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Rand gain is SAA’s loss. A billion to be exact

South African Airways’ revenue for the 12 months ending March was at R29.4bn, 6% below projections.

The currency’s advance in the past six months cost South Africa’s struggling state-owned airline almost R1 billion ($80 million) in its past fiscal year.

Revenue in the 12 months through March was 6% below projections at R29.4 billion, with R996 million of that due to currency-translation losses, South African Airways said in a written copy of a presentation to lawmakers distributed on Wednesday. The currency effect was particularly bad in the quarter through March, accounting for a loss of R508 million in foregone revenue, it said.

The rand has gained about 15% since mid-November to trade at 12.5056 per dollar in Johannesburg Thursday. In its budget process, South African Airways assumed a rand level of 13 per dollar, it said. The currency actually averaged 12.92 over the full fiscal year, and 11.84 in the final quarter, according to data compiled by Bloomberg.

The airline reported a net loss of R5.7 billion in the year through March, more than double what it had budgeted, after carrying fewer passengers. Fourth-quarter revenue fell 12%  short of SAA’s expectations.

Source: Bloomberg 

© 2018 Bloomberg 


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I heard that fewer people are flying SAA?

I suspect South Africans are choosing not to fly SAA anymore.

That is what we do when our Tax Money is misused and our voices are not heard.

Check this one out.

But surely a stronger rand is positive for as it leads to a lower fuel bill?

The stronger Rand should be good for SAA, because:

1) Fuel will be cheaper for SAA and thus make more profit
(That is what happens with other airlines, they make more profit)

2) South Africans can fly more because of the cheaper Dollar and Euro.

On the expense side a strong Rand wil lower expenses , such as fuel paid for in Dollars , but on the income side foreigners prefer a weak Rand , so income was reduced by the strong Rand , since the foreigner must now use more euro or pounds to purchase a SAA fight ticket .

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