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S Africa airline aims for $101.9 mln profit by March

JOHANNESBURG - South Africa’s national airline SAA said on Wednesday it aims to reach operating profit of 695 million rand ($101.9 million) by March 2008.

SAA chairman Jakes Gerwel told a parliamentary briefing the airline would implement a cost effective hedging strategy on foreign exchange, fuel and interest rates.

‘We aim to achieve sustainable profitable operations in every major market segment ... and we’ve put ourselves very specific targets,’ Gerwel said.

The troubled airline announced a restructuring plan in June this year in an effort to return to profitibility within 18 months.

‘With regard to hedging we will implement ... a cost effective hedging strategy covering the three areas of foreign exchange, fuel and interest rates to reduce risk to within acceptable levels,’ Gerwel added.

In its 2004 financial year, SAA was hit by close to 6 billion rand hedge book loss and impairment charges on aircraft.

In June, SAA said it planned to spin off non-flight operations into seven subsidiaries, which was expected to result in a 2.7 billion rand turnaround over the next 12 to 18 months.

South Africa’s public enterprises minister said in January an initial public offering of SAA could be years away and that the government had no plans to bail out the struggling airline.

SAA posted an operating loss of 603 million rand in the financial year to March, compared with a profit of 425 million rand in the previous year.

Last month, the airline said it could shed up to 2,232 employees in a bid to save 638 million rand in labour costs.