring program.
Commenting on the results today, SAA’s Head of Australasia, Thevan Krishna said the turnaround reflected the company’s concentration on reducing costs while maintaining quality standards and continuing to build the strongest airline network to and within Africa.
Highlights of the airline’s performance for 2008-2009 include:
– Net profit of R398-million (A$61m) against a net loss after restructuring costs of R1.085-billion (A$166m) previously.
According to Thevan, SAA posted a significant turnaround at operating level, posting an operating profit of R1.9-billion (A$292 m) for 2008-09 against an operating loss the previous financial year (before restructuring costs) of R1.3bn (A$200m).
“Our results were achieved despite a tough trading environment which prevailed for the latter part of the financial year, with the oil price rising to record highs during the review period and the global economy going into meltdown. These contributed to the airline industry entering a major downturn, with more than 30 airlines globally being forced to shut down. The strong demand for travel seen at the beginning of 2008 started to dampen in about September, and demand continues to remain under significant pressure,” Thevan said.
SAA’s restructuring process was concluded at the end of the financial year ending March 31, 2008 with tangible results such as cost reduction, revenue growth and efficiency gains. The restructuring resulted in a total of R2.5-billion (A$385m) in cost reductions and revenue being taken out of the airline over the two-year period, which was 8% above target.
“As a result, SAA was able to weather the downturn in the aviation industry and better manage the impact of increased competition from other airlines. SAA experienced strong growth in market share in Africa, which remains our most profitable market following a strategic decision to concentrate on growth plans in the region. In the international market, there was growth in a number of markets, including Australia and South America, although several other markets were negatively affected by the economic downturn, notably North America and Europe.
“In light of the major challenges being faced by airlines around the world following the global economic meltdown, our restructuring intervention was embarked upon at the right time. SAA is operationally profitable today due mainly to the achievements forged under the restructuring programme,” Thevan said.
“We are particularly pleased with the way the Australia to South Africa route is performing, even with increased competition and price-cutting by other airlines. We have seen significant fare competition from other carriers.
When flying via Asia or the Middle East, passengers should note that it can take up to 40 hours to fly from Australia to South Africa on these more indirect, multi-stopover routes. On SAA it takes just over 14 hours to fly from Sydney non-stop to Johannesburg and 11 hours from Perth.”“We believe our results augur well for 2010 and South Africa’s hosting of the Soccer World Cup. We’re excited about the future and to welcoming more Australians to Africa .” Thevan concluded.
Source = South African Airways