Is SAA Heading For A Crash Landing?

South Africa’s national carrier, SAA, has announced a reduction in flights and routes. How long will the indebted company stay afloat?
U
Melissa
Cohen
Published: Tuesday, February 6th 2018
General
Local airline, South African Airways(SAA) has announced that flights from Johannesburg to London Healthrow will decrease. The airline currently has a double daily flight to London, however from April 20, this will decrease. The airline explains that this will decrease to one flight a day. Apart from this, the company has also drastically reduced the number of local flights. Flights from Johannesburg to Durban and Johannesburg to Cape Town have taken a blow. We investigate the current state of South African Airways and its future.
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London Flight Reduction

According to SAA's CEO,Vuyani Jarana, the company put a lot of thought before they made the changes and flight reductions.
"SAA decided to focus on those areas of our business that will enhance our efficiencies, bring more value to our customers and produce improved overall performance of the airline."
Despite there only being one remaining flight to London, SAA confirmed that they have bought into a better aircraft. The A300-300 Airbus will take to the sky for the first time from March 25. Jarana explains that SAA wants to provide their passengers with an improved on-board experience. The aircraft hosts state-of-the-art features, environmentally friendly as well as comfortable seating. The aircraft is capable of carrying a total of 249 passengers; 46 in Business class and 203 passengers in Economy class. SAA has said that they have leased the Johannesburg to London flight which will allow the airline to reinstate the second flight once the leasing period is over. The airline also announced that passengers who are booked on  SA236/SA237, would be able to switch to SA234/SA235. 

The Mango Take Over

In August last year, SAA announced that they would be giving their subsidiary, Mango, more of their domestic flights. SAA explained that the reason for this is due to the cost of flying long distance designed aircrafts over short distances is very expensive. There have been over 80 return flights a week that have been affected by the decrease of flights. The SAA Group was previously flying 200 flights between Johannesburg and Durban a week. SAA was previously flying 112 flights, while Mango was making 88 weekly flights. By the middle of February, SAA will decrease their flights to 68 trips a week. The SAA Group previously traveled a total of 278 trips from Johannesburg to Cape Town a week. SAA traveled 162 trips, while Mango flew 116. This route, in particular, is one of the ten busiest air routes in the world. SAA has also cut their fleet from 62 airlines to roughly 52.

Route Cancellations

Besides for Mango taking over some SAA's routes, the company has cancelled some local flights due to lack of demand. The Johannesburg to Port Elizabeth route has decreased from four flights a week to two. The Johannesburg to East London route has decreased from three trips a week to two. Apart from a few local flight cancellations, SAA announced in October that they have cancelled some regional routes. The following routes have been cut from the airline schedule:
  • Flights to Brazzaville via Pointe Noire in the Congo;
  • Douala in Cameroon via Libreville in Gabon;
  • Kinshasa in the DRC; Entebbe in Uganda;
  • Luanda in Angola;
  • Cotonou in Benin via Libreville in Gabon.

The Pits Of Debt

Although SAA has decided to make some strategic decisions with regards to their flight schedule and destinations, they are still in debt. Last year, SAA was expected to receive a R3 billion bailout in order to settle debt with Standard Chartered and various other banks. According to an article published by CompareGuru last year, "SAA runs at a R350 million loss each month." In fact, their debt is so high that they might even be removed from the National Treasury.
"We have reviewed our offerings informed by performance, demand and market conditions. We are satisfied that the changes we introduce will be of mutual benefit to our customers and to the SAA Group. A commercially strong SAA Group offers customers improved efficiency and schedule integrity," explains Jarana.
But how long will these planes be in the air for? Will SAA be able to keep the wind beneath its wings or will it suffer a crash landing?