SAA – the end?Back to Forum
I understand that contrary to what was expected, salaries were paid for November. This probably means that on Monday they will realise they don’t have money to pay for fuel.
Their loadings on JNB LHR JNB for next week look very poor, but some of BA’s aren’t brilliant either, so it may be a seasonal thing.1 Dec 2019
This article probably explains why SAA is doomed :
Ferial Haffajee: SAA strike grabs headlines, but the flying market has moved on
We thanked our lucky stars flying out to London last Thursday night, the first day of the SAA strike. We had booked BA. It’s much cheaper than flying SAA.
The British carrier was packed to the gills: there wasn’t a seat to be had from first-class to business and economy, said ground staff. SAA passengers rebooked themselves or the national carrier had to make plans for its clients who had to be somewhere – which, when you think about it, is almost everybody with a booked flight.
But last week on leaving and this week on getting back, the strike was barely noticeable at OR Tambo, the Johannesburg international airport. The routes into and out of South Africa (especially the Johannesburg-London and Cape Town-London flights) are so lucrative that a range of airlines fly them.
To get to London, you can fly BA, Virgin and SAA. If you don’t mind a layover, Emirates and Qatar are good value, and so is Ethiopian Airlines, which is quickly replacing SAA as the continent’s leading carrier. In the absence of SAA, if you need to fly on our continent, you can use Ethiopian, Kenya Airways or RwandAir, in addition to SA Express, the regional airline which was not on strike.
And domestically, SAA’s market share of 56% has steadily been whittled down by Comair and its budget operator, Kulula, as well as by the nimble FlySafair, all three of which have proven wily competitors, even faced by the highly subsidised SAA.
Barriers to entry into the low-cost airline market are still high, but the strike this week was more muted than it might have been because there is so much competition. The SAA monopoly has largely been broken by competition. A study for the National Treasury showed how, when FlySafair entered the market, prices came down significantly as it created triangular competition. Eleven airlines hit the skids in the Noughties, according to the study, but Comair and FlySafair seem to be well-captained and sustainable.
SAA CEO Zuks Ramasia thanked patient passengers this week, but there may not be so many of those left. Last year, SAA bumped me off a long-haul flight, and when I tried to use the coupon they gave me to fly again, the customer services number rung off the hook for about an hour.
That was me gone. The competition is better and cheaper, and while I had been a patriotic flyer, believing that it was part of my national duty to fly SAA (plus the staff are really nice) – no longer. I guess it will be much the same with most passengers, disrupted by the strike this week or made nervous by the negative headlines and Numsa’s threats against passenger safety. You don’t play with flying and safety, and the market moves on, as I guess it did in great numbers this week.
Convenience went down; risk went up. SAA has eaten itself up. Unlike a strike at a factory or a mine, the audience or stakeholders available for disruption by labour are not static or captive in an airline strike beyond the single disrupted flight. Thereafter, you can move and my guess is we have. In droves.
The risk for SAA now is that the hard rump of its full-fare paying customers – corporates and individuals – are largely gone, and that its captive market of government employees and politicians remain.
If you look at SAA’s ticketing structure, politicians get a wad of free flights for themselves and families from SAA (or from taxpayers) while government departments get highly discounted prices. The free flights explain why Public Enterprises Pravin Gordhan got a dressing down from the ANC caucus this week for his comment that SAA is not too big to fail. Who else will fly them with families for free all around the country? Perhaps a dodo.
There’s a big ideological free-for-all happening about whether or not SAA should exist. But the people who really matter – the paying passengers – have flown the cuckoo nest.1 Dec 2019
Alex….Bloomberg is suggesting that the large SA travel agent Travel Start is refusing to book pax on SAA due to the compromise of the lack of insurance cover on domestic flights. Many pax are connectors from international to domestic flights in SA. So, should the UK CAA take urgent action to investigate the insurance cover of pax to and from the UK and elsewhere?2 Dec 2019
The promised ‘announcement’ has not happened.
There are rumours of a merger with Ethiopian, or as one news medium said ‘another west (sic) African carrier’. One can’t really place much credence on that. I have been in touch today with 3 friends, all ex-SAA employees, who are in turn in touch with several past and present colleagues at the airline and nobody appears to have any new concrete information.
Gordhan says SAA in ‘intense discussions’ with lenders, calls on public to buy tickets
Dec 02 2019 06:19 Jan Cronje
Minister of Public Enterprises Pravin Gordhan has said that cash-strapped airline SAA is in intense discussions with lenders to secure much-needed funding and will go through a “radical restructuring process” to ensure its financial and operational sustainability.
Gordhan, in a statement on Sunday afternoon, said a weeklong strike by members of National Union of Metalworkers of SA and the SA Cabin Crew Association had “caused immense damage to the reputation, operations, and the deterioration of the finances of SAA”.
The strike, which cost the airline an estimated R50m per day, ended on November 22.
The finance minister’s latest statement comes after Flight Centre on Thursday said it would stop selling SAA tickets until “certainty” returned to the market.
Both Santam and Hollard insurance have withdrawn insolvency cover benefit on SAA tickets.
Support the airline
Gordhan on Sunday said it was the “collective responsibility as South Africans to support SAA in its efforts to restore sales confidence among its customer base and rebuild revenues in the shortest possible time”.
“We therefore reassure customers and encourage them to buy tickets with confidence.
“SAA is determined to remain open for business. Management is also committed to ensure financial sustainability going forward.”
SAA’s board and management would intensify marketing campaigns to rebuild confidence, said Gordhan. He added that the airline’s leadership would be taking “bold initiatives to increase its market share,” without providing further details.
Gordhan did not say which lenders the flag carrier is in discussions with. In mid-November the minister said that while the government as committed to saving SAA, there was no room for further bailouts.
“Even if there were funds available, there is no legal mechanism to provide funding to SAA in the current year,” he said after meeting with striking workers on November 19.
Finance Minister Tito Mboweni, meanwhile, presenting his mid-term budget in late October, announced that the state would no longer be bailing out state-owned enterprises, but would be open to providing loans that had to be paid back with interest.2 Dec 2019
Apparently, the airline agreed to a pay rise of 5.9% backdated to february after an 8 day strike. It will be paid in February 2020 – provide the airline has the cash to do so!!3 Dec 2019
Although the A340 is a lovely aircraft, and one of my favourites, it’s uneconomic and I can’t see airlines queuing up to buy them. Maybe someone with more money than sense will buy a couple of ‘cheap’ aircraft to start a new airline, then find out that the number don’t add up, and go bust.
SAA, the embattled national airline, seems to be in its death throes.
Although no official announcement has been made, indications are that government could finally jettison the entity, which has suffered losses of more than R30bn over the past 13 years.
SAA needs the bridging finance by January 18 – that is, Saturday. If it cannot secure financing by then, the airline will have to cease operations
SAA will, however, immediately relinquish its landing rights at Heathrow, which will also save the company millions of rands. It is unclear how international flights will be wound down, or how long the national carrier will still fly before it ceases operations in its entirety. Winding down the company is also expected to cost in excess of R5bn.
I’m not sure I understand the last paragraph. If ceasing LHR services will save the airline millions of rands, it’s clearly an unprofitable route (something I’ve known for many years) so why did they carry on operating it?
Sometimes the loads are good, sometimes terrible, but the route loses money because of the costs of the London office, it’s a prestige posting for the boys from the ANC, and the flight concessions have been abused by them and their cronies.16 Jan 2020
We all know that SAA can have as many billions as it wants. After all, how will all the corrupt managers get to their expensive houses in London! At the 11th hour they will have another R5billion in their account. Then in a months time they will get another R5billion. All this money could house thousands of families!16 Jan 2020
The ANC are not interested in housing thousands of families. Nor in providing them with adequate food, education, security and health care. The ANC are only interested in the ANC. SAA provides transport, employment, and contracts with lucrative backhanders for their cronies.
I suspect SAA will get another handout of
governmenttaxpayer’s money and will carry on, like Alitalia, Flybe, Tarom …….17 Jan 2020
Not exactly looking rosy, but I suppose the taxpayer will end up stumping up as usual.
Mboweni on SAA funding crisis: ‘We are still trying to find additional financing’
Jan 16 2020 11:54
Finance Minister Tito Mboweni said on Thursday that National Treasury is still trying to find additional funding for cash-strapped flag carrier SAA.
“Given the serious financial and operational challenges facing SAA, the department of public enterprise and that of National Treasury are working closely with the management of South African Airways and the business rescue practitioners,” he said.
“The National Treasury has provided financial support to the crisis … and as of yesterday [Wednesday] when I was speaking to the director-general of National Treasury we were still trying to find additional financing for South African Airways. He hasn’t briefed me about what has happened between yesterday and this morning,” said the finance minister.
Speaking to Fin24 by phone earlier Thursday morning, a spokesperson for business rescue practitioners (BRP) Les Matuson and Siviwe Dongwana said R2bn in funding from Treasury was still outstanding.17 Jan 2020
SAA uncertainty: what you need to know if you have a ticket or intend to buy one.
This well written and comprehensive article sets out rights and obligations for both parties. However it omits to mention that ZA credit card insurance will not always cover airline bankruptcy, as friends of mine found out late last year when Thomas Cook Airlines went bust.17 Jan 2020