Minister of public enterprises Pravin Gordhan said the department of public enterprises was concluding the business valuation of SAA to finally get the national carrier’s strategic equity partner deal with the Takatso Consortium over the line.
“There’s lots of regulatory things which we didn’t realise would take the kind of time that it has taken. [For] over 10 months, we waited for the Competition Commission to decide which direction things [would] go in. Then [it went] to the Competition Tribunal.
“Then you’ve got to go to the Civil Aviation Authority, and we also have to redo certain things. SAA’s properties were valued just around and after the Covid period, but we are in a very different economic climate now,” said Gordhan.
Gordhan was speaking to the Sunday Times this week on the sidelines of the relaunch of the national carrier’s international route to São Paulo, Brazil, in Cape Town. The airline will resume the route to the city on Tuesday.
Gordhan said concluding this stage of SAA’s recovery would free up R3bn for the airline, which will allow it to lease more aircraft and fly more routes. He said this would lead to competition in passenger air travel, lower ticket prices for South African travellers, and ease the seats shortage.
“The SAA that many thought would get liquidated is today flying 13 routes. And if we ensure we have the right kind of board, the right kind of management, the right kind of staff, [and] also the right partner when we eventually get this strategic equity partner in, I am very confident SAA will move in the right direction,” he said.
Gordhan said the national carrier no longer had a legacy debt problem, because the National Treasury had given the airline financial support over the past three years. He said that, once the strategic partnership was established, SAA would resume business with “a clean start”.
SAA CEO Prof John Lamola told the Sunday Times that the financial and operational progress the airline had made since it exited its business rescue process in 2021 could be seen in its ability to lease aircraft for the resumption of flights.
“SAA has come out of business rescue debt-free. When you have a debt-free airline, you are able to go to the lessors and say: ‘Can I lease an aircraft from you?’ They will say: ‘Show me your financials.' Then we show them our balance sheet and they say: ‘Okay, these people don’t owe money to any bank.' But progressively we have to show a profit. Our stress currently is to ensure that SAA becomes operationally profitable, and we have been very fortunate,” said Lamola.
Lamola added that, as a result of thorough studies of international commercial routes, the work of the internal executive committee of SAA, the airline's strategic materiality framework, and ministerial concurrence, the route to São Paulo had been identified as one beneficial to the airline and its recovery.
Our stress currently is to ensure that SAA becomes operationally profitable, and we have been very fortunate
— SAA CEO Prof John Lamola
Lamola said that in 2021 SAA was “burning about R150m a month in terms of fuel, lease costs, and so on”. He added: “That R2bn was gone in less than 10 months.”
“So, from then on, we had to survive on our own. It’s not just a cliché to say every route we choose goes through a number of [checks to ensure] we are not making a mistake,” he said.
Lamola said the legacy contractual debt had been paid by August of last year, except for unpaid ticket liability of R450m. He said the national carrier needed only a contingent legal liability on unpaid tickets from the National Treasury, but would not say how much that would be, revealing only that it was below R1bn.
Minister of tourism Patricia de Lille told the Sunday Times that the routes between Cape Town and São Paulo, as well as Johannesburg and São Paulo, would benefit tourism for both countries, owing to their recent mutual agreement on visa-free travel for up to three months.
“It’s the right moment at the right time. Air Brazil launched their direct flight ... from São Paulo to Johannesburg, and that helped us to grow the number of tourists. When one compares January with August last year, the numbers between Brazil and South Africa have grown by 41%, and this flight is just going to add to those numbers,” said De Lille.
According to SA Tourism, outbound tourist volumes from Brazil to South Africa last year were about 26,530 out of a total of 6.5-million in tourism volumes globally.
Brazilian vice-minister of tourism Ana Carla Machado Lopes said the relaunch of the route would improve the already robust social, economic and cultural ties between the two countries.
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