[ 2016-10-30 ]

SAA to cut costs under ratings scrutiny
South African Airways (SAA) will become profitable
by containing costs and reviewing flight routes,
it said on Friday, as credit rating agencies seek
evidence that loss-making state firms are curbing
spending.

Moody's, Fitch and S&P, who are due to review
their ratings of Africa's most industrialised
country in November and December, have raised
concerns about the burden state-run firms put on
stretched public finances.

SAA has been surviving with the help of 20 billion
rand ($1.45 billion) in state guarantees and
posted a 1.5 billion rand loss for the 2015/16
financial year, after losing 5.6 billion rand the
year before.

"The board and shareholder recognises that the
trend of reporting losses cannot persist and that
urgent and radical actions are required," SAA
Chairwoman Dudu Myeni told reporters.

Myeni said SAA could return to profitability by
2021 by cutting costs, improving its liquidity and
reviewing unprofitable routes.

Finance Minister Pravin Gordhan slashed growth
forecasts, announced government spending cuts and
warned higher taxes were on the way in a mid-term
budget on Wednesday.

He told business leaders on Friday that SAA's new
board, which was appointed in September, was
taking positive steps and the airline could
achieve a significant improvement in financial
performance within 1 to 2 years.

Source - Reuters

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