Acting CEO Chris Smyth told a parliamentary committee that extensive restructuring had saved the embattled flag carrier R2.5-billion.

"We will achieve an operational profit ... in excess of one billion rand this year," he said.

"To put this in context we had a slight loss last year, and we had an R880-million loss the year before (2006-2007) That is almost a billion-a-year improvement," said Smyth.

However, the company could face a financial blow of as much as R1.5-billion if Airbus holds it to the order of 15 A320s that South Africa thought it had cancelled.

"We ordered 15 Airbus A320s in 2002. We do not need those aircraft at the moment, however we have a contract that we thought had been cancelled some years back.

"It turns out that the cancellation was never registered by Airbus and they are holding us to that order. That could cost us a considerable amount of money to cancel," Smyth said, adding "it could be as high as R1.5-billion before we even talk cancellation penalties."

The airline's former chief executive controversially received R20-million in salary and bonuses while the airline made huge financial losses.

The national carrier has been plagued by problems stemming huge financial difficulties as well as complaints over rude staff, rampant baggage theft and the arrest of 15 of its cabin crew members for smuggling drugs to London.

Smyth said baggage theft was down by over 50 percent.

Deputy Public Enterprises Minister Enoch Godongwana said both he, his family and Public Enterprises Minister Barbara Hogan had had goods stolen from their luggage just "a few days ago," to which an opposition Democratic Alliance member added: "Me too."

Smyth apologised and promised to look into it.

AFP