SAA is implementing a business plan that, if successful, will enable the state-owned flag carrier to be sustainable based on revenues generated from its operations.
Depending on what the airline’s growth plans become in future, it might have to once again try to find a strategic equity partner to provide the necessary cash injection. That would, however, depend on SAA’s shareholder, which is now the department of transport.
When SAA was still under the department of public enterprises, former minister Pravin Gordhan tried to finalise an SEP deal by which the Takatso Consortium would become the majority shareholder in SAA. The deal finally collapsed earlier in 2024. One of the conditions set by the Competition Tribunal was that Takatso’s minority shareholders had to sell their stake to prevent possible conflict of interest. The minority shareholders included Global Aviation, which operates the low-cost domestic airline Lift. The minority shareholders were unable to sell their shares.
Initially SAA planned to provide an update on the state of the airline during a media briefing at its headquarters in Johannesburg on Wednesday. However, shortly after announcing the media conference, it was cancelled and a statement was later issued instead. In the statement, SAA’s interim CEO Prof John Lamola said that “as with any airline, SAA’s growth and defence of market share will require continuous capital investment”.
Therefore, SAA is investigating financing options to fund further expansion and “the elevation of our customer service”. Lamola said that, supported by the board, SAA had identified a range of assets, including its portfolio of real estate, that could be leveraged to unlock funding options. The real-estate portfolio was recently valued at R5.5bn.
For the 2022/23 financial year, based on a fleet of six aircraft and six routes, SAA’s revenue grew from R2bn in the previous financial year to R5.6bn. For the 2023/24 financial year, the airline revenue increased to R7.3bn and its fleet capacity increased to 13 aircraft. The audit of the financial year ending March 2024 is under way, and, according to Lamola, all indications are pointing to a net profit for that financial year.
Due to delays experienced globally in the delivery of aircraft by manufacturers, the delivery to SAA of three aircraft, which were expected during the last calendar year, is still delayed. As a result, SAA will again use aircraft wet-leased from Sun Express, an airline co-owned by Lufthansa and Turkish Airlines, during the coming December peak season.
SAA entered business rescue in December 2019 after the government refused to provide any more bailouts. It exited business rescue in April 2021 and started flying again in September that year, initially only on six routes.
In November, SAA plans to launch two new routes from its hub in Johannesburg, namely to Lubumbashi in Democratic Republic of Congo and to Dar es Salaam in Tanzania. SAA currently operates 15 routes, including to Mauritius, Perth in Australia and Sao Paulo in Brazil. The airline has 1,200 staff, including 140 pilots. At the time of going into business rescue it had about 4,700 employees.
“SAA is now positioned to embrace its national developmental mandate of stimulating tourism, trade and the driving of transformation in the aviation sector, without compromising its commercial viability,” Lamola said.
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