South African Airways returns to profit

Return to state ownership has coincided with a return to profit

The renationalisation of South African Airways (SAA) has not dented its ability to turn a profit, its chief executive has said.

Writing in the airline's in-house magazine, Andre Viljoen told his staff that the company's first-half results - for the six months to September - will show an operating profit of 169m rand ($18.9m; £12m).

"We have done it," he wrote. "For the first time since corporatisation [in 1999], the airline has made an operating profit."

The profits do not take into account plans to sell some of its aircraft, but compare favourably with predictions of a loss for the whole of 2002 of 101m rand.

Last year's operating loss was 699m rand.

Meltdown

Mr Viljoen said the success was down to his staff's "dedication, focus and effort... despite the international meltdown in the aviation industry".

That meltdown - combining falling fares and rising costs since well before the tragedy of 11 September - pushed the world's second biggest carrier, United Airlines, into filing for bankruptcy.

It also triggered the collapse of Swissair, which had held a 20% stake in SAA until the start of this year, when the South African government bought it back.

For SAA, the growth in regional traffic has done its financial health some good.

Despite competition from low-cost carriers and the lack in the near future of any African open-skies agreement, Mr Viljoen said the push to cover the continent would continue.

"SAA is already geared to establishing a hub in the West and the East of the continent," he said, adding that the company has just taken a 49% stake in Air Tanzania and reached a code-share deal with Mozambique Airlines.

The company is also improving its management structure, he said, appointing a deputy CEO to streamline reporting procedures and benchmarking itself against the likes of Lufthansa and Singapore Airlines.