Upgrade of fleet needed for SAA to thrive globally— CEO

SAA will need a more modern fleet to be competitive on routes outside its home continent after the Covid-19 crisis, says interim CEO Thomas Kgokolo.

The state-owned airline used to generate revenue on trips to cities such as London and Frankfurt, but its ageing Airbus aircraft have prohibitive operating costs, Kgokolo said in a panel discussion on Wednesday.

“If we get the right fleet for those particular trips, we should be able to minimise costs and become competitive,” he said.

SAA is set to restart operations next week after emerging from bankruptcy proceedings, about 18 months after the fleet was grounded at the start of the coronavirus pandemic. Flights are set to operate from Johannesburg to Cape Town, plus African capitals Accra, Kinshasa, Harare, Lusaka and Maputo. The carrier sees high demand on routes to cities elsewhere on the continent, Kgokolo said, as fewer competitors operate those trips. Early booking figures indicate planes may be as much as 75% full, he said.

Routes anywhere else will be complicated by continued travel restrictions due to the Covid-19 pandemic.

The government agreed to transfer a majority stake in the carrier to a local jet-leasing company and private equity firm in June, though the consortium has yet to complete the transaction more than three months later. It is still not a done deal, Kgokolo said.

“We’re done with due diligence, and negotiations are taking place on the share purchase agreement,” the CEO said. “It can be complex and take time.”

SOLVENT

The group, comprising Global Airways, which owns domestic airline Lift, and Harith General Partners has pledged to invest as much as R3.5bn over the next three years. For now, SAA is solvent, after administrators reduced its workforce by almost 80% and secured a deal with creditors.

SAA has an eight-aircraft fleet, Ch-aviation reported in September, made up of five original-generation Airbus A320-series narrow-bodies, an A330 wide-body, and a pair of thirsty four-engine A340s.

THE CONSORTIUM HAS YET TO COMPLETE THE TRANSACTION MORE THAN THREE MONTHS LATER. IT IS STILL NOT A DONE DEAL