Turbulent 2012 for SAA

"In addition, SAA - as with most global airlines - felt the impact of the dip in passenger numbers due to adverse global economic conditions," she added.

Koetle said that SAA's financial performance is an encouraging response to the strategic objective contained in the group strategy of becoming a fully sustainable business over the next three years. "The focus for the airline over the last financial year included marked enhancement of business efficiencies as well as improved governance and operations," explained Koetle. Economist Zandile Makhoba of Econometrix agreed that following a change in leadership, SAA has been able to achieve a significant improvement in revenues and operating profits. The business is expected to expand over the next few months, with its African destinations expected to be increased from the 20 it currently has. "SAA's improved financial performance is indicative of an organisation that is operating optimally," Makhoba told BBQ.

Despite internal improvements, however, a smooth ride is not predicted. A rise in airport costs, increased competition, the global financial crisis, environmental pressure and anger over baggage pilfering all indicate that a tough 2012 lies ahead. "Any increase in airport costs increases the cost of air travel for South Africans and reduces the competitive position of South African aviation," says Koetle. "The price of a ticket influences the choices of passengers and travel agents globally, and this will be felt by all consumers considering air travel." Energy costs have also increased substantially, with a gross impact on demand for air travel. Increases in price will affect demand, as airlines may be forced to increase their pricing in order to remain profitable. "SAA, however, is focused on cost compression without further increase in pricing," Koetle said.

Read the full article on www.bbqonline.co.za.