Roberto CoelhoBy Roberto Coelho|December 14, 2021|6 Minutes|In Opinion


"Flying into a storm"

Flying a plane is like running a business, without the correct leadership, equipment, and balance you will struggle. An airline- once the pride of Africa – is finding this out the hard way.

National airlines should be a source of pride; when it comes to this, South African Airways is grounded.

In a final effort to save the remaining parts of SAA the South African government agreed to partner with the Takatso Consortium as a preferred Strategic Equity Partner to try to reinvent the airline.

Public Enterprises Minster Pravin Gordhan says, “The partnership brings together South African public and private sector capabilities to reposition SAA.”

This may sound simple, but there are many complex moving parts, according to Guy Leitch, the founder of SA Flyer Magazine.

“The Consortium are dragging it out with SAA, the longer they drag it out, the more desperate SAA becomes to rely on them.”

Naturally, the Consortium want to be able to control SAA in order to reinvent the once profitable airline. This requires tough negotiating techniques.
“Once the Consortium takes over, there will be two parallel management teams, but the SAA management team have not covered themselves in glory.”

Thus, the Takatso Consortium is expected to take control.

With the change imminent, one must understand the route taken by SAA to arrive at this point where management are incompetent, and the airline is unprofitable.

Before explaining ‘the crashone must remember how high SAA once soared above the clouds.

“SAA is a microcosm of Eskom and many other state-owned entities (SOEs).”

After 2008, many SOEs were used as the personal kitty for dozens of politically linked employees, says Leitch.

“The goal was to exp loit it [SAA] as fast and as much as possible. “

Simply comparing SAA’s profit for year end 31 March 2006 of R966 million compared to a loss of five billion Rand for the year ending 31 March 2019.

The numbers speak for themselves, a turbulent performance would be an understatement when reviewing SAA’s latest results.

“The best word to describe what happened is, malfeasance. The rot started from the head down and everyone was in it for themselves.”

Leitch compared SAA to Air New Zealand which successfully implemented a turnaround plan six years ago. Air New Zealand was also struggling, of a similar size to SAA, with a similar amount of planes and routes.

“I believe SAA could have been turned around, but it would have required an undiluted focus on profit.”

All hope is not lost. There is a possibility the Consortium will be able to turn around SAA.

Preventing success are two major constraints weighing down the airline.

Firstly, SAA has sold off much of its fleet, now inefficient and 20 years old, four engine long haul planes remain. With an outdated fight entertainment system and an expensive petrol bill, it is difficult to see how SAA willrediscover profits.

Once this problem has been sorted, the international airline market is up in the air as a result of the pandemic. IATA states international demand for air travel in October 2021 is 50% less when compared October 2019.

Leitch feels there is a further aspect ignored by SAA’s management.

“They underestimate the resentment grown by taxpayers towards SAA after the way they treated creditors, employees, especially the pilots.”

If the South African public, choose to boycott SAA it could hamper a successful turnaround.

After rising above these hurdles, the Consortium will face a highly competitive domestic market.

“The low-cost courier market is overloaded.”

Thus, SAA’s only chance for success is found in the international market.
Even with the predicted demise of Mango, the entrance of the newly formedLift, together with three other major airlines, means domestic travelers are spoilt for choice.

Hence, SAA must focus on the damaged and risky international market where global competitors provide superior services and customers are spoilt for choice.

Nevertheless, Leith believes SAA can return to profitability in the future.

The biggest problem on his mind is safety of the flights.

“There are questions being raised on SAA’s safety as internationally required pilot tests have been thrown out.”

When two pilots control the destiny of 300 passengers, there is no forgiveness for any sort of negligence.

“This is a recipe for disaster.”