SAA claims R9.1 billion boost for South Africa

South African Airways (SAA) said it added R9.1 billion in gross value to the country’s economy in 2023/24, with the company expected to add R32 billion in 2030.

This was revealed in a report on a study by Oxford Economics Africa on SAA Group’s core economic contribution.

This was done by analysing the impact of direct activity generated by SAA on a few fields:

• Tourism.
• South Africa’s international trade.
• The indirect activity stimulated by its procurement spending.
• The induced impact that the wages of its workers and those in its supply chain support in the consumer economy.

SAA, which comprises subsidiary companies SAA Technical and Air Chefs and includes divisions SAA Cargo and SAA Voyager, commissioned the study from Oxford Economics Africa.

Oxford Economics is a London-headquartered consulting firm focused on global economic forecasting and econometric analysis. 

This study found that the gross value SAA added to South Africa will more than triple over the next five years, rising from R9.1 billion to R32.6 billion by 2029/30.

The study also shows that SAA’s operations will support 86,700 jobs by 2029/30, up from 25,000 jobs in 2023/24.

Furthermore, SAA’s operations stimulated tax revenues of R1.1 billion in 2023/24, a figure that is projected to rise to R4.4 billion in 2029/30.

The report estimates SAA’s tourism impact at R1.7 billion in 2023/24, rising to R8.9 billion in 2029/30. 

The airline’s trade impact in 2023/24 amounted to R300 million, which is forecast to quadruple to R1.2 billion in 2029/30.

SAA Interim CEO Professor John Lamola said, “The Oxford Economics Report affirms that the state’s contribution as the sole shareholder in SAA has not been without a tangible return on investment (ROI).” 

“In turn, as the study ventures into a forecast of future impacts as derived from SAA’s growth and expansion plans. It serves as an independent validation of SAA’s current five-year Corporate Plan.”

Over the past five years, the government has given SAA R33.1 billion in state bailouts.

SAA had faced significant financial and operational challenges in previous years. This was partly due to several challenges, which included state capture and corruption.

As a result, its board placed SAA in business rescue on 6 December 2019 to restructure the company and strengthen its balance sheet.

The airline emerged from business rescue in 2021 with just six aircraft and five routes. SAA currently flies 16 aircraft and will take delivery of an additional seven in 2025.

SAA’s current footprint of 16 destinations is modelled to support the extension of its route network into Europe, North America and East Asia as the airline maintains its strategic brand as a premium international network carrier.  

“It is heartening to know that the impact of SAA dedicated staff goes beyond this organisation,”  Lamola said.

“It is helping build the South African economy, which ultimately impacts the upliftment of the African continent.”

On the mend

SAA recently reported some steady growth for the 2022/23 financial year, marking a significant turnaround for the company.

SAA’s Interim Board presented the airline’s results at its Annual General Meeting on 20 November 2024.

The airline and its subsidiaries posted a net profit of R252 million, the first time it has been profitable since 2012.

This stands in stark contrast to the combined R23.5 billion in losses reported over the previous four years.

This includes before-tax losses of R6.5 billion in 2018/19, R5.7 billion in 2019/20, R7.6 billion in 2020/21 and R3.7 billion in 2021/22.

Total revenue increased by 183%, from R2 billion the prior year to R5.7 billion.

“SAA airline operations turned a prior year’s negative EBITDA of R1 billion into a positive R277 million,” the airline said.

“These pleasing results of the 2022/23 financial year are emblematic of the hard and careful work that went into the relaunching of SAA as a reliable airline and globally admired brand,” Lamola said.