Debt-Free South African Airways Seeks Capital to Fuel Post-COVID Recovery and Expansion

The South African Parliament convened with Minister of Transport Barbara Creecy on Tuesday, October 22, 2024, where the Standing Committee on Public Accounts (SCOPA) pressed the government to address South African Airways (SAA) urgent need for capital funding (Parliament of South Africa).

Minister Creecy provided updates on SAA’s governance, financial performance, sustainability, and potential policy and legislative changes. SCOPA learned that SAA has cleared its debt and does not intend to seek further government funding. However, an equity investment remains essential to bring the airline to financial stability. SCOPA emphasized that new capital is crucial for SAA to regain pre-COVID-19 operational standards and fulfill its mandate to support economic growth.
 

The South African flag carrier entered voluntary business rescue in December 2019 after years of financial losses. It ceased all operations the following year. It exited administration in late April 2021 after receiving 7.8 billion rand ($550 million) in government assistance. The airline resumed operations on September 23, 2021, despite the absence of a finalized investment agreement with the proposed private partners.

 In February 2022, South African Airways signed an agreement to sell 51% of the company to Takatso Consortium, with a commitment to invest over 3 billion rands (approximately $164.71 million) to revive the airline. However, negotiations revealed disagreements over SAA's reevaluated value, which was initially set during the peak of its crisis leading to its cancellation.

SAA has made notable progress over the past two years. The airline has expanded its fleet to 16 aircraft, reopened service to 15 destinations, and grown passenger revenue by 400%. Since resuming flights in September 2021, SAA has seen steady revenue increases: from 2 billion rands (USD 111.34 million) in 2021/22 to 5.6 billion rands (USD 311.77 million) in 2022/23—a 180% surge. This upward trend continued into the 2023/24 fiscal year, with revenues reaching 7.3 billion rands (USD 406.41 million), a 49% year-on-year increase.
 

SAA, a Star Alliance member, is also enhancing its collaboration with SunExpress, a Turkish Airlines-Lufthansa joint venture (Moneyweb). Beginning in November 2024, this partnership will expand SAA’s capacity by roughly 20 additional flights daily, totaling 134 weekly flights across three routes. SAA initially signed a damp lease agreement with SunExpress for two Boeing 737-800s. 

The first of those aircraft, MSN 61183, arrived in Johannesburg on October 12, 2023. The leasing deal increases SAA's competitiveness in the local market and coincides with the airline's expansion of its regional African and international connections.