South African Airways – once a giant of African aviation – is back in the intercontinental market, but there are still doubts about its financial viability.
It had disappeared from our skies altogether in September 2020, having fallen victim not just to Covid but also another disease that has plagued some other state-run carriers – corruption and mismanagement.
It may be on the verge of a sale that would see a prate consortium take a majority share in the business.
However, its handling of finances has recently come in for severe criticism by the country’s public spending watchdog.
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In a scathing report, Auditor-General Tsakani Maluleke said that the financial statements SAA had drawn up dating from the 2018-19 financial year lacked credibility. The airline recorded losses in the four years from 2018 of a staggering $1.2bn (£1bn).
But interim chief executive officer (CEO) John Lamola said this did not reflect the current position of the airline, which is under new management.
He said the situation had improved in the most recent financial year, with the airline now “running on financial resources generated from its own operations”.Towards the end of last year, in a sign that SAA wants to be a major player again, it reopened its routes from Cape Town and Johannesburg to São Paulo, Brazil. And now it is selling tickets for flights to Perth, Australia.
These are the airline’s first long-haul destinations in three years. It did return in September 2021, making a surprise profit serving a limited number of African destinations after coming out of voluntary business rescue.
This was a process which saw the airline placed under the temporary supervision of experts who were asked to return the company to financial health. They pared back the fleet from 44 aircraft to six and focused on the African market.
After resuming short-haul flights, SAA has been celebrating milestones including the airline’s first black African female flight crew First Officer Refilwe Moreetsi (L) and Captain Annabel Vundla.
Now it is aiming further afield.
“The choice of São Paulo was as a result of a very meticulous economic and market research analysis,” Mr Lamola told the BBC.
He added that the intercontinental flights hoped to enhance trade and tourism ties between the two countries as members of Brics – an expanding group of emerging economies originally comprising Brazil, Russia, India, China and South Africa.
Prior to the Covid pandemic, SAA operated five other intercontinental routes from Johannesburg to destinations including New York and Hong Kong.
That route encapsulates the prestige that used to accompany the airline. Once the largest in Africa, SAA faced profound challenges in the last decade.
“South African Airways notoriously has gone through a process in South Africa called ‘state capture ‘, where there are well-recorded incidents of corruption that characterised the life of the airline,” said Mr Lamola, adding that investigations were ongoing.
An official inquiry into state capture released at the beginning of 2022 showed that the airline had been wracked by corruption between 2012 and 2017. As a result of the mismanagement, SAA was forced to rely entirely on government financial assistance over a 10-year period to stay afloat, a situation made worse by COVID-19.
“In that period… the government had to put in some 40bn rand ($2.2bn) into SAA,” said Public Enterprises Minister Pravin Gordhan.
It had been run at a loss since 2011.
The national carrier was placed under voluntary business rescue in 2019 to protect it from bankruptcy.
