SAA projects R117m profit

SOUTH African Airways (SAA) is projecting to generate a R117-million profit before interest and tax in the 2017-18 financial year‚ which would be a dramatic R720-million improvement from the R543-million loss expected for 2016-17.

The main driver of the expected gains is projected aircraft lease costs‚ which are forecast to remain relatively stable at R4-billion in both years‚ while revenue is expected to rise 13% compared to the 12.6% increase in operating costs.

SAA has not yet released its 2014-15 financial results, but the airline’s corporate plan tabled in parliament shows that its operating performance improved by R358-million in the nine months to the end of December.

In 2013-14‚ operating costs amounted to R30.6-billion‚ totally wiping out revenue.

Finance Minister Pravin Gordhan last month asked parliament to provide him with a month’s extension for the tabling of the SAA annual report so that provision could be made for its ongoing financial viability. The report is due to be tabled today.

Gordhan said previously he wished to present a comprehensive plan for the airline at the same time that he tabled the report.

The corporate plan noted that the profit projection would result from the combined effect of the elimination of loss-making routes‚ a reprieve in oil prices and an increased sales effort.

Regarding its financing plans‚ SAA envisages capital market funding resulting from its total government guarantees of R14.4-billion.