Guy Leitch

Much was hoped for from SAA Version 2. The government made promises about no more bailouts, including no guarantees for debt and aircraft leases. Yet Minister Pravin Gordhan has now been given a further R1 billion for SAA – for “business rescue purposes.”

The magic bullet for SAA was supposed to be the sale of a majority shareholding to the Takatso Consortium. This was supposed to provide the capital and skills to run the airline without yet more taxpayer money.

It is increasingly likely that the Takatso deal will never happen. In June it will be three years since the deal was announced and we are still waiting for the SAA Act of Parliament to be repealed. In his latest delaying tactic, Gordhan has withdrawn the SAA Bill from Parliament – so yet again the Takatso deal stalls.

Only once the SAA Act is replaced, will government start the time-consuming process of applying for amended operating licences. If government was genuine committed to selling off the airline, these steps would have been completed years ago – while it was grinding through the Competition Commission and Tribunal.

There are also unanswered questions about where Takatso will get the promised R3 billion from – and even whether it promised the funds at all.

Without Takatso, or government guarantees and subsidies, the airline remains undercapitalised, under-skilled and uncompetitive. It cannot lease, or buy, new cost-efficient airliners for its long-haul routes. Instead, it relies on an obsolete 25-year-old Airbus A340 to compete against modern twin-engine airliners which are 20% more efficient and have far better in-flight entertainment.

Under Business Rescue, the headcount was slashed from 5000 to just 1000, and at first the new streamlined and debt-free company made taxpayers happy by claiming that it had made a profit and was cash positive.

But it was a short lived honeymoon. For 2022 the airline produced a R122 million loss – and that was on a paltry R3.6 billion revenue, just 14% of pre-Covid levels. By 2023 the world’s airline industry had recovered to 95% of its pre-Covid levels, yet SAA remained the dunce of the class – and an embarrassment to all South Africans, apart from the tone-deaf government. For the 2023 financial year, the SAA Group loss had swollen to R761m, which was not as bad as it might have been without the quiet star of the show; Air Chefs, and a miraculous contribution from the defunct Mango Airlines. In 2024 SAA has reported a loss of R776m for just 9 months, and thus a probable loss of R1 billion for the year.

The government is deceiving its taxpayers. From its delaying tactics, it can only be concluded that it has no intention of completing the Takatso deal. And so SAA will continue to struggle along, with obsolete aircraft, and unable to attract quality management. The losses will continue. Pravin’s promises are meaningless.