Aviation Africa: Lamola lays out re-building plan for South Africa Airways

The airline also intends growing to 28 in 2-3 years’ time, and treble the size of today’s fleet of 16 aircraft currently flying 15 routes, said John Lamola, Interim CEO of SAA, addressing delegates at the Aviation Africa Summit 2024, held in Johannesburg on 16 September.

Lamola disclosed that SAA will re-build some of its long-haul network over the coming years, adding to the Johannesburg to Perth and Sao Paulo services that the carrier has resumed over the past year.

“Within our long-term plan is to do routes to the eastern coast of the USA and into Europe, thereby being able to diversify our income stream across the various regional markets as well as global,” said Lamola.

Having survived near bankruptcy, which caused the carrier to cease flying and enter a business rescue process in December 2019, SAA returned to the skies on 23 September 2021 with just six aircraft and six routes.

Lamola explained that SAA will forge ahead as a 100% state-owned entity following the government’s termination of a deal with a strategic equity partner in March.

It is important for South Africa to have a flag carrier and a national player offering competition in the continent and domestically, he said.

According to Lamola: “South Africa, as a country in Africa, has to execute and defend its strategic economic and other related interests, where we have positioned ourselves as a long-haul airlift that connects South Africa with its trade partners and tourism market.”

Lamola said that “the building blocks are there” to establish a sustainable, full-service network carrier, albeit significantly smaller than it was previously.

The blocks include “a debt free balance sheet and an encumbered valuable property portfolio upon which we are rebuilding,” he explained.

“The airline still has a brand that we believe we can build on and what is most crucial in this world where we are competing for skilled labour, we have seasoned pilots, we have seasoned aircraft mechanics, and we have seasoned airline managers who are still willing and ready to help us rebuild South African Airways into the world-class airline that we are working towards.”

Another building block is being part of the Star Alliance, allowing SAA to benchmark itself against leading carriers, he said.

Although SAA has been through a “difficult time” it is celebrating three years since it restarted operations and is looking ahead, said Lamola.

The carrier’s workforce was cut from a pre-bankruptcy level of some 5,000 to 700 when it restarted. “We are very pleased that we're able to even increase our employment offering where today we have about 1,200 plus employees [at SAA the airline],” he noted.

The airline’s executive team has been working on three scenarios as the strategic equity partner talks unfolded. The first seeing that deal go through, the deal being delayed, and the deal failing, said Lamola.

“When the private equity partner investment didn't materialize, there was already a plan that had been developed, which we are implementing currently,” said Lamola.

If the equity partner deal had gone ahead “we were expecting SAA to be catapulted into a different dimension with external funding,” he noted.

Now Lamola’s team has developed a “bankable business plan to approach capital and debt markets to raise money, and it has revisited its fleet and network plan bearing in mind constrained working capital.”

One of the considerations in its fleet planning is whether to deviate from its current all-Airbus fleet. It is currently operating 12 Airbus A320s, two A330s and two A340s but has been frustrated in attempts to grow its fleet with delays causing the late delivery of three aircraft.

“We are saying that as a national carrier in the world that we live in, it is a risk mitigation strategy to have some modicum of a mixed fleet type, with all the costs that come with that,” said Lamola.

In the short term, to grow its fleet in a tight market, SAA is finalising an “innovative partnership” with European carrier SunExpress to exchange aircraft on a seasonal basis. “We will be having them as our partners providing the aircraft we need to meet the peak season in our domestic market,” he stated.

South African Minister of Transport Barbara Creecy reiterated the cabinet’s decision to support the re-building of SAA and the country’s desire to have a flag carrier, speaking to the media on the sidelines of Aviation Africa where she gave a keynote address and opened the event.

She also confirmed the importance of appointing a permanent CEO and that having full time leadership is key to taking the airline forward.

The search for a full-time CEO is underway but no official date has been given for when this will be announced.