Picture: SAA
Picture: SAA

Revenue of struggling state-owned airline South African Airways (SAA) was trending R1bn below budget for the nine months to end-December, Parliament heard on Tuesday.

The airline made a R3.7bn loss for the period, 71% higher than the budgeted R2.2bn loss. This was driven by lower revenue and higher operating costs due mainly to higher fuel costs. Year to date costs were R561m above budget.

The airline is forecasting a loss of R4.8bn for the 2017-18 as well as in the 2018-19 financial year but sees a sharp improvement in the 2019-20 financial year as the effects of its long-term turnaround strategy kick in. SAA foresees a return to profitability in 2021.

The company plans to hold its annual general meeting on March 29 and to table its 2017-18 financial year in April.

The chairperson of the SAA board, Johannes "JB" Magwaza, CEO Vuyani Jarana and board members appeared before Parliament’s finance committee to update MPs on the progress made by the airline.

Revenue for the nine months to end-December was R23.3bn, 4% lower than the budgeted R22.2bn. Operating costs of R23bn were 2% higher than the previous period.

Passenger numbers declined over the nine-month period and fares were lower due to increased competition and negative sentiment.

The committee was told that international sales had declined by 9% (R816m), regional sales by 2% (R91m) and domestic sales by 16% (R617m). Mango and the cargo operations had produced a positive result.

The results include the effect of the strengthening of the rand, which added R578m to costs.

Maintenance costs were 19% (R580m) above budget, energy costs were 3% (R173m) above budget and labour costs 2% (R79m) above budget.