South African Airways (SAA) is at breaking point as without a significant cash injection, the airline will fail to grow and compete with local and international airlines.
This is feedback from aviation analyst Guy Leitch, who spoke to the SABC following a presentation by SAA to Parliament.
SAA told Parliament’s Standing Committee on Public Accounts (Scopa) that putting the company in business rescue was the best decision as it saved the airline from liquidation.
Entering business rescue also enabled SAA to secure a cash injection from a strategic equity partner, the Takatso Consortium.
However, the deal with the consortium has been hit by several delays.
Minister of Public Enterprises Pravin Gordhan initially promised the deal would be completed in March of 2023. This has since changed to the end of 2023.
“I do not think this deal is ever going to happen, although Gordhan keeps promising it will,” Leitch said.
He explained that for the deal to go through, existing legislation governing SAA would have to be changed in Parliament, and the aircraft operating licences would have to be changed. This would take 18 months at least.
However, “without it, the airline cannot grow; it is already stretched to breaking point, and it desperately needs funds”, Leitch said.
SAA will never be able to catch up with its competitors if it does not secure a cash injection. The airline lacks the fleet, the equipment, and the financial resources to compete.
“At this stage, I can’t see a recovery. I don’t see us ever being the number-one airline to Africa again. We are never going to catch up.”
SAA has reported financial loss after financial loss despite receiving a massive R50.7 billion in bailouts in the past 15 years.
For the first three months of the 2024 financial year, the airline reported a R150 million loss, which was better than the expected R182 million loss.
SAA Technical was the only subsidiary to report a profit of R4.4 million, while its other subsidiaries reported losses – including Mango, Air Chefs, and SAA itself.
The company’s total revenue of R1.1 billion was 22% less than the budgeted R1.4 billion due to lower demand for domestic and regional travel over the last three months.
National Treasury estimated the average load factor for the first quarter was 60% for domestic travel and 49% for regional travel.
Furthermore, SAA cancelled flights in June due to aircraft maintenance and the unavailability of spare aircraft.
SAA has not released annual financial statements for the last five years.