Picture: BLOOMBERG
Picture: BLOOMBERG

Struggling state-owned SAA will be reorganised into three business units as part of a revamp plan that could also involve the partial sale of the airline’s catering unit, its CEO said on Monday.

Vuyani Jarana said the firm — which has not made a profit since 2011 and was given a R5bn bail-out in 2018 to shore up its balance sheet — will organise itself into domestic, regional and international business units. 

Each unit will have its own management, rather than decisions being centralised, in a bid to make the airline more agile and increase accountability.

“We are evolving into an operating model of three business units,” Jarana told the briefing.

“We want to build a new SAA, fit for the future, place the right people in the right jobs,” he said.

Jarana also said the company was exploring the partial sale of its catering unit, Air Chefs, as part of the restructuring.

SAA, which expects to make another large financial loss this year, hopes to turn a profit by 2021 via restructuring and cutting jobs and routes.

But its finances were dealt another blow last week when it was ordered to pay R1.1bn to rival Comair to settle an anti-competition case.

Finance minister Tito Mboweni is expected to announce some form of financial assistance for the airline when he tables his 2019/20 budget in parliament on Wednesday.

Acting CFO Deon Fredericks said on Monday that SAA secured the R3.5bn it requires to continue financing working capital requirements until June.

Negotiations with banks are also under way to extend the payment terms of R9.2bn in bank debt that is due at the end of March, he said.

Monday’s announcement follows the government’s decision to remodel and split struggling power utility Eskom into three state-owned entities dealing with generation, transmission and distribution. 

Reuters with staff reporter