Minister Alec Erwin's speech at the South African Airways (SAA) media conference

I really do believe that the decisions of the SAA Board to achieve a sustainable turnaround of SAA's finances and to continue to provide a high quality, reliable service will constitute a major milestone in SAA's long and proud history. The support that government is giving to the recapitalisation of SAA is contingent on this comprehensive programme being successfully implemented.

I think we all know that the international airline industry is highly competitive and many carriers around the world do receive government support owing to the strategic role that they play in economies and their links internationally. In South Africa's case our economy is growing and we face the challenges of large numbers of people visiting us for business, tourism and of course the 2010 World Cup. For these reasons it is imperative that the key elements of the turnaround are achieved or put in place during this financial year. I am confident that the Board and Management have put in place a very detailed implementation plan and they will provide insight today and working with the Seabury Group this plan is now being implemented. Detailed consultations and negotiations with the Unions will start shortly. The Department of Public Enterprises and I will give the Board, Management and the employees all the support we can to ensure the success of the turnaround.

The turnaround will involve an overhaul of SAA's entire business model, including strategy, processes, people and systems. I am confident that the plan is well conceived and draws on successful turnaround strategies elsewhere in the world. However, success depends absolutely on its implementation according to the time schedule. There are many hard decisions to be taken and these will be all the easier if we can develop effective collaboration with all stakeholders. The prize of such collaboration is that SAA will become a profitable African airline with global reach. This will secure its future and allow it to serve our air passengers well and provide stable employment for its workforce. As I indicated in my letter to the Board at the time of the recapitalisation earlier this year, government is fully behind the turnaround strategy but will not support the airline if this strategy is not implemented. Again I stress that the key elements of the strategy need to be implemented during this financial year.

I wish to stress again that I consider SAA a fine airline with excellent prospects in the growing South African economy and indeed the African economy. What gives us the confidence to back the airline is that it has a highly regarded record of service, safety and reliability. Most of all we have absolute confidence in the capacities and commitment of its personnel - the CEO, management, pilots, technical, ground staff and others.

What we have to accept is that despite this excellence and favourable revenue trends the cost structure of the airline has moved out of line with its competitors in a very competitive market. We have to internalise this reality and adjust to it timeously. Failure to do so would be irresponsible in the extreme as such a failure will destroy this airline we are all justifiably proud of. There is no time or place for recrimination as to who did what since that is not the issue - our competitors are moving faster than us and we just cannot let this continue. Looking back will help little, we have to move forward and get ahead of some very efficient competitors.

SAA you will have my full support but it is going to be very tough love in the coming year. I wish management and staff all the strength, determination and commitment they can muster - a great airline lies in your hands.

Issued by: Department of Public Enterprises
4 June 2007