South African Airways’ acting chief executive Nico Bezuidenhout insists the Star Alliance carrier is not out of the woods yet, despite its successfully implemented 90-day turnaround plan outperforming its original savings target.
Bezuidenhout took on the acting chief executive role in November and immediately embarked on the 90-day plan to stem losses as its financial problems mounted. He says this has generated tangible savings and financial changes of between R1.3-1.5 billion ($100-120 million). That exceeds the original target of R1.25 billion.
“Does that mean SAA is out of the woods? No it's not, it’s a work in progress. It’s far too early to let off. All that we have done, and it is all that we have set out to do, is to put SAA back on track with its long-term turnaround strategy,” says Bezuidenhout, speaking to Flightglobal at the IATA AGM in Miami.
He admits there was a sense of déjà vu, as two years ago the head of the group’s Mango low-cost unit stepped up into a similar acting CEO role.
“It is true there was a lot of continuity in terms of my re-involvement, that helps when you do know the business and the DNA of the business,” he says. “But at the end of the day, the time for making plans at SAA is well and truly gone. SAA is great at making plans, but we have to implement some. That is why we have given ourselves very strict deadlines. It does build momentum.”
The wide-ranging plan included a raft of cost-savings initiatives and an overhaul of its network, giving Mango more responsibility for domestic capacity and relying on partnerships with the likes of Etihad and Air China to cut unprofitable long-haul routes. This enables SAA to boost its own capacity on its more profitable intra-African routes.
Bezuidenhout highlights the improved performance of the carrier since the plan was completed, pointing to a 45% year-on-year improvement in EBITDA for April. Having only begun the turnaround plan in November, it will have limited impact in its financial year just ended in March. But Bezuidenhout says: “What I can say is the results this year will be considerably better.”
Ultimately the carrier hopes to return to an EBIT profit in the next year and a bottom line profit in the next five years. “We are one of the more highly geared airlines in the world. So we do need to in the long-run look at how we restructure the balance sheet. But you can’t expect the shareholder to invest capital if it’s not fit. That is why it’s imperative we record 45% EBITDA improvements and that we sustain that going forward.”
Bezuidenhout says it is for the shareholder to decide whether it looks to secure an investor for the airline, but believes the bigger issue is not about ownership. “It should not be a debate about SAA ownership but of the South African tax payer deserves an efficient flag carrier. And we take our eye off the ball by making it an ownership discussion. It does not necessarily follow that just because you are state-owned you can’t be efficient.
"The end goal for the management is to make SAA commercially sustainable – ie, stop losing shareholder funds. At least the shareholder is then in a better position [to decide on whether to sell]," he says, but adds the government has "not taken an express decision".
Likewise there is no decision on the permanent CEO position at the carrier; his predecessor Monwabisi Kalawe only formally quit in April. "It remains a board decision and shareholder decision. I am not aware the position has been advertised yet, and for the time being I continue to act in the role,” says Bezuidenhout, who remains the head of Mango. “I have a job to do, and I will focus on that.”
Source: Cirium Dashboard
