Could South African Airways Be Sold?

South African Airways (SAA) continues to face financial difficulties despite several government attempts to turn around its fortunes. Therefore, the National Chairperson of the African National Congress Geese Mantashe has recently called for the government to sell the state-owned flag carrier.

SAA Airbus Aircraft
Some government officials are becoming frustrated with SAA’s misfortunes. Photo: Airbus

Cash flow concerns

South African tech news site MyBroadband reports on how the ANC chairperson and energy minister feels that the firm does not cater for the working class of the country, despite the amount of money the state pumps into it.

“If it is always asking for money and it does not fly the working class but only elites… [subsidising them] is not subsidising the working class,” Mantashe said.

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“The only ones who are ferrying the working class are the buses and the taxis. If we were giving this money to the buses, taxis, and trains, you would have a case.”

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The politician continued on to state that the government can’t continue to throw money at the airline every month. He is frustrated that R3.2 billion (US$212 million) was given to the airline in December, even though it is still severely struggling. Mantashe states that in order to survive, it must make money. Therefore, a businessperson should take it on to steer it in the right direction.

SAA Airbus
A sale of the airline could be the only way to help it become healthy again. Photo: Airbus

Cost-cutting measures

Earlier this week, SAA shared that, as part of its restructuring plan, it will have to cut various routes. Along with this, it is continuing with its plan to sell several Airbus A340 aircraft as part of its fleet modernization.

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All the money-saving initiatives and cash injections put in place haven’t seemed to put the airline back on track. Therefore, a sale could be a viable solution for the struggling firm. It is currently losing out on customers from several routes. If the situation doesn’t change, even more flights could be cut, further reducing the amount of revenue.

If there is no overhaul, the airline could be stripped to its bare bones while no change in fortune is achieved. Just like how South Africa’s government is struggling with its national carrier, the government of India is also finding it tough to handle Air India’s financials.

The state has been talking with several companies to take the company off its books. Most recently, the Tata-Singapore Airlines group has expressed its interest in the operator.

Air India Boeing 747
The state-owned flag carriers of both South Africa and India are facing similar situations. Photo: Getty Images

Party disagreements  

However, President Cyril Ramaphosa has a different view from Mantashe when it comes to SAA’s ownership. He believes the airline is an economic enabler and is eager for it to remain a successful carrier for the country. He is determined not to close the firm down but wants it to be revamped to regain profitability. Nonetheless, a huge change is needed for the airline to return to the heights that Ramaphosa wants it to reach.

It’s understandable that the government would want to keep control of one of its key assets. However, the right decision needs to be made to ensure that the operator survives. At this point, it seems to be more of a liability than an asset.

Do you think South African Airways could be sold? Let us know what your thoughts are in the comment section.

Simple Flying reached out to South African Airways for comment on its situation but did not hear back before publication. We will update the article with any further announcements.

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Gerry S

I have not seen one comment here saying that SAA should not be sold. Including mine. Ethiopian ought to jump all over this. Before Qatar does.

Paul

What is there to sell? The long haul A340s are ready for the scrap yard. Leaves you with a couple of A320s and A319s

Chuck

Agree with Paul. Best to dissolve and start all over. Keep the A350 (long haul), and A320 series (medium haul). The A340s sold as scrap. The real problem is the politicians (ie: handouts, corruption, and graft) are in the way!!

Victor

Only if the government keep their hand off. That is the only way SAA will be profitable. Let the the-qualified people work their magic.

Paul

Too late for that now. Instead of going on strike for more money the unions should have gone on strike years ago to enforce new management. Instead they happily just took what the government was pouring in and didn’t dare to question it – too bad for them!

Gerry S

Leaves you also with their airport slots and routes.

Paul

Airport slots, yes. But even then, take FFM for example. SAA leaves pretty late at night when slots are cheaper and easier to obtain. Routes are pretty irrelevant because with the exception of the USA transatlantic routes (on which SAA virtually has a monopoly) the competition is so strong there are enough other airlines that would swallow up the passengers in one gulp. It is not like one cant find seats on flights to SA….. SAA is a bubble that does not even have enough air to keep it floating. Mismanagement and incompetence over the last 8 years have taken… Read more »

Charles Bolland

The airline is useless, it will close soon. Anyone working for SAA should look for another job.

Alfred S Goliath

The Minister must remember that SAA are bringing tourists to South Africa, who put money into the SA economy, while the working class he rant about is only expecting from the Government to deliver.

Paul

There are enough other options to bring tourists to SA. There have never been more airlines flying to SA than currently. SAA only holds a monopoly on the USA route as they were the only airline that flew direct between the 2 continents. Once SAA are not around the monopoly will also dissolve and make room for other airlines. The only people that need SAA are the employees and the Government (as a status symbol). In order to earn a status symbol you have to be able to sustain it and that is not possible anymore. Now let’s all sing… Read more »

Mark

Won’t the debtors have to be paid once liquidated. An Government does not have that kind of money.

Keegan

I would like to buy it, take over the responsibility as a private company. Supporting SAA and its assets. To deliver a connection between elite and working class. To grow diversity and to enable all the profit margins possible as well as to get rid of unnecessary expenses. A perfect example would be Tom Ford.