SAA has left the door open at the possibility of getting another strategic equity partner after the collapse of the Takatso Consortium transaction.
This comes after the termination of negotiations for the transaction to sell 51% of SAA to the Takatso Consortium in March, following three years of negotiations, as a result of a disagreement on the revised transaction structure.
In a letter to SAA staff and the broader stakeholder community on Tuesday, SAA interim CEO Professor John Lamola said the state-owned airline was currently executing a business plan that allowed it to thrive from revenues generated from its operations.
Lamola said the question of whether there would be another strategic equity partnership was tied to SAA’s future growth plans and remained the prerogative of the shareholder.
“As with any airline, SAA’s growth and defence 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,” Lamola said.
“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 favourable creditworthiness to strengthen the company’s balance sheet.
“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.”
Lamola said SAA continued to report steady, sustainable growth three years after returning to the skies, adding that the airline had more than doubled its route network and tripled its fleet size.
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 September 23, 2021, with just six aircraft and six routes.
“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,” Lamola said
“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.
For the 2022/23 financial year, based on a fleet of six aircraft and six routes, SAA revenue grew by 96% (R5.6bn) from R2bn in the previous year.
For the 2023/24 financial year, the airline revenue increased by a further 49% (R7.3bn) owing to fleet capacity reaching 13 aircraft.
SAA said the external audit of the 2022/23 financial results had been completed and closed, and the audit of the year ending March 2024 was currently under way, with all indications pointing to a net profit for the year.
However, 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 utilise aircraft wet-leased from Sun Express (the Lufthansa and Turkish Airlines-owned airline) during the coming December peak season.
BUSINESS REPORT