SA Airways is projecting a R177-million profit before interest and tax for the 2017-2018 financial year, which would be a dramatic R720-million improvement on the R543-million loss expected for 2016-2017.
The main driver of the expected gain is aircraft leasing costs, which are forecast to remain relatively stable at R4-billion in each year, while revenue is expected to rise 13% compared to the 12.6% increase in operating costs.
SAA has not yet released its 2014-2015 financial results but the airline's corporate plan, tabled in parliament yesterday, shows that its operating performance improved by R358-million in the nine months to the end of December. In 2013-2014, operating costs amounted to R30.6-billion, wiping out revenue.
The corporate plan noted that the profit projection would result from "the combined effect of the elimination of the loss-making routes, a reprieve in oil prices (although somewhat offset by currency weakness) and an increased sales effort."
It noted that SAA had reduced its unit costs 17% over the past three years, saving R2.1-billion despite a 46% deterioration in the value of the rand and inflationary pressures. A further R1.1-billion in savings is forecast for the next three years.
Assumptions used for the forecasts include a rand-dollar exchange rate of 16.28 and oil at $35 a barrel.