South African Airways (SAA) continues to report steady, sustainable growth three years after returning to the skies.
The national flag carrier entered business rescue in December 2019, just weeks before the outbreak of the Covid-19 pandemic. After 18 months of non-operation and comprehensive restructuring, SAA returned to the skies on 23 September 2021 with just six aircraft and six routes.
In a letter to SAA staff and the broader stakeholder community celebrating three years since the restart, Interim CEO, Professor John Lamola wrote that, three years later, the airline has more than doubled its route network and tripled its fleet size.
Lamola said, “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.”
“To date, we have reopened 11 outstations, including Mauritius, Perth in Australia, and São Paulo in Brazil. Post-Covid, our employment offering has expanded from 500 to around 1 200 staff, including 140 pilots”.
In November 2024, SAA will launch two new routes from its hub in Johannesburg. These are Lubumbashi in the DRC, and Dar es Salaam in Tanzania.
SAA moves to the Transport Ministry
Last month President Cyril Ramaphosa assigned shareholder responsibility for SAA to the national Department of Transport and Minister Barbara Creecy. Lamola said the airline’s leadership has already met with the minister to provide a full debrief on the state of the airline, and its plans for the medium and long term.
“SAA is excited to be a member of the family of state-owned transport infrastructure entities. Our focus is being sharpened to being facilitators of world-class passenger air transportation into and out of South Africa.” Lamola added.
Strategic Equity Partner
Lamola elaborated that SAA is currently 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 partnership is tied to SAA’s future growth plans and remains the prerogative of the shareholder.
“As with any airline, SAA’s growth and defense of market share will require continuous capital investment. 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. We are building on this favorable creditworthiness to strengthen the company’s balance sheet.” said Lamola.
“Supported by the Board, we have identified a range of assets that can 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.”
Sustainable revenue growth
SAA Group has experienced steady revenue growth since restarting operations in September 2021, albeit from a low base as the aviation industry was emerging from the COVID-19 pandemic.
For the 2022/23 financial year, based on a fleet of six aircraft and six routes, SAA revenue grew by a stellar 96 percent (R5.6 billion) from R2 billion in the previous year.
For the 2023/24 financial year, the airline revenue increased by a further 49% (R7.3billion) owing to fleet capacity reaching 13 aircraft.
The external audit of the 2022/23 financial results is completed and closed, and the audit of the year ending March 2024 is currently underway, with all indications pointing to a net profit for the year.
The global supply constraints of aircraft resulting from the Covid pandemic and the production problems at aircraft manufacturers continue to negatively affect SAA’s financial performance. The delivery of three aircraft which were expected during the last calendar year is still delayed. As a result, SAA will again innovatively utilize aircraft wet-leased from Sun Express (Lufthansa and Turkish Airlines-owned airline) during the coming December peak season.
A driver of economic growth
Lamola said SAA’s growth strategy aims to ensure that the airline attains profitability whilst funding itself from its operations and pursuing award-winning service to its customers.
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.