SAA – woes multiply

AT A recent media round
table in Johannesburg, SAA
ceo, Vuyani Jarana, and
chief financial officer, Deon
Fredericks, said bad publicity
for the airline directly affected
finance charges and forward
bookings for the airline.
The ceo said during mid2018, negative publicity
about SAA had caused Iata
to increase the airline’s
guarantee by US$80 000
(R1,1m) and this had placed
an unexpected strain on the
airline’s cash flow.
Its guarantee had been
increased, despite SAA never
having defaulted on any of its
key costs in its entire history,
said chief restructuring
officer, Peter Davies. He said
the publicity had created a
domino effect, with other
suppliers following suit with
deposit increases in order
for SAA to continue doing
business with them. This had
put even further strain on the
airline’s cash flow.
Deon said the airline
currently spent about R1,3bn
annually in finance costs.
Cash flow was a critical issue
that needed to be reviewed
by the airline on a daily basis.
He said, as confidence in
the airline improved, it would
be able to negotiate better
finance terms, bringing these
costs down in the future.
Vuyani also explained that
as most passengers booked
travel arrangements six to
nine months ahead of time,
media reports questioning
the continuity of the airline
negatively affected its forward
bookings. “Our customers
are our investors and if they
lack the confidence to book
tickets in advance, the asset
devalues,” he said.
“Iata as the administrator
of the industry’s global
settlement systems has a
responsibility under rules
unanimously established
by the airline users of the
system, to safeguard the
money of all participating
airlines. When an airline’s
financial situation brings risk
to the industry’s settlement
system, we are obliged to
take action to protect the
integrity of the system. We
are monitoring the situation
continuously and closely,” said
a spokesperson.