South African Airways (SAA) airbus A340. Picture: iStock
With state bailouts dried up and a private share partner, Takatso’s deal that failed many moons ago, will South African Airways’ innovations help it raise its head above the profitability waters?
Perhaps what needs to be asked is how it has managed to survive so far without state bailouts, while increasing profitability at other levels.
According to the national carrier, its operations and service delivery to customers has come in handy to allow it to achieve this.
At the same time, the past three years have seen it positioned to embrace its national developmental mandate of stimulating tourism, trade and the driving of transformation in the aviation sector.
SAA board chair Derek Hanekom said since the airline introduced the direct Cape Town to Sao Paulo and Johannesburg to Sao Paulo flights last October, visitor traffic had shot up three-fold.
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The expansion into Africa is still a priority while overseas expansion has slowed down.
SAA’s African dream was boosted after Johannesburg to Accra, Ghana, traffic also increased three-fold between the first quarter of last year and the first quarter of this year.
The South Africa-Ghana and the South Africa-Brazil flights have given the cash-strapped airline hope for the future.
“These flights are making a huge difference to tourism and trade, especially tourism. We want to expand a bit more in Africa,” Hanekom said.
In addition to Perth, Australia, further expansion is envisaged for London and New York. But the overseas expansion was slowed by the fact that additional aircraft were required.
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The expansion has been delayed for two years at least, but more frequent flights will be done in Africa.
“Our overseas plans have slowed down, we are delaying the implementation of the expansion on that side. The most important issue here is that in whatever we are doing in our expansion programme, we have not asked the government for money,” Hanekom said.
SAA interim CEO Prof John Lamola said three years since it returned to the skies, the airline had more than doubled its route network and tripled its fleet size.
“We are proud that between August 2022 and August 2024, we have grown the airline to 16 aircraft flying 15 routes, with a 400% growth in passenger revenues during that period,” Lamola said.
“To date, we have reopened 11 outstations, including Mauritius, Perth in Australia, and Sao Paulo in Brazil. Post-Covid, our employment offering has expanded from 500 to around 1 200 staff, including 140 pilots”.
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The airline announced that in November, it will launch two new routes – Lubumbashi in DRC and Dar es Salaam in Tanzania, from its hub in Johannesburg.
According to Lamola, SAA is executing a business plan that allows the airline to thrive from revenues generated from its operations.
The question of whether there will be another strategic equity partner is tied to SAA’s future growth plans and remains the prerogative of the shareholder.
“As with any airline, SAA’s growth and defence of market share will require continuous capital investment,” Lamola said.
Therefore, it is part of our job to investigate financing options to fund further expansion and the elevation of our customer service. Over the last three years, SAA has managed to cultivate a positive reputation with both international and South African financial institutions, hence the success in rebuilding our aircraft fleet.
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“We are building on this favourable creditworthiness to strengthen the company’s balance sheet.”
It identified a range of assets that could be leveraged to unlock funding options.
“SAA has a portfolio of real estate that was recently valued at R5.5 billion. We also have a surplus of aircraft stock that we are converting into cash,” he said.
There had been doubt about SAA survival without bailouts and some even indicated it would still need National Treasury intervention.
But its management was adamant that SAA had experienced steady revenue growth since restarting operations in September 2021, albeit from a low base as the aviation industry was emerging from the Covid pandemic.
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