SA EXPRESS Presentation to the SOE Portfolio Committee 17 June 2009

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SA EXPRESS Presentation to the SOE Portfolio Committee 17 June 2009. Contents. Background Airline Categories Route Network Financial Highlights Strategic Focus Financial Projections for FY2009-10 Challenges. Background. - PowerPoint PPT Presentation

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  • SA EXPRESS Presentation to the SOE Portfolio Committee17 June 2009

    Slide *

    ContentsBackground Airline CategoriesRoute NetworkFinancial Highlights Strategic FocusFinancial Projections for FY2009-10Challenges

    Slide *

    BackgroundSouth African Express (SAX) was established in 1994 as a regional feeder airline to South African AirwaysSAX operates predominantly on routes that are secondary within South Africa and the region, e.g. Bloemfontein, Kimberley, Richards Bay, George and Gaborone, Botswana. These routes cannot be served viably with larger aircraftThe majority of SAX customers (75%) are business travellers commuting between major hubs and secondary routes (the Hub-and-Spoke system)

    Slide *

    Airline Categories

    Slide *

    HOEDSPRUITNELSPRUITKruger National ParkMAPUTORICHAregional divisionS BAYDURBANEAST LONDONPORT ELIZABETHKIMBERLEYMAUNGABORONELUBUMBASHIWALVIS BAYWINDHOEKCAPE TOWNGEORGEJOHANNESBURGBLOEMFONTEINCurrent Network

    Slide *

    Current SAX Fleet: 23 aircraft12x CRJ200Ave Age: 8.5yrs2x CRJ700Ave Age: 7.7yrs7x Dash 8-300Ave Age: 14.4yrs2x Dash 8-Q400Ave Age: 3.1yrs

    Slide *

    Slide *

    Highlights of FY2008-09Won the Overall Q400 Reliability Performance Award for the Q400 aircraft type from Bombardier

    IOSA accreditation leading to full IATA membership

    SA Express acquired 2x CRJ 700 (70 seat)

    Awarded contract to carry all the teams domestically during the FIFA Confederation Cupwww.FIFA.com

    Slide *

    Financial HighlightsRevenue has more than doubled over the last five yearsNote: FY2008-09 is budget figures

    Chart1

    733FY2004-05

    954FY2005-06

    1315FY2006-07

    1528FY2007-08

    FY2008-091715

    Revenue

    Budget

    Sheet1

    Column1FY2004-05FY2005-06FY2006-07FY2007-08FY2008-09

    Revenue73395413151528

    Budget1715

    To resize chart data range, drag lower right corner of range.

    Slide *

    Financial HighlightsOperating profit has grown by over R300m over the last 5 yearsNote: FY2008-09 is budget figures

    Chart1

    60FY2004-05

    223FY2005-06

    232FY2006-07

    349FY2007-08

    FY2008-09383

    Operating Profit

    Budget

    Sheet1

    FY2004-05FY2005-06FY2006-07FY2007-08FY2008-09

    Operating Profit60223232349

    Budget383

    To resize chart data range, drag lower right corner of range.

    Slide *

    Financial Highlights SAX became solvent in FY2007-08 and has sustained and improved this status Note: FY2008-09 is budget figures

    Chart1

    -425

    -264

    -127

    478

    1011

    Net Asset Value

    R Millions

    Sheet1

    2004-052005-062006-072007-082008-09

    Net Asset Value-425-264-1274781011

    Slide *

    Balance Sheet PerformanceOn target to increase the total assets by over 30% compared to last year

    Positive Net asset value

    On target to reduce liabilities by over 50%

    Slide *

    Strategic FocusShort-Term GoalsConsolidate presence in domestic secondary marketsImplement the DRC opportunityDevelop human capitalBuild a sustainable cargo businessContinue to improve efficiencies

    Long-Term GoalsFully establish the intra-Africa hub strategyImprove the Retention Strategy and Talent Management PlanBe the employer of choice in the aviation sectorReposition the South African Express brand

    Slide *

    Regional Expansion StrategyOpportunities exist for SAX to establish hubs, in Central Africa, East Africa and West AfricaThe strategy to play a major role in the region has been attempted by other airlines, but has been unsuccessful for following reasons:Aircraft too large to operate profitably in developing these new routes (not enough feeder market into hub)Fear of dominanceInadequate frequency out of hubs if larger aircraft are utilisedSAX core business has for the last 15 years been to service secondary markets. Experience has shown that frequency and right capacity are key to opening secondary markets.

    Slide *

    In partnership with other African carriers and non airline entities SAX aims to:Serve the regional local marketsProvide intra-continental daily connectivityConcentrate intercontinental traffic at hubs to provide better connectivityBenefit to other African carriers:Increased revenue from stimulated marketsLower costs from sharing maintenance, systems, aircraft etc. Intra-Africa Hub Strategy

    Slide *

    DRC opportunitySAX currently operates the route between Johannesburg and Lubumbashi, and has identified the opportunity to extend its operation within the DRC, in joint venture with a local partnerThe airline plans to extend its operation to Kinshasa as follows:JNB FBM FIH FBM JNB SAX had already received an in-principle PFMA approval in 2008 and is now waiting final approval

    To JNB

    Slide *

    FY2009-10 Budget Highlights and AssumptionsIncrease turnover by 15%Increase net contribution from cargo revenue by up to 80%Increase capacity on major SAX routes (e.g. BFN, KIM, etc.)Implement the regional expansion strategy in the DRCGrow 3rd party maintenanceIncrease profit by 6%Contain costs as per FY2008-09, excluding exposure to volatile marketsContinue to focus on reducing administration costs by adopting low-cost principlesIncrease capital investments by 8%

    Note: Financial assumptions prior to Economic meltdown

    Slide *

    Slide *

    Operating Challenges

    Slide *

    Economic Challenges

    Slide *

    Global perspective

    Slide *

    Domestic perspective

    Slide *

    Thank you

    ***************

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