SAA swings to another huge loss

Rand volatility, the Ukraine conflict, and a global shortage of aircraft saw South African Airways (SAA) report a R354 million loss for its 2023/24 financial year.

This marks the second year since South Africa’s national flag carrier exited business rescue. In 2019, the airline suffered major losses and was placed into business rescue to prevent bankruptcy.

In its first year out of business rescue, the 2022/23 financial year, SAA returned to profitability for the first time since 2012, recording a profit of R210 million.

However, despite a 23% year-on-year increase in revenue to R7 billion, the airline could not maintain that momentum in 2023/24.

The company attributed its R354 million loss to various factors, including a R415 million foreign-currency translation loss due to the rand’s volatility.

Other factors include the effect of the Russia-Ukraine conflict, which drove jet fuel costs from R1.3 billion to R1.9 billion, and a global shortage of aircraft, which pushed leasing costs up by over 30%.

The airline said delays in the delivery of budgeted aircraft also negatively impacted its earnings.

In the 2023/24 financial year, SAA’s EBITDA declined from a positive R346 million to a loss of R90 million.

However, South Africa’s flag carrier reported significant operational improvements, having operated, on average, with a fleet of ten aircraft across 15 destinations in 2023/24.

Its number of flights flown grew by 42%, with a significant increase in flights into Africa and routes from Johannesburg and Cape Town to Sao Paulo starting in the second half of the financial year.

“These results detail a phase of intense uncertainty in the resuscitation of SAA as the assumption of the company’s control by the strategic equity partner was awaited,” CEO Professor John Lamola said. 

“Since then, we have entered a period of structured and strategic reconstruction of the business, focusing on institutionalising robust governance and management systems, whilst implementing plans on aircraft fleet and route network expansion and elevation of customer experience.”

Positively, the 2023/24 financial year also marked the last of the airline’s outstanding audits from its business rescue period, with all prior year adjustments now resolved.

To reinforce confidence in its financial reporting, SAA’s board has also launched an Audit Health Plan that standardises key controls, expands internal audit capacity and strengthens collaboration with external auditors. 

“After six consecutive audits in three years, SAA is firmly back on track to meet all statutory reporting deadlines and to devote its efforts towards improved audit outcomes,” the company said.

Lamola said the 2023/24 financial year results reflect significant progress in SAA’s financial health. 

“We have strengthened the channels of our revenue streams and cost containment measures; we have a debt-free, asset-rich balance sheet that is supporting the steady growth of the airline and the recovery of SAA as a global aviation brand,” he said.