At its annual general meeting on 20 November 2024, national flag carrier South African Airways (SAA) reported a net profit of R252 million for the 2022/23 financial year.
It also posted a group revenue increase of 183%, from R2 billion in the prior year to R5.7 billion in 2022/23.
Additionally, SAA made a final payment against legacy debt during the reporting term, leaving the airline without interest-bearing debt for the first time in years. As a result, it now boasts a positive equity of R4.7 billion.
This timeframe is the first fiscal period of commercial operations since SAA exited business rescue and restarted operations in September 2021.
More notably, it is the “first time that SAA has seen a positive bottom line since 2012,” said SAA Interim CEO Professor John Lamola, which was achieved with only six to eight aircraft and nine routes.
The performance is particularly commendable given the challenging global aviation environment of the time combined with uncertainty around the future of SAA with a strategic equity partner.
“The International Air Transport Association (IATA) Annual Report 2023 notes tough economic times for air transport worldwide, with the pressures of post-Covid recovery, persistently high interest rates, the war in Ukraine, and the highest oil (and therefore jet fuel) prices impacting airlines’ sustainability,” said Lamola.
Onwards and upwards
Since the 2022/23 period, SAA has seen consistent growth with the number of aircraft in its fleet increasing two-fold, with seven more planes rented for delivery during the financial year 2025/26.
Furthermore, it launched its first intercontinental route to Sao Paulo, Brazil in October 2023.
The total number of routes in the SAA network has also jumped to 16, encompassing popular global destinations such as Perth, Australia, as well as a number of African stops including the Democratic Republic of Congo, Ghana, Mauritius, Nigeria, Zambia, and Zimbabwe.
“In the process, SAA has been a conscientious creator of jobs,” Lamola stated.
Between SAA and its subsidiaries, Air Chefs catering and SAA Technical aircraft maintenance facilities, the size of the staff has steadily grown from 800 to the current total number around 2,000, with 140 pilots counted among them.
“These pleasing results of the 2022/23 financial year are emblematic of the hard and careful work that went into the relaunching of SAA as a reliable airline and globally admired brand. This has put SAA on a path to financial sustainability without reliance on the fiscus,” concluded Lamola.
“We have now entered a period of consolidation of the current route network and fleet strategy and are looking to the next phase of quantum growth as SAA renews its fleet to elevate its customer offering, open more intercontinental routes, and pursue its environmental sustainability goals.”
As part of the next phase of growth, SAA is looking to sell its landing slots at major international airports as a way to finance a R1-billion shortfall.
Speaking to Parliament’s Standing Committee on Public Accounts, Transport Minister Barbara Creecy said the state-owned airline will no longer have to rely on government handouts to stay in the skies, but that it still has a significant funding gap due to failed negotiations with the Takatso Consortium that would have seen the private company take a 51% stake in SAA.
Takatso was supposed to invest R3 billion in SAA during the 2023/24 financial year as part of the takeover, however, the deal’s collapse means that SAA had to postpone its expansion plans and adjust its corporate strategy.
As such, SAA is assessing the viability of selling one of its two landing slots at London’s Heathrow Airport in the United Kingdom – one of the busiest airports in the world.
These slots are currently being leased to British and Qatar Airways as SAA does not have a London route at present.
The contract with Qatar expires in March 2025, which would allow SAA to sell one slot whilst continuing to lease the other to British Airways.
Slots at high-traffic airports are in incredibly high demand and historic sales of these assets have generated prices upwards of 10 digits.
The valuation of SAA’s Heathrow slots remains to be determined, but other air carriers have shown interest in buying the slot, said Derek Hanekom, SAA interim board chair.
“Even when we were flying, when we had many routes and many flights to London, we were only using one of these landing slots,” said Hanekom.
“The possible disposal of one of the landing slots would obviously be a useful capital injection in the enterprise.”
Aviation analyst and editor of SA Flyer Guy Leitch has criticized the proposal to sell SAA’s Heathrow slots, labeling it as a quick-fix solution that will hurt SAA’s interests in the long run.
He likened selling the landing spots to “selling off the family silver,” and suggested it would be better for SAA to retain these assets as it is already short of long-haul flight options, many of which have been snapped up by competitors.
Leitch also warned that airport slots aren’t worth as much as they were pre-Covid, meaning the sale may not generate the funds that SAA is hoping for.
To safeguard the future of SAA, Creecy said that government is still open to signing a private equity partner, which would allow the airline to continue opening new regional and international routes.
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