SAA, (South African Airways) in its new re-incarnation is gearing up to start long-haul flying again during the coming months after a hiatus of over three years.
The first routes to be re-opened from Johannesburg will be either Perth or Sao Paulo, SAA Chairman and CEO John Lamola confirmed in an interview with Airlineratings.com
“We are ready now to start. From July or August we will begin to sell flights again to either Sao Paulo or Perth and start operating maybe a month later,” said Lamola.
SAA had stopped four of its remaining long-haul routes at the end of February 2020 and initially kept flying to just London and Frankfurt, unrelated to the emerging worldwide pandemic at the time. The state-owned airline, having amassed debts equivalent to AUD 9.6bn/US$ 6.4bn, had been put into Business Rescue, the South African equivalent of the US bankruptcy protection Chapter 11. In September 2020, during the height of the COVID-19 crisis crippling aviation globally and an extreme lockdown in South Africa, SAA ceased operations entirely.
After a year, a “new” SAA restarted on a much smaller scale in September 2021. It currently operates just nine aircraft and flies only two domestic routes and will soon serve ten African destinations ranging from Accra to Mauritius. The government still holds 49 per cent of the shares, while chosen private equity partner Takatso Holding is supposed to take 51 per cent, but the capital injection hasn’t taken place so far.
To keep SAA running, the 2023 state budget allocated another A$82m/US$55m to the airline. John Lamola insists that SAA legally still has to fill the role of the flag carrier. “Fact is that we are the national carrier, and as such we have an obligation for long-haul airlift capability in South Africa. SAA is the only airline in South Africa that flies wide bodies,” he stresses.
Currently, SAA operates just one A340-300 and one A330-300, with another A330 joining shortly. “We will restart long-haul operations with our A330s. We then want to retake some of our former A350s currently stored in France, they have been offered to us,” said Lamola. “The plan is to retake two A350s and maybe move to the third.” On the other hand, he admits to also having interesting proposals from Boeing with the 787 being a candidate as well, in order to create synergies with strategic partner Kenya Airways.
Once the routes to Perth and Sao Paulo have been re-opened, SAA wants to increase its new global reach. “We have been under a lot of pressure to restart our routes to London and the United States from our customers. We have a loyalty program with members who can’t spend their miles because we don’t have enough international routes,” says Lamola. The airline has kept its route rights to the US dormant and still owns valuable assets in London. “In Heathrow, we have four daily slots that we have leased out, making money for us.” In serving Europe again, the “new” SAA is contemplating flying non-stop from Cape Town, a popular winter break destination, especially for tourists and long-term travellers from the UK and Germany. The old SAA had withdrawn direct services from the Cape to London over a decade ago in favour of concentrating on its Johannesburg hub. That was seen as a massive strategic mistake, contributing to the unprofitability of SAA’s long-haul network, while European and Gulf carriers were left to dominate all lucrative long-haul routes from Cape Town until today.
Industry analysts doubt, however, that there is a viable business case for a “new” SAA, both within Africa and especially in long-haul. “There is no need for SAA, we have healthy competition within Africa from carriers like Airlink and soon FlySafair, and it will also be very hard for them to make money on any long-haul route,” says a leading South African aviation industry expert, who wants to remain anonymous.
Also, the alleged disentanglement between the government and its airline is seen as hanging in doubt by the fact that the sought-after private investment hasn’t taken place to this day and SAA again relies entirely on state funding so far. John Lamola, a member of the ruling ANC party, won’t have any of that.
“Since SAA restarted in September 2021, it has been operationally successful and also financially,” the Chairman and CEO insists. “In the last quarter of 2022, SAA was profitable. SAA is no longer even technically insolvent, we are producing cash,” he stresses. At the same time assuring that indeed lessons have been learnt: “All of us agree that we need an airline that is not encumbered in political and governmental processes. It has to be privatized in terms of how it works, but in a corporate structure of the national carrier.”
And he is looking at finding a new role for the airline: “Our aim is not to rebuild the old SAA that was flying 54 very expensive aircraft. We’d rather operate as a mid-size airline that takes decisions under commercial considerations, not political ones. We are not going to be told by a minister ‘fly to Beijing”, or anywhere else.” By 2025, he predicts, SAA will be a mid-size airline operating about 30 aircraft.