Siphamandla Goge
SAA had to rethink its decision to withdraw from its loss-making Beijing route due to political and diplomatic considerations, its acting chief executive said yesterday.
The airline had to defer the announcement to avoid upsetting South Africa’s biggest and most sensitive trading partner China.
Nico Bezuidenhout said the government had asked that it “not burn bridges” with the Chinese market.
SAA declared its intention but did not name a date until it had presented its financial statements last month. The route will be phased out on April 1.
“We were asked to give assurances that we would exert every effort to make sure that we don’t burn bridges. Second, there was a state visit at the beginning of December to China.”
SAA was losing R300 million per annum since the route was launched three years ago.
The unprofitable Mumbai route to India would be phased out on March 31.
The airline was reviewing how it operated its Washington services. SAA has seven weekly flights via Senegal into Washington. He said Senegal was not the best available option in terms of the Western Africa feeder market.
The national carrier was hoping to save R200 million from its North American operations. “We are finalising the route rights in terms of an alternative West African country that allows more of a feed and de-feed situation through existing partnerships.”
Bezuidenhout could not name the country it would be entering into partnership with, but denied that it was Nigeria.
SAA has renegotiated fleet lease re-extensions of three of its A340 aircraft, and is in a process of further five aircraft lease extensions and renegotiations in order to cuts costs and raise savings.
It expected to save a total of R262m combined with contract renegotiations.
Bezuidenhout said SAA expected to improve operating performance by about R1.25 billion through the implementation of the 90-day action plan, in the financial year ending March 2016. The plan was meant to turn the airline around to ensure financial sustainability.
He said the airline had engaged its management on other cost-saving areas, including reviewing the head count.