Aviation: South African Airways set eyes on profit as it reorganizes into three business units
South African Airways chief executive Vuyani Jarana says the carrier holding is to be reorganized into three separate entities as part of its restructuring plan.
According to Moneyweb, Jarana told a media briefing on Monday, February 18, that SAA would organise itself into domestic, regional and international business units. To improve the loss-making carrier’s agility and accountability, each unit will also have its own management rather than a centralized powerbase.
At present, the state-owned carrier currently has four wholly-owned subsidiaries; low-cost carrier Mango Airlines, MRO firm SAA Technical, catering unit Air Chefs, and the South African Travel Centre, a retail travel business with franchises in South Africa and some other African states. SAA also maintains two other substantial non-corporate businesses namely SAA Cargo and its frequent-flyer programme SAA Voyager.
The reorganization could also involve the partial sale of its Air Chefs subsidiary, Jarana said.
“We are evolving into an operating model of three business units,” he added. “We want to build a new SAA, fit for the future, place the right people in the right job.”
Airline spokesman Tlali Tlali later clarified that the drive referred to the “reconfiguration of our internal resources” and did not mean an unbundling of the airline.
The restructuring and reorganization of SAA is intended to transform the state-owned airline into a profitable, self-sustaining enterprise capable of surviving without support from the national fiscus from which it has sought a ZAR21 billion rand (USD1.44 billion) bailout.
According to Reuters, Chief Financial Officer Deon Fredericks said SAA was in talks with lenders about potentially extending the maturity of ZAR9.2 billion rand (USD651 million) worth of debt due at the end of March by between four and five years.
Further details concerning the success of the negotiations will likely come after Wednesday, February 20, when South Africa’s annual budget is presented.
Fredericks told Reuters that SAA had sufficient liquidity to last until June after securing ZAR3.5 billion rand (USD248.7 million) in financing from lenders last week. However, from June, the company will require a further ZAR4 billion (USD283 million) to carry it through to March 2022, he said. The airline expects to turn profitable in fiscal 2021.