South African Airways (SAA) is not only South Africa’s national flag carrier but also their largest airline. However, it is currently reaching out to the government for extra funding, in a desperate bid to renew its aging fleet.
The airline’s CEO, Monwabisi Kalawe, has said; “We are doing this replacement programme over a period 10 to 15 years and expect the first two planes to arrive somewhere in 2017/18.”
The programme Kalawe speaks off will involve replacing up to 30 planes in a long-haul fleet overhaul, which will cost around 60 billion rand ($5.2 billion). The airlines aim is to create a sustainable fleet, by ensuring the planes are more fuel-efficient.
In 2013, SAA reported an operating loss of 991 million rand ($92 million). It has put these figures down to rising fuel costs, and ‘unprofitable routes.’
Losses such as these, has caused great concern to Public Enterprises Minister Lynne Brown, who has said; It has become clear to me that simply extending state guarantees to the airlines is an inadequate response to the challenge and an extraordinary intervention is required to put them on a sustainable footing and to support their turnaround efforts. It might mean we have a different business model that rationalizes the two companies. SAA is a national asset, it’s a strategic asset.”