SAA Embarks on Deep and Fundamental Restructuring

JOHANNESBURG, March 27, 2007 – South African Airways (SAA) comprehensive and fundamental restructuring process is well under way.

SAA CEO Khaya Ngqula said at a press conference today that a process to "simplify, right size, re-skill and incentivize the business" with the aim of placing the company on the road to profitability, has been dramatically stepped up.
"SAA has had several years of continued losses and needs a full scale restructuring to return to profitability. A profitable airline holds tremendous benefits for our customers, our staff and our country," Ngqula said.

The airline has, following approval from its board, started the comprehensive restructuring process that will include all levels of the organization. A board sub-committee, chaired by the Chairman of the Finance, Risk and Investment subcommittee of the Board, Ms Louisa Mojela, has been formed and the process to develop a new business plan for SAA has been approved.

Other airlines such as Air Canada, Continental Airlines, Delta, United, US Airways, Qantas and Iberia, that have undergone a restructuring process have been able to show a turn around by implementing various measures. These include cost savings, a review of contracts with suppliers, simplifying the fleet, capacity adjustments (eliminating unprofitable flying) and labor concessions. Labor will be involved throughout the process.

SAA appointed Seabury, acclaimed airline specialists, to guide the airline through this process. Seabury has been involved in eight of the ten largest airline restructurings undertaken around the world, including those of Air Canada and US Airways.

Essential requirements for SAA’s successful restructuring are to engender a new mindset moving away from current perceptions that the airline lacks a sense of urgency, accountability, that it is bureaucratic and that government will not let it fail.

A successful restructuring involves several key elements, such as initial analysis and quantification as well as communication, which includes in-depth workshops with staff across the board.

"Following the initial analysis phase, SAA is now in the quantification phase. It has intensified its cost reduction program, and developed a communications plan with various groups, including labor and the shareholder.
A cash conservation program has been implemented, which includes the following actions:

• SAA staff duty travel is now limited to those needing to travel for essential operational requirements such as aircraft maintenance, restructuring, labor issues and revenue accounting
• All company cell phones, excluding those needed for key operational purposes, have been removed
• All discretionary spending has been revoked

"The restructuring process is a painful and uncomfortable experience for all, however, it is a necessary process to keep the airline in operation. We are involving all our staff in workshops throughout the company to get their input as they best understand the business," Ngqula said.

For more information, please see: http://www.seaburygroup.com/

Contact: Karen C. Cook
Director of Communications
kcook@seaburygroup.com
+1 212 475 8132