South African Airways (SAA) is set to launch new routes from Johannesburg to Lubumbashi and Dar es Salaam this November, marking another step in its post-COVID-19 recovery. This expansion follows the airline’s gradual resurgence, which began three years ago after it returned to the skies.
In a media release issued on September 10, SAA reported significant growth, with the airline’s fleet increasing from six aircraft in 2022 to 16 by August 2024. Interim CEO, Professor John Lamola, highlighted a remarkable 400% rise in passenger revenue over the same period, noting that SAA now operates 15 routes, compared to the initial six at the time of its relaunch.
“We have reopened 11 outstations, including key destinations such as Mauritius, Perth in Australia, and São Paulo in Brazil. Post-COVID, our workforce has expanded from 500 to around 1,200 staff, including 140 pilots,” Lamola shared.
Steady Financial Growth
SAA has experienced steady revenue growth since resuming operations in September 2021. For the 2022/23 financial year, the airline posted a 96% increase in revenue, rising to R5.6 billion, up from R2 billion in the previous year. This growth was achieved with a fleet of six aircraft serving six routes.
For 2023/24, SAA expects a further 49% revenue increase, bringing the total to R7.3 billion, driven by an expanded fleet of 13 aircraft. The airline has emphasized that, despite delays in the release of its 2022/23 financial results due to a disagreement with the Auditor General regarding the treatment of expired ticket revenue, all audits are now on track. The airline also anticipates posting a net profit for the 2024 financial year.
Challenges and Constraints
Like many airlines, SAA faces constraints from global supply chain issues affecting aircraft deliveries. The delayed arrival of three aircraft, initially expected in 2023, has forced the airline to rely on wet-leased aircraft from Sun Express (a Lufthansa and Turkish Airlines joint venture) during the upcoming December peak season.
Shift to the Transport Ministry
In August, South African President Cyril Ramaphosa transferred shareholder responsibility for SAA to the national Department of Transport, led by Minister Barbara Creecy. The airline’s leadership has since briefed the Minister on its current operations and long-term plans.
Strategic Equity and Future Expansion
SAA’s business strategy has so far relied on revenues generated from its operations, but the question of bringing in a strategic equity partner remains. CEO Lamola acknowledged that future growth will require capital investment, with the airline exploring financing options to fund further expansion and elevate its customer service offering.
Lamola also highlighted SAA’s improving creditworthiness, which has been crucial in rebuilding the airline’s fleet. “We have a range of assets, including real estate valued at R5.5 billion, which can be leveraged to secure additional funding. Additionally, we have surplus aircraft stock that we are converting into cash,” Lamola said.
With sustainable growth, new routes, and plans for further expansion, South African Airways appears set to solidify its position in both regional and international markets.
