Business News 5.9.2017 07:43 am

SAA is being forced to cut its fleet

Resulting in popular routes being cancelled or downscaled.

Embattled South African Airways (SAA) is being forced to cut its fleet as its precarious financial position raises doubt over whether it can continue as a going concern and the airline is forced to reschedule terms with suppliers.

This was revealed to Moneyweb by the chairman of the SAA Pilots Association, Jimmy Conroy, who represents 721 pilots of 725 currently employed at the airline. “We were advised at a meeting in early August that they planned to reduce their current fleet of 65 aircraft by as much as 10,” said Conroy.

But due to the deteriorating financial condition of the airline, SAA’s board cannot approve contracts for durations longer than six months as they may be accused of reckless trading. This means that in the case of aircraft that are typically leased over a period of years, the owners are not happy renewing or extending leases for short periods when they can enter into leases for years with other airlines.

According to Conroy, this would entail SAA returning five of the wide-bodied aircraft it currently leases and transferring four narrow body aircraft to other airlines, amounting to nine in total or roughly equivalent to 20% of its fleet (see table).

SAA Fleet

Number

Wide body aircraft

23

Narrow body aircraft

26

Freighters

2

Wet lease aircraft

1

Mango

10

Total

62

Leased

55

Owned

7

Source: SAA

This means aircraft that SAA utilises are now becoming not a function of the routes and passenger capacity they require, but are instead being determined by what they can continue to lease. This partly explains why some popular routes – like Johannesburg-London for instance, are being downscaled as part of broader plans to reduce flights by as much as 700 per month.

While these changes have all been mooted, nothing has been signed off yet. This is probably to allow incoming CEO Vuyani Jarana time to review the airline’s state of affairs and approve changes that could lead to a significant reduction in headcount.

When asked about whether the airline had communicated any plans to reduce the number of pilots, Conroy said that no discussions had been forthcoming. “In the wake of the planned reduction in flights, this left us scratching our heads.”

SAA’s pilots have postponed any negotiations surrounding wage increases that were due to start for the new financial year beginning in April to give the airline time to get back on a sound financial footing.“We will continue to pursue our case against chairperson Dudu Myeni to have her removed as a delinquent director.”

Asked to confirm how may suppliers had not been paid for August, SAA spokesperson Tlali Tlali, stated the following: “We have a duty to ensure that we maintain our relationship with all our suppliers. We are in liaison with them on a continuous basis and have payment terms and/or arrangements in place with all of them.”

Tlali did not respond to questions regarding the reasons for reducing the fleet.

Brought to you by Moneyweb 

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