A new South African airline could start operations as soon as January of next year, according to the South African financial website BusinessTech. While quoting the South African Sunday Times, BusinessTech says that the South African government is working with private investors and has already received more than ten offers.
The paper claims that the private money looking to invest in the new SAA is also exploring the integration of some of the airline’s subsidiaries, including Mango and SAA Technical. Mango Airlines is SAA’s low-cost subsidiary based at OR Tambo International Airport (JNB). SAA Technical meanwhile provides aircraft maintenance services for many of the continent’s airlines.
SAA needs $583 million
Last week business newswire service Bloomberg reported that the government had started talks with potential partners and that SAA needed a minimum of R10 billion ($583 million) to start flying again. According to Kgathatso Tlhakudi, the Department of Public Enterprises’ (DPE) boss, members of his staff and advisers from Rand Merchant Bank entered into talks after receiving four promising proposals.
While being interviewed by Bloomberg last Wednesday, Tlhakudi declined to name the interested investors but said he would like to see the airline resume operations by the end of the year. He also stressed that getting the airline flying again could depend on the current coronavirus pandemic.
SAA stopped flying in March
SAA entered into administration last December after the South African government refused to give them any more money. The airline managed to keep flying until March when the government closed South Africa’s borders to help stop the spread of COVID-19. In a bid to bring the bloated airlines workforce down, administrators have been offering voluntary severance packages. Of the current 3,700 employees, only 1,000 will get to keep their jobs, including whittling down 625 pilots to just 68.
It has also been reported that pilot seniority will not be a part of deciding which pilots will be offered jobs with the new SAA. According to BusinessTech, equal employment metrics will be used to determine which of the mostly white pilots and cabin crew gets to stay.
In its statements regarding the airlines, the Department of Public Enterprises has said that the new SAA will be run professionally. By operating, in this way, the new SAA will help promote tourism and serve as an African gateway to international markets.
The DPE listed the following things it would like to see with the new SAA:
- A modern fuel-efficient fleet of aircraft
- Routes at competitive prices
- The proper deployment of SAA assets
- Connecting South Africa to the world
- A motivated workforce
- Focused on the customer
While all this talk seems promising, no investor in their right mind would touch SAA until it was dismantled correctly and debt-free. Even if it was managed successfully, had new planes and a small workforce, it’s hard to imagine the new SAA making any money for at least three years, and that’s without the coronavirus.
Can SAA be saved?
The new SAA sounds nothing more than a government vanity project that they hope will bring tourists to the country and provide jobs for 1,000 workers. Also, don’t be lured in by talks of Ethiopian Airlines being one of the potential investors as they are doing just fine and have no intention of investing in the new SAA.
The fact is that there is just one solution for SAA, and that is to fold the airline and sell its assets to the highest bidder. If a private entity thinks that it can make a go of running an airline in South Africa at such time, the government can grant them an operator’s license.
What do you think of all this talk about a new SAA? Please let us know your thoughts in the comments.
