SAA turnaround strategy will take five years: Gigaba - CNBC Africa

SAA turnaround strategy will take five years: Gigaba

Southern Africa

by Trust Matsilele 0

Minister Melusi Gigaba is being accused of overstepping his authority in state enterprises

The minister also noted that certain routes contributing to the losses were unprofitable but were a national priority routes.

“There is still a number of routes that are unprofitable but are maintained due to developmental goals of our government,” he said.

The national airline has been facing multiple challenges that have been contributing to losses. Gigaba believes that it will take about five years to turnaround the fortunes of the state enterprise.

(READ MORE: South African Airways on recapitalisation path)

The troubled national airline has also introduced routes it believes will change fortunes to the perennial loss making enterprise.

“We believe a new landing slot on our Beijing route will change and improve our fortunes. We are going to try and improve our Indian route through code share agreements,” Gigaba noted.

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Rising fuel and landing costs have also been credited for losses being incurred. 

The landing costs have gone up due to need by the Airports Company South Africa (ACSA) to recover investment made on the infrastructure over the past few years.

ACSA invested about 16 billion rand to improve the airport. The investment has largely been through debts that needs to be repaid.

The South African Airways is believed to be incurring high fuel costs due the usage of old and fuel-wasteful aircrafts.

Earlier in the year, the airline reported a 990 million rand loss for the last financial year.

The 2012/2013 financial year loss was an improvement from the previous year estimated to be about 1.3 billion rand.

The national airline has been reporting losses over the past decade that are estimated to be over 10 billion rand.

The public enterprise minister is dogged by allegations of interference in the appointments and firing of chief executives in state enterprises, allegations he describes as nonsense.

BY TRUST MATSILELE

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