SAA projects loss of R4 billion by March 2018

New CEO Vuyani Jarana and board members briefed Parliament’s Standing Committee on Finance for the first time on Wednesday.

FILE: Vuyani Jarana. Picture: Vodacom.

CAPE TOWN - South African Airways (SAA) is projecting a loss of R4 billion for the financial year ending in March – much more than the R2.8 billion projected in the ailing airline’s turnaround plan.

New CEO Vuyani Jarana and board members briefed Parliament’s Standing Committee on Finance for the first time on Wednesday.

Jarana, who has been in the position for just 30 days, told the committee that all the domestic routes and most of the international routes that SAA services are not profitable at the moment.

Chief Financial Officer Phumeza Nhantsi says SAA’s losses are set to widen.

“We budgeted that in the year 2017/18, our loss would be R2.8 billion, we’re projecting that our loss will be around R4 billion.”

The reason is the exit from lease agreements for five narrow-bodied aircraft which was not anticipated.

“We then had to cancel flights. We had to spend money for the redelivery of those aircrafts.”

The lease agreements require that the aircraft be grounded three months ahead of the lease expiring.

“The aircrafts are on the ground, preparing them for redelivery but we’re paying for lease rentals and we’re not generating revenue.”

Nhantsi says while revenue has increased during the second quarter, there’s a year to date shortfall of R879 million.