SAA after Business rescue

[ZX357]

SAA Statement, 26 March 2024 | SAA navigates turning the corner

SAA is focused on its recovery with no further bailouts, after surviving probably the most turbulent years the national carrier has ever navigated, interim chief executive John Lamola said in an interview this week. He added that the airline’s staff and management are committed to ensuring the recovery after the collapse of the controversial Takatso consortium deal in March.

The deal, which was shrouded in secrecy, would have seen Takatso purchase a 51% stake in the airline for just R51, implying a R100 evaluation, with the condition that it would invest in its development. SAA exited business rescue on 30 April 2021, after a R10.5 billion taxpayer bailout. But the total sum the fiscus has injected into the airline is more than R33 billion since May 2019. Its woes were partly caused by corruption, not least when Dudu Myeni was at the helm. Public Enterprises Minister Pravin Gordhan provided a breakdown of how this sum was spent in a recent parliamentary response to the Democratic Alliance’s Farhat Essack. Gordhan said it was important to note that state capture had affected all state-owned entities, their liquidity position, operational costs and performance. In a response to an earlier question, SAA told Essack that it had “lost a total of R23 056 231.17 to corruption, fraud and bribery” since 2019, but had recovered R17 209 114 of this amount. Lamola — who is still serving in an interim role along with other senior executives until a permanent leadership team is appointed in a process he says is well under way — was upbeat about the future of the airline. Its 2 000 staff have strong morale, he said. “The staff of SAA have gone through a lot. Besides the business rescue the retrenchments […] were massive. Five thousand staff were reduced to only 1 000. But even before that time of business rescue, there was a lot of uncertainty into 2019 about the fundability of SAA by national treasury,” Lamola said. There are also 600 workers in catering and 400 in the technical aircraft maintenance division. “SAA staff are a hardened lot, they have seen the worst. The average length of service is about 15 years. People stay for long and they’ve seen CEOs come and go every second year. They’ve seen boards changed. So they’re very blasé, resilient people who are just committed to the brand, SAA, they love the job,” Lamola said. “But there is a level of angst in terms of will there be another bout of retrenchments … we have sufficiently assured them that things are stable and look good.”

He said one of the major risks SAA faces is stiff competition for aviation skills globally. “We are constantly dealing with the challenge from mainly Middle Eastern airlines and all over which are attractive to our pilots and technicians. So, we are managing South African Airways with an eye to ensuring that we retain all those skills in the country for the long-term sustainability of SAA,” Lamola said. SAA has also been expanding its fleet since its relaunch in September 2021, but is cautious not to do so too quickly. “It’s growing gradually. Currently, we have 15 aircraft and of those two are owned by South African Airways and the rest are leased. We have two Airbus A340s and two Airbus A330s and the rest are A320s,” Lamola said. He said airlines globally have, since last year, experienced a shortage of aircraft “and that has slackened our plans, affecting our performance at various levels, including customer satisfaction, because we had to use what we call a wet lease, which is where you get an aircraft that comes with its own pilot and cabin crew”. “Today if you fly British Airways from London to New York, you fly in an aeroplane that is from Air Belgium. They have rented aircraft from Air Belgium, there’s no BA brand. It’s happening all over now,” he said. He said SAA planned to lease a further eight aircraft during the financial year to bring its fleet to 21 by April 2025. He described the need to lease aircraft on six-month leases as “a pain in our strategy” — the white unbranded leased aircraft do nothing to build the brand. The industry anticipates the shortage of aircraft supply, which started as a result of the Covid-19 pandemic, will persist until at least 2028. “There are only two major equipment manufacturers, Boeing and Airbus, and Boeing has had all sorts of calamities in terms of their quality and operations. They’ve not been providing aircraft. But besides, aircraft engines have their own manufacturers, who have also coincidentally had a major problem,” Lamola said. “The standard industry practice is that good airlines always have a mix of … about 40% leased and 60% owned. This is a question of finance economics, where you make a decision that is cheaper to buy than to lease.”

Looking ahead following the failed Takatso transaction Lamola said SAA was pursuing its “plan B” which includes route expansion and eventually purchasing aircraft. The deal was terminated after SAA was revalued and found to have grown in value by R4.1 billion since the agreement was struck in 2021. “We are at that stage now at SAA where we are making calculations. We believe that beyond 2028 South African Airways should start purchasing new generation aircraft because there’s pressure about environmental responsibility, the carbon footprint and so forth. And all airlines are moving on getting newer aircraft,” Lamola said. SAA operates 14 routes, including to São Paulo in Brazil and Perth in Australia. “We are focusing on our major lucrative market, which is the Africa regional market. And, of course, the domestic market where we’ve restricted ourselves to Cape Town, Gqeberha and Durban. But our strategy is to extend this to route 21 routes as we increase our fleet,” he said. There is a possibility SAA might add another “very lucrative” intercontinental route during the next financial year. “Our post-Takatso strategy essentially is that for now we are going to continue our plan of growing the airline to 21 aircraft, with 21 routes, during which period we will then densify and stabilise instead of just expanding all over the place quickly,” he said. “We had a plan B based on our scenario planning, where we anticipated that this transaction may be prolonged for too long, or it may just collapse. And when the announcement came in March, it came at the right time because it was just at the end of our financial year and now we’re beginning a new financial year, which starts in April, with our budget that is based on the assumption that there will be no Takatso.” “We have this middle-sized South African Airways that is reconstructed, which is not necessarily seeking to replicate the old SAA but is based on a different business model that is not reliant on taxpayers funding but on its own financial resources.” Lamola said the airline would “absolutely not” be seeking further bailouts, although he insisted “the word bailout is not the right language” because the government is a shareholder in SAA and had the responsibility to recapitalise the business.
“Currently, the word from the shareholder, from the board, is that SAA is fine. There is no frantic search for a private equity partner,” he said. He added that SAA is not in discussion with Qatar Air, which has announced it is taking a stake in Rwanda Air and wants to buy into another southern African airline. But, Lamola said, the public enterprises department had talked to multiple parties ahead of signing the Takatso deal. “SAA is resized to a level where according to the strategy we will not survive but actually thrive, and start making good profit. Currently SAA is hamstrung from making the profit we want to see because we don’t have enough aircraft but we’re going to be able to deliver this financial year.

“There is now stability at South African Airways. The demise of the Takatso transaction was a very unfortunate cloud hanging over the organisation. There are a number of things that we couldn’t do during the past two years, which we’re now free to start doing. There’s now certainty."
Ends

https://x.com/flysaa/status/17947955868 ... 7X5bw&s=19

[marius scheepers]

What a lot of hot air!

[Burner]

What a lot of hot air!

Apart from him being completely wrong about BA leasing Air Belgium right now for their JFK route. BA leased ONE A330NEO for 2.5 months in the 3rd quarter of last year specifically for their Chicago route. All the JFK BA flights right now are operated by BA branded/operated aircraft.

[Joker11]

What a lot of hot air!

Apart from him being completely wrong about BA leasing Air Belgium right now for their JFK route. BA leased ONE A340-300 for 2.5 months in the 3rd quarter of last year specifically for their Chicago route. All the JFK BA flights right now are operated by BA branded/operated aircraft.

Before that for their LHR-DXB-LHR.

[evanb]

What a lot of hot air!

Apart from him being completely wrong about BA leasing Air Belgium right now for their JFK route. BA leased ONE A340-300 for 2.5 months in the 3rd quarter of last year specifically for their Chicago route. All the JFK BA flights right now are operated by BA branded/operated aircraft.

Before that for their LHR-DXB-LHR.

There is a huge difference between a large airline with a large fleet bringing in a small amount of ACMI capacity to cover for unexpected short-term unavailability or seasonal capacity to that of a small airline with a small fleet counting on ACMI operators to provide a big chunk of capacity.

ACMI capacity can be expensive, but a larger airline can absorb the cost for a small amount to maintain their network, slots, client commitments, etc. But it's not sustainable when it's a big chunk of capacity.

Some recent ACMI cover that I've come across include Qantas wet leasing two Finnair A330s covering for short term unavailability of A380s due to D-checks and cabin refits. Interestingly, after two years they'll revert to dry leases for several years and provide some expansion capacity. But Qantas operate a fleet of 50 widebody aircraft!

[ZX357]

https://www.luchtvaartnieuws.nl/nieuws/ ... um=twitter

Seems like Frankfurt could be the next international destination to return but only in 2025

[ZX357]

US DOT fine SAA and others for delayed Covid refunds

https://www.timeslive.co.za/news/world/ ... 9-refunds/

The US transportation department (USDOT) has imposed $2.5m (R46.84m) in civil penalties against Lufthansa, Air France unit KLM Royal Dutch Airways and SAA.

The civil penalties are for significant delays in providing more than $900m (R16.87bn) in refunds owed to passengers due to flights disrupted by the Covid-19 pandemic and after thousands of airline customers were forced to wait months. Of the $1.1m (R20.63m) penalties imposed on KLM and Lufthansa, each carrier was credited $550,000 (R10.3m) for refunds for non-refundable tickets on US flights.

[ZX357]

US DOT fine SAA and others for delayed Covid refunds

https://www.timeslive.co.za/news/world/ ... 9-refunds/

The US transportation department (USDOT) has imposed $2.5m (R46.84m) in civil penalties against Lufthansa, Air France unit KLM Royal Dutch Airways and SAA.

The civil penalties are for significant delays in providing more than $900m (R16.87bn) in refunds owed to passengers due to flights disrupted by the Covid-19 pandemic and after thousands of airline customers were forced to wait months. Of the $1.1m (R20.63m) penalties imposed on KLM and Lufthansa, each carrier was credited $550,000 (R10.3m) for refunds for non-refundable tickets on US flights.

https://fastforward.com.cy/breakthrough ... er-refunds

Additionally, South African Airways agreed to refund $15.2 million and pay a $300,000 fine.

[marius scheepers]

US DOT fine SAA and others for delayed Covid refunds

https://www.timeslive.co.za/news/world/ ... 9-refunds/

The US transportation department (USDOT) has imposed $2.5m (R46.84m) in civil penalties against Lufthansa, Air France unit KLM Royal Dutch Airways and SAA.

The civil penalties are for significant delays in providing more than $900m (R16.87bn) in refunds owed to passengers due to flights disrupted by the Covid-19 pandemic and after thousands of airline customers were forced to wait months. Of the $1.1m (R20.63m) penalties imposed on KLM and Lufthansa, each carrier was credited $550,000 (R10.3m) for refunds for non-refundable tickets on US flights.

https://fastforward.com.cy/breakthrough ... er-refunds

Additionally, South African Airways agreed to refund $15.2 million and pay a $300,000 fine.

I see another bailout on the horizon!

[GLF4]

Maybe with a coalition government it won't be so easy?

[Jasondn78]

I get the feeling that Sun Express is to SAA as Karpowership is to Eskom. Is it ironic that they are both sourced from the same country?

[mak]

https://www.thesouthafrican.com/busines ... t-heights/

Former SAA CEO.jpg

Sad to see that we lost these skills and how much it costed and still costing the country

[snoopy]

South African Airways agreed to refund $15.2 million and pay a $300,000 fine

But as owner of Mango they could not refund pax who paid for flights and never got to fly it?...Instead its owner under lead of Gordhan, abandoned Mango, just as Covid hit the industry, forcing it into business rescue and ultimately into the possibility of liquidation ...hmmm

(Un-flown Ticket Liability of Mango SOC Ltd = R183 million) + 4 years of banking interest on that money by now.

Pray tell where SAA found all this money from suddenly...or are they borrowing it from elsewhere via the DPE again?

[ZX357]

https://www.flightlineweekly.com/post/s ... uthorities

SAA only has to pay $300,000 (+- R5,4 million) according to the above article.

From the original penalty claim amount, SAA has accepted the settled imposition of a civil penalty of US$ 300,000 (roughly R5,4 million) to void protracted litigation. The penalty will be paid to the US Treasury in tranches over 540 days from the issuance date of the consent order.

Between April 2021 and March 2023, SAA claims to have paid around R2.2 billion in Covid period unflown ticket refunds.

[Volo]

https://www.flightlineweekly.com/post/s ... uthorities

SAA only has to pay $300,000 (+- R5,4 million) according to the above article.

From the original penalty claim amount, SAA has accepted the settled imposition of a civil penalty of US$ 300,000 (roughly R5,4 million) to void protracted litigation. The penalty will be paid to the US Treasury in tranches over 540 days from the issuance date of the consent order.

Between April 2021 and March 2023, SAA claims to have paid around R2.2 billion in Covid period unflown ticket refunds.

...............................
The $ 300 000 is only the administrative penalty and does not include any repayments of tickets.
But we already have the answer on where the money has come from as in a previous disclosure they ( SAA) have cost the fiscus something like R23 billion over the last 4 years but the government continues to pull the wool over our eyes with conflicting statements on how this money has been paid and exactly when.