SAA's non bail-out bail-out
 

"A PROPOSED multibillion-rand recapitalisation of South African Airways (SAA) by the government is not a "bail-out", said Siza Msimela, CEO of the state-owned airline, on Monday.

Ms Msimela said funding of R6bn, which SAA had requested from Parliament, was needed to strengthen the airline’s balance sheet for a fleet renewal programme and improvements such as the introduction of a premium economy class and the extension of business-class cabins on long-haul flights.

Airlines all over the world are struggling due to rising fuel and industry costs, higher airport user fees and declining passenger demand.

Australia’s Qantas has reported a loss of more than A$200m for its international division in 2011, American Airlines has entered bankruptcy proceedings, Lufthansa has announced a €381m loss in its first quarter and 3500 job cuts, and Emirates has seen a 61% decline in yearly profit.

In South Africa, Velvet Sky has ceased to operate and Comair , the operator of British Airways and Kulula in the country, announced its first loss in 61 years.

Airlines that have stopped flying to South Africa include Malaysia Airlines, TAP Portugal, Jet Airways and Iberia.

Ms Msimela said airline industry profits were expected to fall further this year.

SAA needs recapitalisation to replace its short-haul fleet of 737-800s by 2017. Two A320 aircaft were delivered earlier this year, the first 20 new and more fuel-efficient A320s expected in the next five years."

Mzimela draws us a picture of woe in the industry, all the big airlines in trouble..blah but we aren't, and "we don't need a bailout, we just need six thousand million rands to recapitalise"..

Having swallowed up R18 billion since 2004, thats R2,225,000,000.00 per year....now they want to buy fuel efficient aircraft? What do you care about fuel efficient aircraft when you can just run with begging bowl in hand to the government every year?

How about keeping the aircraft they have, which are pretty efficient anyway (probably the most efficient thing there), buying the new seats they need, and then asking for a couple of hundred million for the 5% difference in fuel they would use? Would save us a few thousand million.

Considering that, many years ago, one of SAA's executives who gave a speech at a presentation I attended didn't know that a loss and a deficit are (in essence) the same thing, there is not much hope that Siza Msimela, a political appointee, wuold know any better.

In fact, there is not much hope .......

(In fairness I should add that she, unlike previous incumbents in the position, does have siginficant airline experience)

How much is R6 000 000 000 ?
 

Anyone got any idea about exactly how much 6 000 000 000 (billion) is??:eek:
Take your school ruler and place it on your car window ledge next to you. Now drive down to Cape Town from Johannesburg, then back up, then down again, then back up again. Now look at the smallest graduations on the ruler, yes, the milimeter marks. Now picture every one of those tiny milimeters being a R1 coin. Now think of the distance you've just covered. All the milimeters in this distance in Rands is what SAA is asking the general public to donate to them, because times are hard......:ok:
If the dear politicians would just give 1% of that amount, divided by 3 to the private airlines to split equally between the 3, that alone would be fabulous!!
Oh yes, sorry, I forgot. We NEED to have a "National carrier". Stupid me.

At least the government will be able to finance their new 777 and 787 to replace their current BBJ in the not-too-distant future.

SAA should not be state owned.
Privatise it - end of problem.

Well yeah but no .....!

Privatise it and let it stand on its own feet. It won't. Its legs have become so atrophied from disuse that they won't support it. It is so full of useless middle-management whose only activity is buck passing and paper shuffling, senior management are increasingly political appointees, and only at the lower levels is there an intake of young enthusiastic hard-working 'previously disadvantaged' people who lack experience.

Without state support (life support!) South African Airways would die.

I would bet that if they adjust pay scales ever so slightly, they would find their 6 billion in just a few years.

The owners of a privatised SAA would sort out the waste.
There would be a lot of job losses in manglement, the dead wood would go and salaries would move to the market rate. It should break even within 2 years.

There would be howls of protest but it would eventually become a profitable business OR ELSE.

Just take a look at the disaster that was BA before privatisation or a dozen or more privatised state airlines.

"Without state support (life support!) South African Airways would die."

... and ... ??!!

How much more fuel efficient is an A320 vs a B738 (if anything)? I take it they mean the current A320, ie the ones they are receiving now, not the NEO? If they refer to the NEO, then how much better is that than a B738? If you can't make money with a B738 then I would imagine you're doing something wrong somewhere, but I would still like to know just how much more water they expect to be able to squeeze from this stone (the 'fuel efficient aircraft' stone that is). There comes a time when you have to make do with what you have - SAA has ALWAYS had the newest fleet in SA airline ops - now they're telling us they need new aircraft to replace the (by implication) old and fuel inefficient short haul ones? I'm sensing salivation at massive backhands somewhere...apart from the numbing buzz of the general aura of stupidity that always accompanies these things...

... and ... there would be lot less troughs for the affirmative appointees to stick their snouts into.

Isn't re-capitalisation supposed to come from reinvested profits or loans that need to be paid back? They could go the loan route with government guaranteeing the loans but when they don't repay, the government steps in and bails SAA out so pay it this way or pay it that way Mr. Taxpayer but either way you will pay. In the end this IS a bailout.

So very true!

Bring the salaries down to market standard and your problems will be solved.

Or suck on the tax titty you parasites.

Goddam it I would be ashamed to be earning 2 million plus per year while my employer goes around with the begging bowl from my fellow tax payers.

SAA's CEO lists a number of airlines that are running at a loss this year or have significantly reduced profits. There is no mention of what bail-out any of them are getting?? (A hint of the way to go could be the job losses at Lufthansa?)

Also listed are the airlines that have pulled out of operating into SA. Shouldn't this be seen as a business opportunity to move into the space left by them... or is it more the case that there just isn't the business on the SA routes and that is why those airlines have pulled out?

But the best has to be (quote) "SAA needs recapitalisation to replace its short-haul fleet of 737-800s by 2017. Two A320 aircaft were delivered earlier this year, the first 20 new and more fuel-efficient A320s expected in the next five years."! Probably one of the most cost-conscious airlines operating in one of the most expensive airline environments is Ryanair. Their entire fleet is B737-800s!!! I have heard nothing about them "...need[ing] recapitalisation to replace [their] short-haul fleet of 737-800s..." Quite the reverse, with that fleet they have posted record profits (Ryanair reports record profits - The Irish Times - Mon, May 21, 2012)!! I haven't done the sums, but I suspect that Ryanair's entire seating capacity on that one 'fuel-inefficient' fleet significantly outnumbers SAA's seating capacity on all their fleets combined!!

Note, however, this quote from that Irish Times article "We expect more ... failures in 2012, as higher oil prices and recession continues to expose failed airline models as well as subscale or peripheral carriers"! Would SAA then fit into that category of "failed airline models" if they cannot make their B737-800s earn a profit and they cannot make use of the business opportunities presented to them with competitors pulling off routes into SA?

I also note that the 'proud to be SAA' lobby has gone very quiet with this thread!!

Not really Trossie, "we proud to be SAA" are quite content and have better things to do then waste time trying to convince SAA haters hell bent on demonising anything SAA that our current management is the best we've had in 20 years. We've seen the effects through the corridors and are willing to give them a chance.

Btw,if you haven't noticed,the B738 make up a small percentage of our fleet! It's A340's that need to go.

Long live SAA!

^^^ I don't know if you realise this, but you sound like the average government minister. How you feel 'in the corridors' is totally irrelevant to what's actually happening. I'm sure you have no problem giving them a chance. In the meantime, everybody else has had enough a long time ago.

"SAA needs recapitalisation to replace its short-haul fleet of 737-800s" is the quote mentioned. No mention of A340's. Heaven help us, that'll be 20 billion requested on the next hand out I suppose.

Believe it or not, I remain totally open to being convinced by some facts. Ready.......go!


Good luck.

Long live SAA! (Really! Just without the constant f***** life support please! And when you're finally standing without your walking frame/ventilator, please repay everybody! Don't you still owe Comair/1Time/Nationwide?!? some anti-competitiveness money?)

This thread is getting silly.
This is not about "haters" or jealosy or pilot pay.

The facts a simple, Government ownership of an airline has been proven worldwide to be a fatally flawed business model.

In almost every case where a failing state airline has been privatised it has been turned around and made a profit.

Stop messing around and do the only sensible thing - privatise it and headhunt a CEO who has done it successfully before - Willy Walsh would be a good candidate.

There will be a few years of pain but it will be worthwhile, if you want a long term job as aircrew you need to work for a successful airline.

A "proud to be SAA" has surfaced and doesn't come up with a rational response. Of course they should be "quite content", so would I if my employer was in such financial trouble that it needed a massive handout and there was a government that still hasn't learnt about austerity ready to help with that bail-out!! (Throwing massive amounts of state money around was what got the Portuguese, Irish, Greeks, Spanish and Italians into trouble, so watch this space...)

As The Ancient Geek has said, this is noting about 'hating' any airline or group of people. It's all about questioning obviously flawed airline business models. It would have just been interesting to see if someone from the 'inside' could come up with a rational 'defence'. Obviously not! (As Shrike has said, some convincing facts would be welcome.)

The B737-800 fleet has been mentioned because that is what the CEO mentioned in that article. It is not a particularly big fleet. But the A340 as well? Wow!! That will cost a lot (and it is not a 'massively' big fleet either). Why can't SAA make money with relatively new aeroplanes that many other airlines manage to operate (without government bail-outs) in other parts of the world? (For example, a competitor on a couple of SAA's routes, Virgin Atlantic, has a larger fleet of A340s. They are renewing their fleet with orders for very modern aeroplanes... but with no government bail-out!!! And they have a far more expensive 'home' operating environment.)

Maybe there is a better management in SAA but if they were privatised would the markets be "...willing to give them a chance"? Should the SA taxpayers be happy about where their money is going? Should the private airlines that are trying to compete be happy about this state bias to the market?

Try being proud of something that can stand on it's own two feet, rather than a shallow 'pride' in something that is on life-support. "Long live SAA!"?? Only until the government umbilical cord dries up in the way that it has done in so many other countries that have splashed money around. Wouldn't it be so much better if SAA could 'live long' through its own efforts?

Alternative, calling people with valid and realistic arguments "SAA haters" is like playing the race card. The last desperate attempt to avoid the real issue and argument.

How many times before have we not heard " this is the right management team??"