Published on : Thursday, December 28, 2017
South African Airways (SAA) has noted with concern false claims that the entity pays more for its supplies than the retail or market price on some of the commodities it procures. The claims are baseless and misleading and we reject them.
We took note of comments on social media platforms suggesting that we procure at premium commodities such as bottled water and fuel. Nothing could be further from the truth and it would be foolhardy not to negotiate a best possible price given the high volumes of supplies we procure.
A company the size of SAA procures its supplies and products from a range of suppliers in substantial volumes and we must ensure that we conduct business in a manner compliant with our own supply chain policy, National Treasury regulations and other relevant legal prescripts.
Price competitiveness is one of the most important considerations in evaluating bids and forms part of our criteria in any tender process. It would be treasonous to procure these commodities at an exorbitant rate. In this case, we source bottled water and jet fuel supplies from the bottling company and oil majors respectively, and not from any third parties. SAA procures bottled water at a rate even less than the wholesale price (R2.75) suggested on social media platforms. Given the cutthroat competitive environment in which we operate, we make every effort to maintain a competitive edge to advance our commercial interests – and this includes pricing advantage we must secure on our supplies.
Fuel is an important commodity for SAA as it accounts for approximately 25% of our operating costs. We have to get the best price in the market in order to remain in business. We are comfortable that we are procuring this commodity within a competitive price range. Of course, we will always demand greater efficiency and innovation from all our supply chain partners in order to create a competitive headroom for ourselves in the market.
Some of these claims made on social media are so disturbing and devoid of truth and serve only to hurt our brand. It would have been useful and responsible for those who put them up for public consumption, to have taken steps first to verify or validate their information to avoid misleading the public and our stakeholders.
At SAA, our focus is on executing the turnaround strategy in order to bring the airline to financial sustainability.
Tags: South African Airways