South African Airways details relaunch plans due in 3Q21
South African Airways (SA, Johannesburg O.R. Tambo) has confirmed it will resume commercial passenger operations on September 23 on one domestic and five regional routes following a 21-month hiatus during which it was plucked from bankruptcy protection through a controversial taxpayer-funded ZAR10.5 billion rand (USD683 million) bailout.
Restarting as a significantly smaller airline with a fleet that has shrunk from 44 to just six aircraft and a workforce that has been reduced from 4,000 to 802 employees and five interim executives, SAA will start-off with one domestic return route between Johannesburg O.R. Tambo and Cape Town, as well as regionally from Johannesburg to Accra (Ghana), Kinshasa N’Djili (DRC), Harare Int’l (Zimbabwe), Lusaka (Zambia), and Maputo (Mozambique), interim Chief Executive Officer Thomas Kgokolo said in a statement. SAA will add more destinations to the route network as it ramps up operations in response to market conditions.
Tickets will go on sale on August 26, while Voyager loyalty programme bookings and travel credit voucher redemption will be available from September 6, 2021.
“After months of diligent work, we are delighted that SAA is resuming service, and we look forward to welcoming onboard our loyal passengers and flying the South African flag. We continue to be a safe carrier and adhering to COVID-19 protocols,” Kgokolo said. “There is a profound feeling of enthusiasm within Team SAA as we prepare for takeoff, with one common purpose – to rebuild and sustain a profitable airline that once again takes a leadership role among local, continental, and international airlines.”
SAA’s Board chairperson, John Lamola, believed the airline was restarting with a “formidable business case”, saying the Board, management, and the shareholder representative Department of Public Enterprises (DPE) had been hard at work since the airline exited administration on April 30, 2021.
However, no mention was made of SAA’s announced preferred strategic equity partner, the Takatso Consortium, which is still doing its due diligence of the airline before finalising a partnership that will see the government give up a 51% shareholding of SAA. Takatso, comprising ACMI specialist Global Aviation Operations (GE, Johannesburg O.R. Tambo) and asset fund manager Harith General Partners, is to sink another ZAR3 billion (USD195 million) in operational capital into the airline for the first 12 to 36 months of operations, while the state aid will be used to take care of SAA’s historical debt.
In a letter to South Africa’s Politics Web, the consortium underlined that only once its due diligence process has been “finalised and if successful, will the deal be finalised”. It said future capital and planning of SAA would be determined after completing the due diligence exercise.
SAA is returning to a domestic market space that has changed fundamentally since it went into business rescue. Its own state-owned low-cost subsidiary Mango Airlines (JE, Johannesburg O.R. Tambo) is in voluntary bankruptcy protection. Its sister airline and regional feeder, South African Express (EXY, Johannesburg O.R. Tambo), is in provisional liquidation. Its former franchise agreement with regional airline Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) has been cancelled after SAA withheld about ZAR700 million (USD45.5 million) in unflown revenue from the former secondary route feeder. With no further government pay-outs likely, SAA will be pitched against a clutch of carriers all plying the same trunk routes, including Comair (South Africa)‘s Kulula Air brand and British Airways franchise, no-frills carrier FlySafair (FA, Johannesburg O.R. Tambo), newcomer Lift Airlines (GE, Johannesburg O.R. Tambo) (wholly-owned by Global Aviation), as well as regional specialists Airlink and CemAir (5Z, Johannesburg O.R. Tambo).