Description
LONG TERM TURNAROUND STRATEGY LTTS is built on 3 key pillars that support strategic objectives and triple bottom line approach for driving business sustainability and achieving economic, social and environmental objectives.
GAINING ALTITUDE
SAA’s Long Term Turnaround Strategy (LTTS)
Presentation to the Select Committee on Labour and Public
Enterprises
February 2014
1
OUR VISION
2
ACHIEVE & MAINTAIN FINANCIAL
STABILITY
? Strengthen balance sheet
? Cost Management (including overheads)
? Revenue Management
? Cash Management
? Subsidiaries
PROVIDE EXCELLENT CUSTOMER
SERVICE
? Attractive value proposition
? Network optimisation (routes, brands,
partnerships, alliances)
? Customer Service excellence
? Prompt Recovery
CONSISTENT, EFFICIENT AND
EFFECTIVE OPERATIONS
? Safety
? On-time performance
? Efficiency (fuel, productivity, sourcing,
maintenance)
? Fleet replacement and utilisation
PERFORMANCE EXCELLENCE
? Staff engagement
? Improved governance
? Performance management
? Benchmarking
SUPPORT SA’S
NATIONAL
DEVELOPMENTAL
AGENDA
• TRANSFORMATION
• JOB CREATION
• CONNECTING RSA
TO TRADE AND
TOURISM
PARTNERS
OUR STRATEGY EXPLAINED
3
GROUP STRUCTURE
BUSINESS UNITS & SUBSIDIARIES
• Divest of SATC
• Improved governance
• Establish South African
Aviation Assets Group
Holdings
• Group Optimisation
• Full corporatisation of SAA
Tech, Air Chefs, Voyager &
Cargo
• Optimise operation
performance of head office
and all subsidiaries
LONG TERM TURNAROUND
STRATEGY
– LTTS is built on 3 key pillars that support strategic objectives and triple bottom line’ approach for
driving business sustainability and achieving economic, social and environmental objectives.
– This reaffirms the airline’s position as a responsible corporate citizen and its commitment to deliver
sustainable value to the Shareholder
NETWORK, ALLIANCE & FLEET
• Cease loss making ‘own-metal’ services
• Alignment of airline brand & aircraft gauge to
meet market demand
• Limited domestic premium service on
domestic routes & greater role for Mango &
SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
4
In order to ensure all the tasks in the LTTS are being addressed a high level dashboard was created to track 244 short term initiative
tasks. This was grouped in 23 projects. The principle used is a binary project tracking methodology as indicated in the LTTS Strategy
section on Implementation Blue Print as well as the Project implementation plan provided to the monthly DPE meeting.
Work Breakdown Structure
Total 208 209 209 209 209 209 239 242 244 244
Terminated At Risk
Completed Delayed
On
Schedule
Distress
Glossary for Status Definitions
Tasks not completed within the planned time
Tasks no longer applicable due to changes market
changes
Tasks that have been achieved and now closed
Tasks that achievable within the planned time
Tasks forseen to be achieved beyond the planned time
Tasks passed the due date for beneficial reasons/
uncontrallable mitigated reasons
GROUP STRUCTURE
1
• Divest of SATC
• Establish South African
Aviation Assets Group
Holdings
• Improved governance
• Group Optimisation
Group Structure
Achievements To Date
– Corporate Finance Advisors have been appointed and are assisting with
the Divestment of SATC
– A project plan has been created for approval by the LTTS board on the
creation of the State Aviation Assets Group including the legislation that
will be required and presented to the LTTS Committee Board.
– An Annual Governance Cycle has been codified and approved by the
Board
– In process of doing the Organizational Redesign
P
r
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1
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1
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6
17%
2
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1
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1
0%
1
0%
7
43%
8
0%
1
0%
2
0%
1
100%
3
67%
6
0%
1
100%
4
100%
8
75%
2
0%
1
0%
1
100%
2
50%
1
0%
1
0%
3
100%
4
25%
Savings realised for the 9 months ending 31
December 2013 total R300 million
F
Y
2
0
1
4
Q
2
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
G
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0
1
3
Q
1
F
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2
0
1
3
Q
2
F
Y
2
0
1
3
Q
3
F
Y
2
0
1
3
Q
4
F
Y
2
0
1
4
Q
1
SATC Divestment
State Aviation (Airline)
Assets Holding Company
Corporate Finance
Advisory Opinion
Establish an Effective
Annual Governance Cycle
Equity Injection
Implement Key Finance
Interventions
Cost Compression
Legislation Requirments for Holding Company
being assessed by Corporate Finance Advisors
In the processes of drafing a project plan inc.
legislation requirements
Progress being finalised with Financial Institutions
Awaiting funding decision on Equity Injection
Corporate Finance Advisors Appointed to assist with
Divestment
Awaiting funding decision on Equity Injection
Remarks
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
5
Network, Alliance & Fleet
– Mango’s fleet have been increased from 6 to 8 aircraft and more
domestic flights were added to their schedule
– SAA now codeshare on all Mango Domestic Routes
– Additional capacity have been deployed in Africa
– Some loss-making routes e.g. Kigali have been closed and Buenos
Aires will be closed end of March
– West African location study finalized with Ghana and Senegal
identified as the best locations
– Additional Code-shares were implemented
2
• Alignment of airline brand & aircraft
gauge to meet market demand
• Cease loss making ‘own-metal’ services
• Limited domestic premium service on
domestic routes & greater role for Mango
& SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
Achievements To Date
P
r
o
j
e
c
t
S
t
a
t
u
s
B
a
r
12
100%
2
50%
2
100%
3
33%
2
100%
2
0%
2
0%
6
100%
6
83%
4
25%
3
0%
1
100%
4
25%
2
0%
1
0%
2
100%
1
0%
1
100%
2
50%
7
43%
3
100%
2
0%
1
0%
4
100%
4
0%
5
80%
4
50%
1
100%
1
0%
IT system integration challenges
Remarks
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
Remediation of Loss-
Making (SAA) Regional &
International Routes
F
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,
A
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a
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c
e
s
a
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N
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w
o
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Formation of Alliances
Wide-Body Fleet
Replacement Tender
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3
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1
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Y
2
0
1
3
Q
2
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1
3
Q
3
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Q
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1
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Q
2
Buenos Aires route scheduled for closure
Terms of Reference in support of the agreed upon
network plan for the three airlines are under negotiation.
Wide-body Fleet aquistion process under review.
Discussions in progress with ASKY
Potential hub locations have been identified, specific
opportunites are being evaluated.
Multiple actions implemented evaluating results.
Alliance Revenue Tracking is implemented to ensure
better tracking of Alliance/Codeshare Revenue
performance.
Africa Roll-out Acceleration
SAA International Network
Optimisation
Establish West African Hub
Fast-Tracking of
Commercial Initiatives
Remediation of Loss-Making
Domestic Routes
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
NETWORK, ALLIANCE & FLEET
6
Network, Alliance & Fleet
– Mango’s fleet have been increased from 6 to 8 aircraft and
more domestic flights were added to their schedule
– SAA now codeshare on all Mango Domestic Routes
– Additional capacity have been deployed in Africa
– Some loss-making routes e.g. Kigali have been closed and
more routes are scheduled to be closed including Buenos
Aires
– West African location study finalized with Ghana and
Senegal identified as the best locations
– Additional Code-shares were implemented
2
NETWORK, ALLIANCE & FLEET
• Alignment of airline brand & aircraft
gauge to meet market demand
• Cease loss making ‘own-metal’ services
• Limited domestic premium service on
domestic routes & greater role for Mango
& SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
P
r
o
j
e
c
t
A
c
c
o
u
n
t
a
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e
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t
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r
12
100%
2
50%
2
100%
3
33%
2
100%
2
50%
2
100%
6
100%
6
83%
4
25%
3
0%
1
100%
4
25%
2
0%
1
0%
2
100%
1
0%
1
100%
2
50%
7
43%
3
100%
2
0%
1
0%
4
100%
4
0%
5
80%
4
50%
1
100%
1
0%
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
Remediation of Loss-
Making (SAA) Regional &
International Routes
GM Commercial
F
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A
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i
a
n
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e
s
a
n
d
N
e
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w
o
r
k
s
Formation of Alliances CEO
Wide-Body Fleet
Replacement Tender
CPO
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Y
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0
1
3
Q
1
F
Y
2
0
1
3
Q
2
F
Y
2
0
1
3
Q
3
F
Y
2
0
1
3
Q
4
F
Y
2
0
1
4
Q
1
F
Y
2
0
1
4
Q
2
Africa Roll-out Acceleration CEO: Mango
SAA International Network
Optimisation
GM Commercial
Establish West African Hub CSO
Fast-Tracking of
Commercial Initiatives
GM: Commercial
Remediation of Loss-Making
Domestic Routes
GM Commercial
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
Business Units & Subsidiaries
– Corporate Finance Advisors have been appointed and are assisting with
the Divestment of SATC.
– Corporate Finance Advisory opinion is also underway for SAA Technical ,
Air Chefs, Cargo and Voyager.
– Change champions have been appointed in all divisions to drive the
strategy with all levels of the company
3
• Full corporatisation of SAA
Tech, Air Chefs, Voyager &
Cargo
• Optimise operation
performance of head office
and all subsidiaries
Achievements To Date
P
r
o
j
e
c
t
S
t
a
t
u
s
B
a
r
4
50%
1
0%
10
0%
2
0%
5
100%
1
0%
3
0%
1
100%
8
25%
1
0%
2
0%
12
75%
1
100%
2
50%
6
67%
3
67%
2
0%
2
50%
8
75%
1
0%
1
0%
1
0%
1
0%
1
0%
1
0%
4
0%
1
0%
2
100%
3
100%
2
50%
Due Diligence underway with Corporate Finance
Advisors
Due Diligence underway with Corporate Finance
Advisors
BSC's being finalised for New and Acting GM's
Negotiations with Labour in progress
Change Champions are communicating New Vision
and Mission to all levels of the organisation
Organisational Design being done in line with the
LTTS
All Critical vacancies have been filled,
Improvements are noted
Remarks
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
SAA Technical Strategic
Growth
B
u
s
i
n
e
s
s
U
n
i
t
s
a
n
d
S
u
b
s
a
d
a
r
i
e
s
Full Corporatisation of SAA
Cargo
Optimise Air Chefs'
Profitability
F
Y
2
0
1
3
Q
1
F
Y
2
0
1
3
Q
2
F
Y
2
0
1
3
Q
3
F
Y
2
0
1
3
Q
4
F
Y
2
0
1
4
Q
1
F
Y
2
0
1
4
Q
2
Due Diligence underway with Corporate Finance
Advisors
Implement LTTS
Communication Plan
Optimise Head Office
Operation
Performance Management
Human Capital
Development
Full Corporatisation of
Voyager
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined if applicable
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
BUSINESS UNITS & SUBSIDIARIES
7
Financial Plan
8
FINANCIAL PLAN OBJECTIVES
The financial plan has the following objectives:
– Contain the current and untenable rate of cash and Shareholder
value depletion
– Redress deficiencies in the Group’s capital composition
– Equip the Group with an appropriate fleet
– Realise organic growth in retained earnings
– Optimise the Group’s Balance Sheet
9
FINANCIAL IMPACT
Financial impact of LTTS – Year 1
• Achievements
• Cost Compression - R 300m
• Closure of Bujumbura / Kigali - R 48m
• Domestic operations Improvement - R 256m including Mango
• Regional operations improvements - R 180m
• Air Chefs (Y0Y) improvement - R30m
• Codeshare re-negotiated - R 80m
• Challenges
• Exchange Rate volatility - R 1bn +
• Beijing - R 309m p/a
• Buenos Aires - R 86m - Delayed to 2
nd
year
10
Cost Compression (project 23)
SAA commenced the Cost Compression Programme in April 2012 with the objective of ensuring a systematic, comprehensive
and on-going compression of the SAA Group’s operating cost base - The aim is to reduce non-fuel CASK (Cost per available
seat kilometre) from 7.04 usc in 2012 to 5.63 usc or 20%, without negatively impacting the demand-side revenue per available
seat kilometre (RASK).
– For FY12/13 - programme benefits realised in excess of R1b with a
consequential reduction on non-fuel CASK of .52 usc. (90% of these
savings have been sustainable throughout FY14.)
– Savings realised for the 9 months ending 31 December 2013 total R300
million (of which fuel savings were R75 million) with a further
reduction in non-fuel CASK of 0.26 usc to 6.26 usc.
– Main areas of non-fuel savings were on the maintenance side (R83
million) through contractual savings and speedier maintenance reserve
recovery lead-time and Overhead reductions (R129 million), again mainly
contract related.
Unfortunately all costs in rand terms have been adversely impacted by the
dramatic weakening of the Rand against the US Dollar (17% YoY) which underlies
around 65% of SAA’s costs, especially fuel.
11
Skills Development
& Training
12
Skills Development
Key Performance
Indicator
Shareholders
Compact
YTD Actual Current Status Projected Year End
Status
Training Spend 3% of personnel
costs
5.74% On Track Achieved
Cadets 30* 9 On Track Achieved
Technician Trainees 100 97 On Track Achieved
Sector Specific
Interns
60 53 On Track Achieved
*With respect to the Shareholders Compact
target of 30 Cadets for the current year, 9 of
the 30 have been recruited to
date. Recruitment for the remaining 21 is at
an advanced stage . The shortlisted
candidates are currently undergoing
psychometric assessments and a rigorous
interview selection process. These cadets will
be recruited by 21 March 2014.
• Introduction of a Second Officer level to provide cadets the opportunity to
acquire the required 1500 hours to enter SAA as a pilot. This will achieve 2
objectives namely
• To support transformation
• To maximise Return on Investment on Cadet Pilot Development
program
• The recruitment of a Chief Pilot in line with our employment equity strategy
is in progress.
• All new Pilots have been recruited in line with the Employment Equity Plan.
(61% of new pilot appointments were made in line with the EE plan).
Long Term Employment Equity Plan -
Flight Operations (Pilots)
Flight Instructors Program
• There is a notable under representation of PDI candidates in the Flight Instructor
ranks at SAA. SAA will be offering bursaries to suitable PDI’s who aspire to
become Flight Instructors .
• The tender process is at an advanced stage of evaluation and the provider will
be appointed mid March 2014.
THANK YOU
15
doc_122918533.pdf
LONG TERM TURNAROUND STRATEGY LTTS is built on 3 key pillars that support strategic objectives and triple bottom line approach for driving business sustainability and achieving economic, social and environmental objectives.
GAINING ALTITUDE
SAA’s Long Term Turnaround Strategy (LTTS)
Presentation to the Select Committee on Labour and Public
Enterprises
February 2014
1
OUR VISION
2
ACHIEVE & MAINTAIN FINANCIAL
STABILITY
? Strengthen balance sheet
? Cost Management (including overheads)
? Revenue Management
? Cash Management
? Subsidiaries
PROVIDE EXCELLENT CUSTOMER
SERVICE
? Attractive value proposition
? Network optimisation (routes, brands,
partnerships, alliances)
? Customer Service excellence
? Prompt Recovery
CONSISTENT, EFFICIENT AND
EFFECTIVE OPERATIONS
? Safety
? On-time performance
? Efficiency (fuel, productivity, sourcing,
maintenance)
? Fleet replacement and utilisation
PERFORMANCE EXCELLENCE
? Staff engagement
? Improved governance
? Performance management
? Benchmarking
SUPPORT SA’S
NATIONAL
DEVELOPMENTAL
AGENDA
• TRANSFORMATION
• JOB CREATION
• CONNECTING RSA
TO TRADE AND
TOURISM
PARTNERS
OUR STRATEGY EXPLAINED
3
GROUP STRUCTURE
BUSINESS UNITS & SUBSIDIARIES
• Divest of SATC
• Improved governance
• Establish South African
Aviation Assets Group
Holdings
• Group Optimisation
• Full corporatisation of SAA
Tech, Air Chefs, Voyager &
Cargo
• Optimise operation
performance of head office
and all subsidiaries
LONG TERM TURNAROUND
STRATEGY
– LTTS is built on 3 key pillars that support strategic objectives and triple bottom line’ approach for
driving business sustainability and achieving economic, social and environmental objectives.
– This reaffirms the airline’s position as a responsible corporate citizen and its commitment to deliver
sustainable value to the Shareholder
NETWORK, ALLIANCE & FLEET
• Cease loss making ‘own-metal’ services
• Alignment of airline brand & aircraft gauge to
meet market demand
• Limited domestic premium service on
domestic routes & greater role for Mango &
SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
4
In order to ensure all the tasks in the LTTS are being addressed a high level dashboard was created to track 244 short term initiative
tasks. This was grouped in 23 projects. The principle used is a binary project tracking methodology as indicated in the LTTS Strategy
section on Implementation Blue Print as well as the Project implementation plan provided to the monthly DPE meeting.
Work Breakdown Structure
Total 208 209 209 209 209 209 239 242 244 244
Terminated At Risk
Completed Delayed
On
Schedule
Distress
Glossary for Status Definitions
Tasks not completed within the planned time
Tasks no longer applicable due to changes market
changes
Tasks that have been achieved and now closed
Tasks that achievable within the planned time
Tasks forseen to be achieved beyond the planned time
Tasks passed the due date for beneficial reasons/
uncontrallable mitigated reasons
GROUP STRUCTURE
1
• Divest of SATC
• Establish South African
Aviation Assets Group
Holdings
• Improved governance
• Group Optimisation
Group Structure
Achievements To Date
– Corporate Finance Advisors have been appointed and are assisting with
the Divestment of SATC
– A project plan has been created for approval by the LTTS board on the
creation of the State Aviation Assets Group including the legislation that
will be required and presented to the LTTS Committee Board.
– An Annual Governance Cycle has been codified and approved by the
Board
– In process of doing the Organizational Redesign
P
r
o
j
e
c
t
S
t
a
t
u
s
B
a
r
1
100%
5
40%
1
0%
1
0%
1
100%
6
17%
2
0%
1
0%
1
0%
1
0%
7
43%
8
0%
1
0%
2
0%
1
100%
3
67%
6
0%
1
100%
4
100%
8
75%
2
0%
1
0%
1
100%
2
50%
1
0%
1
0%
3
100%
4
25%
Savings realised for the 9 months ending 31
December 2013 total R300 million
F
Y
2
0
1
4
Q
2
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
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Q
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F
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2
0
1
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Q
1
SATC Divestment
State Aviation (Airline)
Assets Holding Company
Corporate Finance
Advisory Opinion
Establish an Effective
Annual Governance Cycle
Equity Injection
Implement Key Finance
Interventions
Cost Compression
Legislation Requirments for Holding Company
being assessed by Corporate Finance Advisors
In the processes of drafing a project plan inc.
legislation requirements
Progress being finalised with Financial Institutions
Awaiting funding decision on Equity Injection
Corporate Finance Advisors Appointed to assist with
Divestment
Awaiting funding decision on Equity Injection
Remarks
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
5
Network, Alliance & Fleet
– Mango’s fleet have been increased from 6 to 8 aircraft and more
domestic flights were added to their schedule
– SAA now codeshare on all Mango Domestic Routes
– Additional capacity have been deployed in Africa
– Some loss-making routes e.g. Kigali have been closed and Buenos
Aires will be closed end of March
– West African location study finalized with Ghana and Senegal
identified as the best locations
– Additional Code-shares were implemented
2
• Alignment of airline brand & aircraft
gauge to meet market demand
• Cease loss making ‘own-metal’ services
• Limited domestic premium service on
domestic routes & greater role for Mango
& SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
Achievements To Date
P
r
o
j
e
c
t
S
t
a
t
u
s
B
a
r
12
100%
2
50%
2
100%
3
33%
2
100%
2
0%
2
0%
6
100%
6
83%
4
25%
3
0%
1
100%
4
25%
2
0%
1
0%
2
100%
1
0%
1
100%
2
50%
7
43%
3
100%
2
0%
1
0%
4
100%
4
0%
5
80%
4
50%
1
100%
1
0%
IT system integration challenges
Remarks
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
Remediation of Loss-
Making (SAA) Regional &
International Routes
F
l
e
e
t
,
A
l
l
i
a
n
c
e
s
a
n
d
N
e
t
w
o
r
k
s
Formation of Alliances
Wide-Body Fleet
Replacement Tender
F
Y
2
0
1
3
Q
1
F
Y
2
0
1
3
Q
2
F
Y
2
0
1
3
Q
3
F
Y
2
0
1
3
Q
4
F
Y
2
0
1
4
Q
1
F
Y
2
0
1
4
Q
2
Buenos Aires route scheduled for closure
Terms of Reference in support of the agreed upon
network plan for the three airlines are under negotiation.
Wide-body Fleet aquistion process under review.
Discussions in progress with ASKY
Potential hub locations have been identified, specific
opportunites are being evaluated.
Multiple actions implemented evaluating results.
Alliance Revenue Tracking is implemented to ensure
better tracking of Alliance/Codeshare Revenue
performance.
Africa Roll-out Acceleration
SAA International Network
Optimisation
Establish West African Hub
Fast-Tracking of
Commercial Initiatives
Remediation of Loss-Making
Domestic Routes
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
NETWORK, ALLIANCE & FLEET
6
Network, Alliance & Fleet
– Mango’s fleet have been increased from 6 to 8 aircraft and
more domestic flights were added to their schedule
– SAA now codeshare on all Mango Domestic Routes
– Additional capacity have been deployed in Africa
– Some loss-making routes e.g. Kigali have been closed and
more routes are scheduled to be closed including Buenos
Aires
– West African location study finalized with Ghana and
Senegal identified as the best locations
– Additional Code-shares were implemented
2
NETWORK, ALLIANCE & FLEET
• Alignment of airline brand & aircraft
gauge to meet market demand
• Cease loss making ‘own-metal’ services
• Limited domestic premium service on
domestic routes & greater role for Mango
& SAX
• Increase networks through code-share
relationships & leverage Star Alliance
membership
• Wide-body fleet replacement plan
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Remediation of Loss-
Making (SAA) Regional &
International Routes
GM Commercial
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Formation of Alliances CEO
Wide-Body Fleet
Replacement Tender
CPO
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Africa Roll-out Acceleration CEO: Mango
SAA International Network
Optimisation
GM Commercial
Establish West African Hub CSO
Fast-Tracking of
Commercial Initiatives
GM: Commercial
Remediation of Loss-Making
Domestic Routes
GM Commercial
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
Business Units & Subsidiaries
– Corporate Finance Advisors have been appointed and are assisting with
the Divestment of SATC.
– Corporate Finance Advisory opinion is also underway for SAA Technical ,
Air Chefs, Cargo and Voyager.
– Change champions have been appointed in all divisions to drive the
strategy with all levels of the company
3
• Full corporatisation of SAA
Tech, Air Chefs, Voyager &
Cargo
• Optimise operation
performance of head office
and all subsidiaries
Achievements To Date
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Due Diligence underway with Corporate Finance
Advisors
Due Diligence underway with Corporate Finance
Advisors
BSC's being finalised for New and Acting GM's
Negotiations with Labour in progress
Change Champions are communicating New Vision
and Mission to all levels of the organisation
Organisational Design being done in line with the
LTTS
All Critical vacancies have been filled,
Improvements are noted
Remarks
F
Y
2
0
1
4
Q
3
F
Y
2
0
1
4
Q
4
SAA Technical Strategic
Growth
B
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Full Corporatisation of SAA
Cargo
Optimise Air Chefs'
Profitability
F
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1
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F
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2
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4
F
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4
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4
Q
2
Due Diligence underway with Corporate Finance
Advisors
Implement LTTS
Communication Plan
Optimise Head Office
Operation
Performance Management
Human Capital
Development
Full Corporatisation of
Voyager
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined
Follow on tasks being defined if applicable
Follow on tasks being defined
LEGEND Finalised On Schedule At Risk Behind Schedule
BUSINESS UNITS & SUBSIDIARIES
7
Financial Plan
8
FINANCIAL PLAN OBJECTIVES
The financial plan has the following objectives:
– Contain the current and untenable rate of cash and Shareholder
value depletion
– Redress deficiencies in the Group’s capital composition
– Equip the Group with an appropriate fleet
– Realise organic growth in retained earnings
– Optimise the Group’s Balance Sheet
9
FINANCIAL IMPACT
Financial impact of LTTS – Year 1
• Achievements
• Cost Compression - R 300m
• Closure of Bujumbura / Kigali - R 48m
• Domestic operations Improvement - R 256m including Mango
• Regional operations improvements - R 180m
• Air Chefs (Y0Y) improvement - R30m
• Codeshare re-negotiated - R 80m
• Challenges
• Exchange Rate volatility - R 1bn +
• Beijing - R 309m p/a
• Buenos Aires - R 86m - Delayed to 2
nd
year
10
Cost Compression (project 23)
SAA commenced the Cost Compression Programme in April 2012 with the objective of ensuring a systematic, comprehensive
and on-going compression of the SAA Group’s operating cost base - The aim is to reduce non-fuel CASK (Cost per available
seat kilometre) from 7.04 usc in 2012 to 5.63 usc or 20%, without negatively impacting the demand-side revenue per available
seat kilometre (RASK).
– For FY12/13 - programme benefits realised in excess of R1b with a
consequential reduction on non-fuel CASK of .52 usc. (90% of these
savings have been sustainable throughout FY14.)
– Savings realised for the 9 months ending 31 December 2013 total R300
million (of which fuel savings were R75 million) with a further
reduction in non-fuel CASK of 0.26 usc to 6.26 usc.
– Main areas of non-fuel savings were on the maintenance side (R83
million) through contractual savings and speedier maintenance reserve
recovery lead-time and Overhead reductions (R129 million), again mainly
contract related.
Unfortunately all costs in rand terms have been adversely impacted by the
dramatic weakening of the Rand against the US Dollar (17% YoY) which underlies
around 65% of SAA’s costs, especially fuel.
11
Skills Development
& Training
12
Skills Development
Key Performance
Indicator
Shareholders
Compact
YTD Actual Current Status Projected Year End
Status
Training Spend 3% of personnel
costs
5.74% On Track Achieved
Cadets 30* 9 On Track Achieved
Technician Trainees 100 97 On Track Achieved
Sector Specific
Interns
60 53 On Track Achieved
*With respect to the Shareholders Compact
target of 30 Cadets for the current year, 9 of
the 30 have been recruited to
date. Recruitment for the remaining 21 is at
an advanced stage . The shortlisted
candidates are currently undergoing
psychometric assessments and a rigorous
interview selection process. These cadets will
be recruited by 21 March 2014.
• Introduction of a Second Officer level to provide cadets the opportunity to
acquire the required 1500 hours to enter SAA as a pilot. This will achieve 2
objectives namely
• To support transformation
• To maximise Return on Investment on Cadet Pilot Development
program
• The recruitment of a Chief Pilot in line with our employment equity strategy
is in progress.
• All new Pilots have been recruited in line with the Employment Equity Plan.
(61% of new pilot appointments were made in line with the EE plan).
Long Term Employment Equity Plan -
Flight Operations (Pilots)
Flight Instructors Program
• There is a notable under representation of PDI candidates in the Flight Instructor
ranks at SAA. SAA will be offering bursaries to suitable PDI’s who aspire to
become Flight Instructors .
• The tender process is at an advanced stage of evaluation and the provider will
be appointed mid March 2014.
THANK YOU
15
doc_122918533.pdf