SAA’s future expansion depends on new government

The appointment of the new ministers in the various government departments is key to South African Airways’ future.

The airline’s growth and expansion plans are intricately linked to the appointment of key people in government. This is because these individuals determine the direction to be taken.

President Cyril Ramaphosa is expected to announce his cabinet sometime after his presidential inauguration. The announcement will signal the seriousness of shaping this new national unity government.

COLLAPSED TAKATSO DEAL HAMPERS EXPANSION

In an interview with 702’s Clement Manyathela, SAA Chair Derek Hanekom said the collapsed Takatso deal had impacted the airline.

After SAA emerged from its business rescue process in 2021, the Takatso Consortium was named the private partner that would become a major shareholder in the national carrier.   

However, after a lengthy process, Takatso Consortium pulled out of the transaction.

The collapse of the deal has left SAA without capital to carry out its growth and expansion plans.

NEW MINISTERS, NEW VISION

The airline’s future is determined and directed by the vision of ministers in the cabinet.  

For the airline to attract potential investors, the intentions and plans of new ministers must be known.

“With a change of government imminent, the new responsible ministers could make a new decision as to whether they want a shareholder and what kind of share and terms they would offer to an investor.” Hanekom said.

SOUTH AFRICAN AIRWAYS EXPANSION PLANS

Without capital injection, SAA is not able to expand its route network.

South African Airways has resumed services on two international routes since its relaunch in late 2021.

Aside from its domestic and continental services, the airline has relaunched flights to two intercontinental destinations.

Late last year SAA restarted scheduled flights to Sao Paulo in Brazil, from Johannesburg and Cape Town.

Then, in April this year, SAA resumed flights to Perth in Australia.

PROFITABILITY OF NEW SAA ROUTES

Hanekom said that South African Airways has made progress in achieving financial sustainability.

SAA has committed to doing things differently in order that it does not become a burden on the taxpayer.

In fact, the new routes are showing already profitability.

“Profitability has already been achieved on the São Paulo routes, especially the São Paulo – Cape Town route.” Hanekom said.

He also said that the newly relaunched Johannesburg – Perth route was showing gains.

“Perth has exceeded our expectations and is doing extremely well,” Hanekom said.

DIRECT ROUTES LACKING COMPETITION

Hanekom said that selecting routes without existing direct flights to Johannesburg or Cape Town was a positive move for South African Airways.

However, SAA’s greatest expansion has been on the African continent. Hanekom said that most of these routes are very profitable.

FURTHER ROUTE EXPANSION

SAA has ambitions for further intercontinental route expansion. However, the need for capital is holding up its plans for further international route development.

TravelNews states that other intercontinental routes the airline hopes to reintroduce include London, New York, Washington and Frankfurt.

Furthermore, SAA will consider restarting flights to India, once it has sufficient aircraft and resources.