SAA makes major route cuts

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  • AMcWhirter
    Participant

    Only days after SAA brought its A350 to FRA – see below – the airline today announced many route cuts in the near future.

    https://www.fin24.com/Companies/Industrial/saa-to-scrap-all-domestic-routes-apart-from-joburg-cape-town-20200206

    The most significant are:

    * The axing of all domestic routes JNB-CPT excepted.
    * Closure of many long-haul routes including MUC, HKG, CAN and GRU
    * Several African destinations are also dropped.

    LHR is unchanged and so too is FRA – see below.

    South African Airways to bring its A350 to Europe


    StephenLondon
    Participant

    The problem with making these dramatic route cuts is that they will fast lose (if they haven’t already) the higher-yielding business customer, who just won’t risk getting stranded. I fear it isn’t long until SAA stop altogether, which is a shame for a once-proud (and formerly excellent) carrier.


    capetonianm
    Participant

    I am amazed that the business rescue team let them continue with the London route. The loads are abysmal and the route costs are very high. Based on what I know (which is more than is in the public domain and thus cannot be shared here) I can see no justification for the continued operation of this route which is operated more for vanity than anything else.

    As a (related) aside, the High Court ruled this morning that SA Express is to be placed under business rescue. It has appealed against the decision, which is an attempt to recover roughly R11 million owed to suppliers.

    SA Airlink is under separate ownership and is not affected.

    1 user thanked author for this post.

    SimonS1
    Participant

    Looks like the endgame is emerging.


    SimonS1
    Participant

    capetonianm
    Participant

    True, but people have been saying that for years about the country itself too. It is always on the horizon and yet things carry on in some way.
    Frau Merkel is in ZA, I wonder what that will achieve.

    If Germany invests rather than plunders ( like the Chinese) it could bring much needed education and employment opportunities. There’s plenty of money. It’s not being spent where it’s needed.

    I can see German investment improving infrastructure problems but the underlying endemic problems will remain.


    capetonianm
    Participant

    Let’s see. I suspect this movie will replay every few weeks.

    Media Statement

    South African Airways Moves Forward with Restructuring Plans

    6 February 2020

    The joint Business Rescue Practitioners (BRPs) of South African Airways (SAA) today announced further initiatives to support the airline’s transformation into a sustainable and profitable business.

    The BRPs, Les Matuson and Siviwe Dongwana, have worked closely with key stakeholders including industry specialists, government, creditors and executive management to develop a comprehensive restructuring programme which will culminate in a Business Rescue Plan to be published in late February and subsequently presented to creditors for approval.

    In line with SAA’s commitment to take urgent action to conserve cash, and create a viable platform for a successful future, key measures need to be implemented now. These measures include targeted changes to the route network, deployment of more fuel efficient aircraft, optimisation of organisational structures and renegotiation of key contracts with suppliers.

    “The initiatives we are taking now will strengthen SAA’s business. We believe that this should provide reassurance to our loyal cust omers that SAA is moving in the right direction. We are focused on our mandate to restore SAA’s commercial health and
    create an airline that South Africans will be proud of”, commented the BRPs.

    Changes to SAA’s Network

    Following a careful analysis of SAA’s liquidity challenges and after consultations with all relevant stakeholders, the BRPs have identified which routes will be retained to drive the restructured national carrier towards profitability.

    SAA will continue to operate all international services between Johannesburg and Frankfurt, London Heathrow, New York, Perth and Washington via Accra.

    Regional services to be retained include from Johannesburg to Blantyre, Dar es Salaam, Harare, Kinshasa, Lagos, Lilongwe, Lusaka, Maputo, Mauritius, Nairobi, Victoria Falls and Windhoek.

    On 29th February 2020, SAA will close the following regional and international services from Johannesburg to Abidjan via Accra, Entebbe, Guangzhou, Hong Kong, Livingston (Livingston is in Scotland – they mean Livingstone), Luanda, Munich, Ndola, and Sao Paulo.

    On the domestic route network, SAA will continue to serve Cape Town on a reduced basis.

    All other domestic destinations, including Durban, East London and Port Elizabeth, will cease to be operated by SAA on 29thth February 2020. Domestic routes operated by February 2020. Domestic routes operated by Mango will not be affected by the changes. Mango will not be affected by the changes.

    All customers booked on any cancelled international and regional routes will receive a full refund.
    Customers booked on cancelled domestic flights will receive a full refund.
    Customers booked on cancelled domestic flights will be re-accommodated accommodated on services operated by Mango.

    SAA does not intend to make any further significant network changes. Passengers and travel agents can therefore feel confident about booking future travel with South African Airways.

    The flight schedule for February remains unchanged. Please consult the website for further information.further information.
    ASSETS

    To improve the airline’s liquidity, rationalisation programmes are under consideration for SAA’s subsidiaries, as well as the sale of selected assets. The BRPs will continue to for SAA’s subsidiaries, as well as the sale of selected assets. The BRPs will continue to explore viable investment opportunities with potential investors in respect of SAA. potential investors in respect of SAA.

    JOBS

    The joint BRPs have stated that every effort is being taken to limit the impact of job losses in SAA and its subsidiaries.losses in SAA and its subsidiaries.
    “It is our intention to restructure the business in a manner that we can retain as many jobs as possible. This will help provide a platform to a viable and sustainable future. jobs as possible. This will help provide a platform to a viable and sustainable future. However, a reduction in the number of employees will unfortunately be necessary”, However, a reduction in the number of employees will unfortunately be necessary”, said Matuson and Dongwana.

    The BRPs will engage labour, both organized and non–ororganized, to reach a solution ganized, to reach a solution necessary for a sustainable airline going forward.

    The BRPs wish to underline their support of the President’s proclamation for the Special Investigating Unit to examine some of the airline’s contracts. This measure will Special Investigating Unit to examine some of the airline’s contracts. This measure will helhelp in assessing viable agreements and in reducing SAA’s cost base.p in assessing viable agreements and in reducing SAA’s cost base.

    The decisions and actions announced today are aimed at improving SAA’s balance sheet, creating a platform for a strong and sustainable airline and ensuring that the sheet, creating a platform for a strong and sustainable airline and ensuring that the company is more attractive for potential strategic equity partners.


    openfly
    Participant

    They will still beg for another R5b next month!!


    SimonS1
    Participant

    So Cyril Ramaphosa knows better than the business rescue people and has opposed the cuts.

    https://www.reuters.com/article/safrica-saa/ramaphosa-opposes-plan-to-cut-south-african-airways-domestic-routes-idUSL8N2A752Y

    Sadly there is no limit to government interference. Perhaps it’s concern that the party chaps may end up actually paying for their flights.

    You would have thought presiding over a disaster zone that Ramaphosa may have better things to do with his time.


    capetonianm
    Participant

    SAA’s main problem is that it is run by the ANC as are most other SEO’s . A government run SEO such as Eskom can’t make a profit as a monopoly, so what chance does SAA have?

    The comparison of the A340 doesn’t take into account SAA’s hot and high base where it’s payload is often superior to the 777. In addition the transatlantic market is hardly comparable to most SAA routes.

    If it had been run correctly over the past 20 years it would now be in a position to invest in the more efficient modern twins such as the A350. Instead it now leases them with 4 x A350 with two different configurations.

    Words from a friend in the industry.


    Cedric_Statherby
    Participant

    The challenge with cutting out nearly all the domestic routes is to retain travellers from PE, East London, Durban etc when they want to fly intercontinental. If when you get to OR Tambo you have to change airlines for the onward flight to eg Europe, why choose SAA?

    BA has exactly the same challenge in the UK since it has cut international flights from everywhere except London. But it knows that the value of eg EDI-LHR is not the revenue they get from that flight itself, but keeping the passenger on their planes for the next leg on from LHR.


    capetonianm
    Participant

    Ironically BA possibly has better connections from ZA regionals (with the Comair franchise) via JNB or CPT than it does from UK regionals via LHR/LGW.

    SAA might fight back by common rating fares from CPT with JNB, giving an incentive for pax to continue their journeys internationally on SAA. They could do the same with Mango from other regionals but the yields will be poor and they will lose money ………. oh …… plus ça change!


    cwoodward
    Participant

    Given the substantial demise of SAA and their total cancellation of their JNB -HKG flights and the virtual castration of their domestic routes there must now be a good case for Cathay to expand their seasonal HKG -CPT route to year round.
    I have travelled this route twice this year myself on totally full aircraft (A350-1000s) and have been looking at the loadings over the past months on ‘expertraveller’. Almost every flight has had heavy loadings in all classes.


    capetonianm
    Participant

    You’d probably have to pay someone to take over ailing state airline SAA :

    Minister of Public Enterprises Pravin Gordhan has said that the R3.5bn in emergency funding that SAA received from the state-owned Development Bank of Southern Africa earlier in the year may be depleted by early March.

    Gordhan was addressing a joint sitting of Parliament’s Standing Committee on Public Accounts and Parliament’s Portfolio Committee on Public Enterprises on Wednesday morning, where he stressed that the need to provide financial assistance to the beleaguered flag carrier would be a reality until the business rescue process is finalised.

    The admission from Gordhan regarding the bailout money came in response to questions from SCOPA member Alf Lees. While the minister talked about the importance of the provision of finance, he did not make any definitive announcements about emergency funding.

    SAA was placed under voluntary business rescue in December, and received R3.5bn of emergency funding from the DBSA in early January. Earlier this month its business rescue practitioners, Siviwe Dongwana and Les Matuson, made the decision to cancel all the airline’s domestic routes except for the popular Johannesburg-Cape Town flight to save cash. Some regional and international flights were also cancelled. Their business rescue plan is expected to be finalised by the end of the February.

    Dongwana and Matuson attended the joint sitting on Wednesday along with other members of the business rescue team and officials from the Department of Public Enterprises, but Gordhan took the lead in updating Parliament.

    Asked whether a private partner could be brought into the fold, Gordhan said while details were still being determined, the airline needed “the right kind of combination” between public and private ownership.

    “Nobody is going to offer you anything for SAA now. You could pick it up for R1. You would probably have to pay someone to come in and take SAA off our hands,” said Gordhan.

    The minister, who had a touch of laryngitis, told MPs that the airline’s business rescue practitioners must consult with unions and creditors during the process of developing their plan. The plan must be published within 10 days of its finalisation. Parliament will then have an opportunity to study it, he said.


    Loveweddingcarhire
    Participant

    Yes, This is right..!

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