SAA - The End Is Right Nigh

How many companies are doing this right now? They say they have a 'nett profit' but once all the sums are done they have a loss of over a billion. I mean who is fooling who? Interestingly almost 100% of SAA's loss can be accounted for in the unanticipated R950 billion they had to pay over and above the usual fuel bill. So if you factor in that the oil price (and it only really started ratcheting up in the last 6 months), is costing SAA R1 billion per 6 months, I think you have an idea how much longer SAA and other airlines have left?

As long as oil prices hover over $120, they simply cannot really exist other than as a very niche scale service for an exclusive business class/millionaire class. In any event, the giant scale long haul business is finished.

clipped from www.businessday.co.za An oil price almost double the airline’s budgeted US$83 a barrel has meant that more than R950 million in unbudgeted costs were incurred by the airline in the financial year to end March 2008. While Ngqula said the airline had "held its own" in the first few months of its new financial year, without a return to a level of below US$100 a barrel SAA, like other passenger carriers globally, was facing tough times. SAA reported the turning of its fortunes after two years of restructuring by posting a R123 million net profit for the year to end March 2008. But this figure excludes restructuring costs of R1,3bn, which, once taken into account, means that the airline posted a loss of R1,1bn. "Depending on the oil price, SAA is on track to be profitable in 2008/9 but will not reach the 7,5% profit target, Ngqula said.