Thursday, April 25, 2013

■ SOUTH AFRICA: SAA delays début bond issuance; warns it will play hardball with Airbus and Boeing in future fleet renewal talks.

SAA logoSouth African Airways (SA) is to delay its début USD160million (ZAR1.5 billion) bond sale, originally slated for March, until its chief financier and backer, the South African government, approves the airline’s recently submitted turnaround plan. The turnaround plan will also play a pivotal part in deciding the airline's long term fleet acquisition plans; a bone of serious contention in the recent past.

According to SAA chief financial officer Wolf Meyer, until the turnaround plan has been greenlighted, SAA will rely on bank-backed loans to sustain it in the interim.
Until such time that the long-term turnaround strategy has been approved and made available to the public, SAA will source its funding requirement through a bank term loan on the back of the shareholder guarantee,” Meyer said. 
Source [Bloomberg]

It is understood that SAA's turnaround plan, its ninth, will include a number of initiatives aimed at returning the loss-making carrier to profit, with provision made for cost cutting and the purchase of new planes, of which 35 will be required, according to former acting CEO, Nico Bezuidenhout.

On the issue of fleet renewal, Bezuidenhout warned both Airbus and Boeing that the South African national carrier would be a shrewd buyer this time round, having allegedly been seen as a "soft target" in the past.
A rendering of an SAA 787
(Royal S. King).
"SAA's re-fleeting process was stalled last June. Now that the long-term strategy has been finalised, we'll be taking our new fleet plan to Airbus and Boeing by May and they had better sharpen their pencils," he said. "We've had a cost-compression programme in place over the last 12 months, and we've realised savings of R700-million to R800-million in the year. Now we're looking at underlying aspects of how to sustainably improve this business," Bezuidenhout said.
Source [Times]

Recent press reports have speculated about a botched possible USD1.08billion Airbus fleet acquisition deal and its subsequent rejection in favour of another proposal, albeit under murky circumstances, as being at the heart of South African Airways' recent boardroom troubles.