2. Parliamentary Update 22 October 2002

3. Parliamentary Update 22 Oct 2002 2 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

4. Parliamentary Update 22 Oct 2002 3 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

5. Parliamentary Update 22 Oct 2002 4 Extensive service International Regional Domestic 184 277 1450 56 450 37 390 187 560 Freq/weekSeats

6. Parliamentary Update 22 Oct 2002 5 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

7. Parliamentary Update 22 Oct 2002 6 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

8. Parliamentary Update 22 Oct 2002 7 SAA is the biggest carrier of in-bound tourist to South Africa Total Intl. Revenue pax in 2001 = 2.3 million* SAA provides a unique air service for both in-bound and out-bound passengers covering 600 destinations *2001 Financial statement Source: SAA Strategy & Planning SAA contributes value to the South African economy SAA contributes value to the South African economy

9. Parliamentary Update 22 Oct 2002 8 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

10. Parliamentary Update 22 Oct 2002 9 SAA provides employment to many people in South Africa Direct employment   10,000 employees  Salary bill ZAR 2 billion Indirect employment   50,000 Source: SAA Strategy & Planning Uniforms Direct servicing SAA ACSA Air Chefs Apron services Transnet - IA - Treasury - Transtel Auditors ATNS Aircraft cleaning Security

11. Parliamentary Update 22 Oct 2002 10 SAA generates economic activities for business in South Africa Apron services Air Chefs Shell, BP and Engen Municipalities Transtel *Based on 2001 Financial Stetement Source: SAA Strategy & Planning Spend on these entities amounts to ZAR 2.5 billion* ACSA (Airports Company South Africa) Cleaning Services LGM

12. Parliamentary Update 22 Oct 2002 11 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

13. Parliamentary Update 22 Oct 2002 12 SAA Supports Business & Sport/ Cultural Events Sponsorship -(North Sea Jazz Festival, Cape Argus, Two Oceans, SA Woman of the Year, SAA Open etc.) R150m Tourism -Destination marketing R130m Cadet Pilots (since inception)R100m LoungesR60m Source: SAA Communications

14. Parliamentary Update 22 Oct 2002 13 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

15. Parliamentary Update 22 Oct 2002 14 SAA generates foreign currency earnings which are US$ based  PaxZAR 4.7 billion (R8-$1)  Technical ZAR 390 million (R8-$1)  Repatriated US$ 70 million *2001 Financial statement **Sales statistics Source: SAA Strategy & Planning Foreign currency earnings

16. Parliamentary Update 22 Oct 2002 15 What is SAA today? SA brand around the world (flies the flag & flies the country) Extensive network serving business and tourists - Europe - Africa - Expansion Largest single carrier of tourists Extensive safe & reliable service Major employer SAA’s spend Foreign currency generator Good corporate citizen

17. SAA's value to SA Economy 16 SAA is a good corporate citizen -Children’s promise fundZAR 2 million -Goodwill in lieu of tickets ZAR 5 million -Love LifeZAR 2.5 million Source: SAA Strategy & Planning SAA is a good corporate citizen

18. Parliamentary Update 22 Oct 2002 17 Turnover increased by 26.1% Operating cost (excl. leases) increased by 16.3% Lease charges increased by 74.6% from R777M to R1,4B Taxation charge of R218M Headline earnings improves from a loss of R998M to a profit of R553M (excl. AC133) Bank balances and cash increased from R2.0B to R3.9B Cashflow from operations increased from R389M to R1.9B Financial Highlights

19. Parliamentary Update 22 Oct 2002 18 Challenges facing Domestic and International Tourism and the impact of Public Transportation

20. Parliamentary Update 22 Oct 2002 19 Underlying crisis predates 11th September

21. Parliamentary Update 22 Oct 2002 20 Over-capacity in many markets, especially long-haul Falling yields due to over capacity and low-cost airlines Escalation in fuel prices Rising labour costs Slow down in key economies -Japan, USA and Germany Causes of deepening crisis 2000 to September 2001

22. Parliamentary Update 22 Oct 2002 21 Demand collapses further Insurance and security costs shoot up by 600% ATC charges rising Changing fuel prices Short-term aftermath of 11th September Source: SAA Insurance & Risk Management

23. SAA's value to SA Economy 22 Transformation Challenges  Management: -Black15% -White85%  Technicians: -Black35% -White65%  Cabin Crew: -Black64% -White36%  Pilots: -Black 3% -White97%  Total Employees: -Black51% (5186) -White49% (4884) Percentage Breakdown:

24. SAA Update Durban Indaba 14 May 23 SAA’s future core network Current frequencies/ seats per week Future frequencies/ seats per week

25. SAA Results and Strategy 23 July 2002 24 *Option A/C TypeNumberLeasePurchaseDelivery Fleet Renewal Strategy  A340-6003- 1Q2003  A340-6003124Q2003  A340-6001 -3Q2003  A340-6002 *-2005  A340-300e2 -1Q2004  A340-300e3 -1Q2005  A319-10011 -2005/6  A320-20015 2010/11/12 41  A340-300e1 -2Q2004

26. Parliamentary Update 22 Oct 2002 25 Transportation Policy on Aviation Niche Player vs A Global Network Carrier - Niche Player  Provide domestic service within a particular country  May focus on a particular region within a country i.e Emirates, Malaysian Airlines & Singapore Airlines - To be successful  Strong market  Good alliances that protect the niche player  Support from the regulators  High entry barriers

27. Parliamentary Update 22 Oct 2002 26 Transportation Policy on Aviation (cont.) A Global Player -Provides world-wide network of routes and destinations i.e. BA, Delta and Lufthansa Key Success factors -Link its own route wide network to a handful of Alliance Partners -Support from the regulatory -Focus on hub and spoke strategy Source: The Airline business in the 21 st century; SAA Strategy & Planning

28. Parliamentary Update 22 Oct 2002 27 Challenges for the Airline Industry South Africa is a challenging +/-10 hours away from its key tourist markets -Coming here for a holiday is a big decision How to provide competitive price in the key markets as provided by South African Tourism As passenger numbers fall, yields and revenue are also under pressure Linking our efforts together -Transportation Entities -Service providers, Hotels, Government, Restaurants etc -Local Authorities -Regulatory framework Growing the number of value added skills in this sector

29. Parliamentary Update 22 Oct 2002 28 Challenges for the Airline Industry Currency problems -Pricing  Hedging9.5 million barrels / 1.5 billion litres per annum  CostUS$10 million -Currency hedging programs  Leases  Loans  Fuel 12% of cost p.a. Source: SAA Treasury

30. Parliamentary Update 22 Oct 2002 29 Access To South Africa Available Flight Frequencies From International Markets are not Currently Fully Utilised Access To South Africa Available Flight Frequencies From International Markets are not Currently Fully Utilised Number of flights Frequencies per Week

31. Parliamentary Update 22 Oct 2002 30 Conclusion Key Success Factors -Stable currency -Support from all sectors of government -Service providers to push the Transformation agenda -Coherrent policy on the future of the Aviation Industry in South Africa Thank You