Banks ‘willing’ to give SAA version 2.0 a R1bn facility

SAA interim CEO John Lamola says that SAA version 2.0 may now not need an equity partner. 

“If we don’t get one, we can still have the airline we have now, but with a maximum of 20 aircraft. But if we want to move up to an airline with 30 to 35 new aircraft, then we will need a strategic equity partner, preferably an airline, to partner with,” said Lamola on the sidelines of the International Air Transport Association’s annual general meeting in Dubai.

As a state-owned carrier, there must be pressure to fly routes that are politically desirable but unprofitable. Lamola says he frequently gets asked: “Why not London? New York? Mumbai? China?”

He says what drives the airline’s current route strategy are the following questions: “What do we need to break even operationally? How many aircraft, flying what routes?” 

SAA’s current fleet plan runs from 2022 to 2029, but the airline had to revise that after the Takatso deal fell through. 

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“We are flying on our own now, with the expectation that when we start a [new] route, it must pay for itself. We will not start a route for vanity.”

Given Boeing’s ongoing troubles, would he consider buying Boeings?

“As SAA is the national carrier, we have to be friendly to both Airbus and Boeing. We cannot be beholden to one industry, in case there are, for example, sanctions against Boeing. I was in Seattle last year and everybody raised an eyebrow. But we also talked to Airbus about what we’re doing. We presented them with our roll-out strategy for the coming five years; that, for instance, we will fly to London in 2027.”

Is that still the plan? Lamola is noncommittal. “Perhaps that no longer makes sense because the competition is too fierce. We’re doing continuous research on all routes. I have business cases for Germany, London and Nairobi, which we are refreshing all the time.”

On SAA having recently restarted its Johannesburg-Perth route, Lamola admits: “Our frequencies are terrible [too infrequent], and we need new aircraft. So we are partnering with Singapore Airlines to operate Sydney on a codeshare.”

Lamola says one of the airline’s key challenges is a skills shortage.

“We need to benchmark SAA to world standards in the quality of our management. Because of the business rescue process, we have not been able to recruit the best skills for route analysis. Fortunately, there is now technology that analyses data on how our competitors are doing on those routes, and we can extrapolate that. 

“We gave Boeing and Airbus the London route to analyse and they flew in route analysis teams. In the end, we said, ‘Thanks, but we’re not ready’.”

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