SAA plans to split up company to increase profits

The head of state-owned South Afri-can Airways (SAA) said yesterday that he wanted to break up the company and slash costs to help return it to profit, and may then sell some units.

The head of state-owned South Afri-can Airways (SAA) said yesterday that he wanted to break up the company and slash costs to help return it to profit, and may then sell some units.

Chief Executive Khaya Ngqula said that the airline would announce a restructuring plan in April, after sliding to a loss this financial year.

He said the company expects to lose more than R650million in the year to end March.

"We want to simplify the business by splitting up the company and creating clear profit targets for every unit," Ngqula said.

"Some sections of the business might be privatised," he added.

SAA said that it spent more than R20billion a year on staff perks and other discretionary items and that it would look at ways of cutting costs to help return the company to profit.

The airline post-ed a 90percent fall in profit last year as fuel costs rocketed and said that it would only consider selling shares when it had reduced its debts.

South African privatisations have stalled over the past few years, with government opting to use state entities to ramp up spending on infrastructure and to help drive economic growth.

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

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