SAA looks to Takatso to regain lost market share

SAA is expecting a final draft external audit report at the end of May for the four years: 2018/19, 2019/20, 2020/21 and 2021/22. Picture: David Ritchie/African News Agency(ANA)

SAA is expecting a final draft external audit report at the end of May for the four years: 2018/19, 2019/20, 2020/21 and 2021/22. Picture: David Ritchie/African News Agency(ANA)

Published May 18, 2023


National airline carrier South African Airways (SAA) yesterday told Parliament it's slipping to a market share of only 16% of the domestic market, with a fleet of seven aircraft against competitors which have more than 33 in their fleets.

This means SAA is losing lucrative routes in Africa to its rivals as well as not having inter-continental flights for passengers to redeem their voyager miles.

These were some of the reasons the carrier desperately needed the on-boarding of the Takatso Consortium as a majority stakeholder.

Updating the Portfolio Committee on Public Enterprises on its business operations and how the delay of the finalisation of the strategic equity partnership is affecting their business, SAA said: ‘’The on-boarding of the SEP (strategic equity partner) needs to happen as soon as possible through regulatory approvals in order for SAA to regain market share’’.

The airline, which relaunched after the Covid-19 lockdown in September 2021 with six regional and two domestic routes, had expanded its offering to 12 destinations, 10 regional and two domestic.

This is as it focuses on 20 destinations by March 2024, one intercontinental, 16 regional routes, and at least three domestic pathways.

SAA said its operations, measured per each route that was operated (C4), would be profitable, both passenger and cargo revenue would exceed budget, year-to-date earnings before interest depreciation tax and amortisation (Ebitda) would be positive, there were forecasts to post-group net profit, and the current cash position was positive.

The airline is operating on an interim board and executive structure with the current interim board, appointed last month, headed by Derek Hanekom, is to hold the fort until the Takatso Consortium takes over as majority partner, possibly after approval by the Competition Tribunal.

Professor John Lamola will continue to serve as Interim CEO and as a Non-Executive Director on the interim board.

Subsequent steps following the Competition Commission's conditional approval, SAA said, included confirmation of the process and requirements set forth by the Competition Tribunal to ensure compliance and a smooth transaction, obtaining  the necessary permissions to transfer ownership and management of the national carrier; ensuring all conditions precedent were either fulfilled or appropriately waived to maintain the legality and integrity of the transaction in the fulfilment or Waiver of Conditions Precedent: Prior to the transfer of shares.

The airline said it was readying to execute the legal transfer of shares from the current shareholder to a new strategic equity partner with all necessary documentation, set up new governance structures for effective management and decision-making under the SEP, which might involve forming a new board of directors and executive leadership and Collaborate to develop and implement strategies for the national carrier's growth and development, focusing on areas such as operational efficiency, market expansion, and customer service improvements.

The airline said its subsidiaries, including SAA Technical, had its restructuring and business process optimisation completed, and the business was now profitable.

Airchefs, the catering division of the airline, was undergoing a four-year external audit, with restructuring refinement continuing, while the last two months had seen it turn some profits.

Mango is the only unfinished story as it is undergoing the four-year external audit under Business Rescue process monitoring and management with legal challenges with PFMA Section 54 on preferred SEP bidder.

‘’Premium Lounge partnership with Discovery Bank and Investec Bank profitable, cargo terminal lease and management contract with Menzies effected since December 2022 and partnership with Kenya Airways developed from codeshare to co-operation on cargo operations,’’ it said.

SAA is expecting a final draft external audit report at the end of May  for the four years: 2018/19, 2019/20, 2020/21 and 2021/22.

‘’We are cognisant that producing SAA group financial statements for four financial years, having them audited simultaneously starting from August 2022 to complete in March/April 2023, was a mammoth task. The Auditor-General (AG) commenced the audit of the SAA group for these years in August 2022. Some of the years relate to the difficult years when SAA was confronted with many challenges,’’ SAA said.

It expects the business rescue processes at both SAA and Mango to further complicate the audit, as SAA has not had a clean audit in many years. This as auditors qualified their opinions on some of the matters and disclaimed their opinions on others.

“It will take a number of years to clear the audit findings, particularly as there has not been sufficient time between audits to address these,” SAA said.