Report to Select Committee on Monitoring of SAA’s Restructuring - 10 September 2007

Summary The Problem The Seabury Transformation Strategy Profitability Bridge Projected Profitability Monitoring by DPE/Treasury Summary of Restructuring Progress Responsibilities for Restructuring Initiatives Top 10 Initiatives Update Highlights SAA Actual Results to 31 July 2007 Key Risks and Consequences

Profit (Loss) before Tax Gap The Problem Profit (Loss) before Tax Gap Minimum of ZAR 2.7 billion improvement needed

The Seabury Transformation Strategy Global initiatives Revenue initiatives 747 elimination HQ staff reduction Operational performance improvements Partner relations Point of sale share gap Pricing actions SAA restructuring Cost reduction Removal of duplication of functions Accountability Contract review Labour concessions Departmental initiatives

Profitability Bridge Profitability Bridge ZAR millions ZAR 2.7 billion

Projected Profitability After restructuring, the Transformation Plan provides targeted profitability Profit-Before-Tax Comparison

Monitoring by DPE/Treasury Inter departmental co-ordination Monthly restructuring SAA reporting format agreed highlighting Performance Progress of main restructuring initiatives Monthly reports to DPE and National Treasury Meetings June, July and August Monthly meetings scheduled September, October and November Board sub-committee minutes provided to shareholder

Summary of Restructuring Progress Benefit realisation is largely on-track “over recovery of benefits on some initiatives making up for initiatives that are behind schedule”

Responsibilities for Restructuring Initiatives Ongoing Must be delivered Annualised during 07/08 Improvement financial year __________________R million_____________________ HR 786 207 Operations 258 124 Finance 796 625 SAAT 217 72 Cargo 21 10 Commercial 623 199 Total 2,700 1,236

Top 10 Initiatives Update Description Annualised Saving Timing SAA Status Labour - management 62% Nov 07 Yellow Labour - gap Jan 08 Green B747 grounding Aug 07 Regional partnership revenues 17% Mar 08 Red GDS contract renegotiation Sep 07 Advertising and promotions 16% Jun 07 Blue Market share revenue gap - Europe and domestic Additional revenue in lieu of sponsorships Engine renegotiations 5% Operational performance Top 10 initiatives 82% of full restructuring 100% Completed Blue On track Green On track but issues to be addressed Yellow Behind or unable to generate monetary value Red

Highlight SAA Actual Results to 31 July 2007 Operating results ahead of budget Revenues better than expected Costs contained Slippage in timeframe of expected labour related savings

Key Risks and Consequences Additional competition from Emirates Expect revenue impact once Emirates commence services Uncertainties Worldwide credit market crisis High oil prices Labour concessions