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American 767
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SAA is on the verge of liquidation.

Sat Aug 27, 2016 3:31 pm

Hi everyone,

SAA's future doesn't look too good. They have to trim their long haul network by cutting routes, such as JNG-KNG. It says in the article that the only four international destinations they would keep would be LHR, FRA, JFK and IAD. If they end up keeping, in Europe, only LHR and FRA, I wouldn't be surprised.

https://airwaysmag.com/airlines/south-a ... ays-brink/

Ben Soriano
 
DDR
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 3:41 pm

I don't know much about SAA but it seems it would be important for the country to have a viable national carrier. Has the airline ever been profitable? If so, what changed? I know geographically they are challenged by being so far south, but Qantas and Air New Zealand do ok.
 
usflyer msp
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 4:35 pm

DDR wrote:
I don't know much about SAA but it seems it would be important for the country to have a viable national carrier. Has the airline ever been profitable? If so, what changed? I know geographically they are challenged by being so far south, but Qantas and Air New Zealand do ok.


Actually, SAA;s big problem is government interference. They are forced to launch unprofitable routes like JNB-PEK for geo-politcal reasons and then can't form a coherent business strategy because the government replaces their CEO seemingly every 6 months. It is a sad situation...
 
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LeCoqFrancais
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 5:01 pm

SAA can be saved and could become a viable airline with great service and network, however for that to happen it must be privatised you simply can't go any other way. If SAA could get privatised and rescruture itself, I see a lot of potential.
Here is my fleet image of a viable SAA:
Regional network: CS100 and Q400
Domestic network: CS100, CS300 and maybe if needed A320NEO (a CS500 would be better)
International/Long-Haul network: A350 or 787, few routes need something larger then A35J or 78J.
Mango network: CS100 and CS300
 
B-HOP
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 5:05 pm

Hong Kong Civil Aviation Department are still waiting for SAA to submit their financial report by early next month, if that weren't submitted by then their license would be revoked, so it would not be surprised if they are leaving Hong Kong, real shame since SA have been serving HKG since 1972

Kev
 
Cointrin330
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 7:09 pm

The article mentions SAA having to potentially cut its long haul network to just JFK, IAD, FRA, LHR. Interesting. I think this one has a lot more to do with government intervention/ownership than anything else. As it is not a private entity, I wonder if they will attract foreign investment (i.e. Etihad, Emirates, or some other deep pocketed airline)?
 
metroline2006
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 8:06 pm

Surely SAA is prime investment opportunity for IAG. With BA flying 2-3 daily LHR-JNB and 2 Daily LHR-CPT and with BA's Franchise partner ComAir I think it would really work. The SAA problem has been zero direction. When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.
 
usflyer123
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 8:24 pm

usflyer msp wrote:
DDR wrote:
I don't know much about SAA but it seems it would be important for the country to have a viable national carrier. Has the airline ever been profitable? If so, what changed? I know geographically they are challenged by being so far south, but Qantas and Air New Zealand do ok.


Actually, SAA;s big problem is government interference. They are forced to launch unprofitable routes like JNB-PEK for geo-politcal reasons and then can't form a coherent business strategy because the government replaces their CEO seemingly every 6 months. It is a sad situation...


also PER-JNB is served because of ties between the large south african community in perth and the country's interests, but it really dosent seem like a profitable route...
 
DDR
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 8:48 pm

metroline2006 wrote:
Surely SAA is prime investment opportunity for IAG. With BA flying 2-3 daily LHR-JNB and 2 Daily LHR-CPT and with BA's Franchise partner ComAir I think it would really work. The SAA problem has been zero direction. When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.


How much more fuel does an A340 take than a 777. Serious question, I have no idea. Could they replace the A340 with A330 aircraft, or would they not have the range?
 
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LeCoqFrancais
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 8:58 pm

metroline2006 wrote:
Surely SAA is prime investment opportunity for IAG. With BA flying 2-3 daily LHR-JNB and 2 Daily LHR-CPT and with BA's Franchise partner ComAir I think it would really work. The SAA problem has been zero direction. When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.

I've read numerous times on here that the 777 and other current long-range twins had limitations when flying out of JNB and that this was the reason why SAA needed the A340s.
 
Planesmart
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 8:59 pm

They have previously had discussions with EK, presumably after a QF-style partnership. Unfortunately, they don't have the same fleet, products, management, funding or political will to bring to the table, at present. Wouldn't be surprised if EK offered the QF package, subject to the Government putting them onto a stable financial footing. There is a queue of airlines and Governments wanting an EK/QF deal, especially in Asia and South America.
 
NichCage
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 9:36 pm

South African Airways should at least keep LHR and FRA in Europe. I've heard somewhere that the Johannesburg-Munich flight is profitable. Is that true? Three destinations in Europe should work fine.

Honestly, North America is not profitable for SAA. JFK should stay, while IAD should get cut. If United ends the IAD hub, then SAA has no chance.

Now, moving on to Asia. Mumbai got cut, and now Hong Kong is the only destination left. Hong Kong struggles, so I wouldn't mind to see the route to get cut.

I heard Perth was profitable somewhere. Is that true?

Last thing I need to say. I heard somewhere that the only three profitable routes for SAA where Frankfurt, Munich, and Perth. Why do they want to cut Munich if the route makes a profit?
 
metroline2006
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Re: SAA is on the verge of liquidation.

Sat Aug 27, 2016 11:19 pm

SAA once flew 3x 747 3/4 to LHR 2 to JNB 1 to CPT yet BA flies more and more and last few years 2 A332 against BA 2 A380 or 1 A380 2 744. To live u need to change. Better package all round. But if it fails could we see ComAir take over with IAG funding without corruption and just plain waste.
 
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TWA772LR
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:06 am

Would IAG be interested in investing in SAA and integrating it with Comair? That would allow oneworld to control almost the whole southern hemisphere.
 
zkncj
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:32 am

NichCage wrote:
.
I heard Perth was profitable somewhere. Is that true?


Seems to have been an common thing that has come up in the past about PER, although aircraft was the main issue with this route.

NZ recently announced that is was building an PER Lounge, and currently has allot of passengers that connect to the SA service in PER. Maybe they are planning to take over the route from 2017 in the an joint venture?
 
Viscount724
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:43 am

NichCage wrote:
South African Airways should at least keep LHR and FRA in Europe. I've heard somewhere that the Johannesburg-Munich flight is profitable. Is that true? Three destinations in Europe should work fine.



I disagree. SAA should eliminate all their longhaul routes and focus on their regional routes where they have some hope of operating profitably and can feed other longhaul carriers serving South Africa. But as long as the airline is government-owned that's unlikely to happen.
 
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kitplane01
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:48 am

metroline2006 wrote:
Surely SAA is prime investment opportunity for IAG. With BA flying 2-3 daily LHR-JNB and 2 Daily LHR-CPT and with BA's Franchise partner ComAir I think it would really work. The SAA problem has been zero direction. When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.


The South African government would not sell a controlling interest to anyone, and especially a foreigner. IAG does not want to invest in an airline controlled by the South African government.
 
DeSpringbokke
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:52 am

SAL is a mess, just like most of ZA's parastatals. In an ideal world, the ZA Government should just let SAL go broke and fix itself without any interference from the ZA Government. But, of course, we do not live in an ideal world and ZA's Government abuses SAL for ANC favours. SAL is the epitome of what's wrong with ZA. All of the political stuff aside, the entire A340 fleet should be parked, which means JNB-JFK gets axed in favour of a technical stop at SID. In the meantime, take delivery of the A330-300s and use them on Europe, PER, and one stop flights to JFK/IAD. SAL should seriously consider leaving Star in favour of One World as has been suggested. We can only dream the ZA Government allowing SAL to be acquired and fully integrated into IAG. Long term, it would translate into stability and profitability for the airline. However, this is all contingent on ZA's economic growth. Should economic growth continue to be mediocre, SAL will never have a chance to become profitable. SAL is the victim of bad geography, bad management, and a bad economy. If SAL were to become profitable long term again, then they can consider acquiring the 280 tonne MTOW version of the A350-900 for nonstops to JFK/IAD/MIA.
 
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LeCoqFrancais
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:52 am

Even if South Africa is very well served internationaly from airlines outside South Africa, I believe SAA should keep a handfull of Long-Haul routes, New-York, London and Frankfurt being key cities with Hong-Kong being a decent idea as well. That being said, I believe that its only feasible for SAA to keep a long-haul network if it gets a better fleet, in the shape of the Airbus A350 or Boeing 787, I simply don't see any route (exlcuding London perhaps) that would need a 777 size plane.
That being said, having both the Airbus A320CEO and Boeing 737NG is not a good economical desicion, it should stick to just one of the two family or change to the Bombardier CSeries. If you really want to have both the Airbus A320CEO/NEO and Boeing 737NG/MAX then use one for your mainline ops. and the other for your Mango ops.
My dad told me that the DeHavilland DHC-8-402Q had issues in South Africa, is that true? And if so, what issues are we talking about and are these issues just for the Q400 or dose the ATR have them as well? Because I really believe in the economical advantages of using a turboprop on shorter routes in the SAA network.
 
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kitplane01
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:53 am

DDR wrote:
I don't know much about SAA but it seems it would be important for the country to have a viable national carrier.


I understand why they need air service, but why do they need a flag carrier? Speaking of international travel (and that's almost all the $$$), if SAA ended tomorrow the other international airlines would pick up the extra traffic quickly and easily.
 
SexyAdonis
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 9:07 am

OK boys and girls .. this is the way I see it. I have always insisted that South African Airways is in the WRONG alliance. The first thing that needs to happen is for the South African government to set-up an interim efficient management that can prepare the company for privatization. IAG then comes in and buys the company up then the following happens:

(1) SA leaves STAR ALLIANCE
(2) SA joins oneworld
(3) The long-haul international network is reduced to the following 5 core routes:

- JNB/JFK/JNB = DAILY codeshared with American Airlines (1x daily on SA metal)
- JNB/GRU/JNB = DAILY codeshared with LATAM (1x daily on SA metal and 3 x weekly on JJ metal)
- JNB/LHR/JNB = DAILY codeshared with British Airways (2x daily on BA metal and 2x daily on SA metal)
- JNB/HKG/JNB = DAILY codeshared with Cathay Pacific (1x daily on CX metal initially and then when finances recover SA can add a service 1x daily on its metal)
- JNB/SYD/JNB = DAILY codeshared with QANTAS (1x daily on QF metal initially and then when finances recover SA can add a service on its metal)

In addition to the above 5 core long-haul routes the following secondary routes can be kept or added as the South African economy recovers:
- MIA/JNB/MIA = DAILY codeshared with American Airlines (1x daily on AA metal)
- MAD/JNB/MAD = DAILY codeshared with Iberia (1x daily on IB metal - this route is ideal to cover the EU and avoid backtracking from LHR)
- KUL/JNB/KUL = DAILY codeshared with Malaysia Airlines (1x daily on MH metal - this route subject to the recovery of MH)

JFK: Justifies itself with O/D and covers connections to/from the Northeast plus Toronto/Montreal
MIA: Justifies itself with O/D and covers connection in the Continental USA plus Central America and the Caribbean
GRU: Covers connections in South America
LHR: Justifies itself with O/D and covers the UK and Ireland
MAD: Covers connections in the European Union
HKG: Covers connections in north-east Asia (Japan, Korea, etc) and China
SYD: Justifies itself with O/D and covers connections in Australia and New Zealand

Unfortunately both Malaysia Airlines (MH) and SriLankan (UL) are in "contraction mode". It would be great if one of them could establish a CMB/JNB/CMB or KUL/JNB/KUL daily service to cover connections to/from India and Southeast Asia.

Finally divesting Mango from Comair must take place, so Mango stands as a low-cost on its own right and provides completion in the domestic market to keep the fares at bay. Then a full merger of Comair into SA should happen with Comair ending its franchise agreement with British Airways.

Privatization, IAG and oneworld are the best way forward for South African Airways.

Sexy Adonis
oneworld revolves around you.
 
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LeCoqFrancais
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 10:57 am

SexyAdonis wrote:
Finally divesting Mango from Comair must take place, so Mango stands as a low-cost on its own right and provides completion in the domestic market to keep the fares at bay. Then a full merger of Comair into SA should happen with Comair ending its franchise agreement with British Airways.

Your post made some theoretical sense until this part. Why are you talking about Comair? Mango is fully owned by SAA and is there version of Air Canada Rouge, Comair has nothing to do with Mango. Since Comair is a completly seperate airline that operates under the Kulula and British Airways franchises I simply don't see why they are being discussed in this thread as part of the recovery plan of SAA, unless they would arrive and purchase SAA.
 
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Polot
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 11:16 am

If Comair was smart (and then seem to be pretty levelheaded) they wouldn't go anywhere near SAA. Getting involved in anyway would just end up dragging them down too.
 
ben175
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 11:17 am

SexyAdonis wrote:
SYD: Justifies itself with O/D and covers connections in Australia and New Zealand


You're just completely forgetting about PER - one of the most, if not the most important link with South Africa in the region. You'd upset a huge diaspora if you forced them to fly to JNB via SYD or via HKG!

I believe the current system works now - funnel all Australian pax through PER and connect them on VA (or in the future, QF again) services to the Eastern states. There's a reason PER is now the only port in Oceania that South African serves.

The only way I ever see SA dropping PER is if, as mentioned above, they start a JV with NZ who launches an AKL-PER-JNB service with a 789. The only other alternative is if VA takes over the route - I've heard a rumour they will be acquiring more A330's from the recent HNA group investment. Could be a good way to utilize the A330 fleet.
 
RobertS975
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 11:48 am

Just in terms of understanding the degree of JNB to USA market, how does DL do on its JNB-ATL route? I have had the impression that it does well, but would love to hear from anyone who really knows...
 
evanb
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:06 pm

ben175 wrote:
The only way I ever see SA dropping PER is if, as mentioned above, they start a JV with NZ who launches an AKL-PER-JNB service with a 789. The only other alternative is if VA takes over the route - I've heard a rumour they will be acquiring more A330's from the recent HNA group investment. Could be a good way to utilize the A330 fleet.


There is no way an A330-200 could make JNB-PER. The ETOPS diversion would make the route too long given the payload restrictions out of JNB.
 
evanb
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:08 pm

Everyone seems to suppose that SAA's challenges are with the fleet, alliances and route network where in fact all the challenges are political and governance related. If they sort out the political interference and governance mess they could be a decent carrier.
 
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SAAFNAV
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:21 pm

SexyAdonis wrote:
OK boys and girls .. this is the way I see it. I have always insisted that South African Airways is in the WRONG alliance. The first thing that needs to happen is for the South African government to set-up an interim efficient management that can prepare the company for privatization. IAG then comes in and buys the company up then the following happens:

(1) SA leaves STAR ALLIANCE
(2) SA joins oneworld
(3) The long-haul international network is reduced to the following 5 core routes:

- JNB/JFK/JNB = DAILY codeshared with American Airlines (1x daily on SA metal)
- JNB/GRU/JNB = DAILY codeshared with LATAM (1x daily on SA metal and 3 x weekly on JJ metal)
- JNB/LHR/JNB = DAILY codeshared with British Airways (2x daily on BA metal and 2x daily on SA metal)
- JNB/HKG/JNB = DAILY codeshared with Cathay Pacific (1x daily on CX metal initially and then when finances recover SA can add a service 1x daily on its metal)
- JNB/SYD/JNB = DAILY codeshared with QANTAS (1x daily on QF metal initially and then when finances recover SA can add a service on its metal)

In addition to the above 5 core long-haul routes the following secondary routes can be kept or added as the South African economy recovers:
- MIA/JNB/MIA = DAILY codeshared with American Airlines (1x daily on AA metal)
- MAD/JNB/MAD = DAILY codeshared with Iberia (1x daily on IB metal - this route is ideal to cover the EU and avoid backtracking from LHR)
- KUL/JNB/KUL = DAILY codeshared with Malaysia Airlines (1x daily on MH metal - this route subject to the recovery of MH)

JFK: Justifies itself with O/D and covers connections to/from the Northeast plus Toronto/Montreal
MIA: Justifies itself with O/D and covers connection in the Continental USA plus Central America and the Caribbean
GRU: Covers connections in South America
LHR: Justifies itself with O/D and covers the UK and Ireland
MAD: Covers connections in the European Union
HKG: Covers connections in north-east Asia (Japan, Korea, etc) and China
SYD: Justifies itself with O/D and covers connections in Australia and New Zealand

Unfortunately both Malaysia Airlines (MH) and SriLankan (UL) are in "contraction mode". It would be great if one of them could establish a CMB/JNB/CMB or KUL/JNB/KUL daily service to cover connections to/from India and Southeast Asia.

Finally divesting Mango from Comair must take place, so Mango stands as a low-cost on its own right and provides completion in the domestic market to keep the fares at bay. Then a full merger of Comair into SA should happen with Comair ending its franchise agreement with British Airways.

Privatization, IAG and oneworld are the best way forward for South African Airways.

Sexy Adonis
oneworld revolves around you.


I'm sorry to say, but you have no idea what you are talking about.
SAA owns Mango. Comair is a very seperate entity.

Do you think Comair, which is a very successfull private sector will want to get their hands dirty with state-politics? Comair operates flights on behalf of BA in South Africa, and also flies Kulula, a very profitable low cost airline with the same crew/fleet/callsign.

SAA's problem is in the very least alliances and routings. Their CEO is a close friend of the president (who has got such a good track record when it comes to corruption) with absolutely no airline experience. Amongst other things she has run into the ground, is the KwaZulu Natal Water Board. None of the other members of the board has got aviation background either.
You can see that in the way the CEO is insisting to pay a R 50 million 'privilege' fee for the company that was supposed to lend the funds to purchase new aircraft. This happened after the courts ruled that such a transaction was lawful, as the company isn't even properly licensed to provide financial services.

Corruption in this country is so deeply filtered into all the cracks, it seems almost impossible to weed it out.
 
Gemuser
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 12:40 pm

evanb wrote:
ben175 wrote:
The only way I ever see SA dropping PER is if, as mentioned above, they start a JV with NZ who launches an AKL-PER-JNB service with a 789. The only other alternative is if VA takes over the route - I've heard a rumour they will be acquiring more A330's from the recent HNA group investment. Could be a good way to utilize the A330 fleet.


There is no way an A330-200 could make JNB-PER. The ETOPS diversion would make the route too long given the payload restrictions out of JNB.

Sorry, QFs A330 fleet could do this immediately. As near as I was able to measure it when the VA MEL-JNB service was being discussed PER - JNB requires a detour of less than 200 nm to maintain EDTO 180. I would expect that *IF* SAA closed PER QF would be on the route with A330s quick smart. Most likely MEL-PER-JNB as an international flight from MEL.

Gemuser
 
DeSpringbokke
Posts: 372
Joined: Fri Sep 18, 2015 3:27 am

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:03 pm

RobertS975 wrote:
Just in terms of understanding the degree of JNB to USA market, how does DL do on its JNB-ATL route? I have had the impression that it does well, but would love to hear from anyone who really knows...


Consistently very well from management on several past quarterly earnings calls. Both cabins go out full, especially up front.
 
jetwet1
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Joined: Thu Jun 14, 2007 4:42 am

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:34 pm

metroline2006 wrote:
Surely SAA is prime investment opportunity for IAG. With BA flying 2-3 daily LHR-JNB and 2 Daily LHR-CPT and with BA's Franchise partner ComAir I think it would really work. The SAA problem has been zero direction. When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.


There is no way IAG will take a stake in SAA while the government is still involved with the airline, they know it would just be throwing money away, also, really, why would they want to, BA has it's flights into JNB and CPT, they already make their money in the region, why deal with the headache ?

evanb wrote:
Everyone seems to suppose that SAA's challenges are with the fleet, alliances and route network where in fact all the challenges are political and governance related. If they sort out the political interference and governance mess they could be a decent carrier.


Bingo
 
evanb
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 1:49 pm

Gemuser wrote:
Sorry, QFs A330 fleet could do this immediately. As near as I was able to measure it when the VA MEL-JNB service was being discussed PER - JNB requires a detour of less than 200 nm to maintain EDTO 180. I would expect that *IF* SAA closed PER QF would be on the route with A330s quick smart. Most likely MEL-PER-JNB as an international flight from MEL.


You're ignoring that JNB is at an altitude of 5,544ft. There is a reason why SAA have never operated the A330-200 to PER.
 
klwright69
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 2:11 pm

I read the article and scanned the comments. The problems seem extremely dire. Would dropping IAD or replacing Star with One World really be an easy solution?
 
Armodeen
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 3:01 pm

metroline2006 wrote:
When airlines have been parking A340's for 777 and 787 SAA just solider on. With many 777-200ER parked up surely retirement of the fuel thirsty 4 engined Airbuses is needed and taking some of these would work. As for short haul 737 or A320/319 pick on and stick. Too many types were 1 type would be cheaper and cost effective. Boeing 777/787 737 max or A350-A32-. But the government needs to allow it to work.


So you feel that the solution to their financial crisis is to replace their entire fleet?

Even if you GAVE them a fleet of 787s (etc) they still wouldn't make a profit, their problems are much deeper than the price of gas.
 
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LeCoqFrancais
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 3:35 pm

klwright69 wrote:
I read the article and scanned the comments. The problems seem extremely dire. Would dropping IAD or replacing Star with One World really be an easy solution?

I agree that switching alliances won't do much for SAA, however dropping IAD might help as its a purely political route and I'm not sure that its profitable.
 
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N717TW
Posts: 611
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:04 pm

Given SAA's issues, it would seem to be good opportunity from some opportunistic carrier to work in a JV and get better access to the South African market. For example, would seem plausible for EY to work in to lock up more SA to India traffic with East Asia as an extra bonus. Or I could see an NZ/VA JV that takes over the PER-JNB route. An inter-Africa partnership, maybe with Kenya Airways would also make sense but then commercial sense isn't necessarily important with government-owned companies, domestic politics are.

BA has a strong franchise to South Africa including an actual franchise carrier in Comair, but that said....

While less likely, it would be a smart play for either IAG or DL (through VS) to lock up the LHR-JNB routes. While I am not even close to familiar with South African corporate and aviation law, based on standard Anglo rules BA or VS could in theory create a fully 50/50 duel-flagged, co-owned airline with SA for the UK routes and that would take the operation out of gov't direct control. In turn (and this is more a benefit to VS than IAG) the new partnership could use SA's two LHR slots, freeing up the LHR slots BA or VS uses for JNB to use on other routes.
 
MaverickM11
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:05 pm

Is this a case where the operating profit/loss is manageable but the overhead and fixed costs of loans/pensions/govt interference is so large as to drown the whole operation? Or is the core operation hemorrhaging too?
 
LAXdude1023
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:12 pm

LeCoqFrancais wrote:
klwright69 wrote:
I read the article and scanned the comments. The problems seem extremely dire. Would dropping IAD or replacing Star with One World really be an easy solution?

I agree that switching alliances won't do much for SAA, however dropping IAD might help as its a purely political route and I'm not sure that its profitable.


This isn't true. I would be surprised if IAD wasn't one of SAAs best routes. The Washington area is home to the 2nd largest West Afican population in the US and even more important than that, they serve DKR and ACC from IAD. Large markets with high fares.
 
usflyer msp
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:32 pm

SAAFNAV wrote:
SexyAdonis wrote:
OK boys and girls .. this is the way I see it. I have always insisted that South African Airways is in the WRONG alliance. The first thing that needs to happen is for the South African government to set-up an interim efficient management that can prepare the company for privatization. IAG then comes in and buys the company up then the following happens:

(1) SA leaves STAR ALLIANCE
(2) SA joins oneworld
(3) The long-haul international network is reduced to the following 5 core routes:

- JNB/JFK/JNB = DAILY codeshared with American Airlines (1x daily on SA metal)
- JNB/GRU/JNB = DAILY codeshared with LATAM (1x daily on SA metal and 3 x weekly on JJ metal)
- JNB/LHR/JNB = DAILY codeshared with British Airways (2x daily on BA metal and 2x daily on SA metal)
- JNB/HKG/JNB = DAILY codeshared with Cathay Pacific (1x daily on CX metal initially and then when finances recover SA can add a service 1x daily on its metal)
- JNB/SYD/JNB = DAILY codeshared with QANTAS (1x daily on QF metal initially and then when finances recover SA can add a service on its metal)

In addition to the above 5 core long-haul routes the following secondary routes can be kept or added as the South African economy recovers:
- MIA/JNB/MIA = DAILY codeshared with American Airlines (1x daily on AA metal)
- MAD/JNB/MAD = DAILY codeshared with Iberia (1x daily on IB metal - this route is ideal to cover the EU and avoid backtracking from LHR)
- KUL/JNB/KUL = DAILY codeshared with Malaysia Airlines (1x daily on MH metal - this route subject to the recovery of MH)

JFK: Justifies itself with O/D and covers connections to/from the Northeast plus Toronto/Montreal
MIA: Justifies itself with O/D and covers connection in the Continental USA plus Central America and the Caribbean
GRU: Covers connections in South America
LHR: Justifies itself with O/D and covers the UK and Ireland
MAD: Covers connections in the European Union
HKG: Covers connections in north-east Asia (Japan, Korea, etc) and China
SYD: Justifies itself with O/D and covers connections in Australia and New Zealand

Unfortunately both Malaysia Airlines (MH) and SriLankan (UL) are in "contraction mode". It would be great if one of them could establish a CMB/JNB/CMB or KUL/JNB/KUL daily service to cover connections to/from India and Southeast Asia.

Finally divesting Mango from Comair must take place, so Mango stands as a low-cost on its own right and provides completion in the domestic market to keep the fares at bay. Then a full merger of Comair into SA should happen with Comair ending its franchise agreement with British Airways.

Privatization, IAG and oneworld are the best way forward for South African Airways.

Sexy Adonis
oneworld revolves around you.


I'm sorry to say, but you have no idea what you are talking about.
SAA owns Mango. Comair is a very seperate entity.

Do you think Comair, which is a very successfull private sector will want to get their hands dirty with state-politics? Comair operates flights on behalf of BA in South Africa, and also flies Kulula, a very profitable low cost airline with the same crew/fleet/callsign.

SAA's problem is in the very least alliances and routings. Their CEO is a close friend of the president (who has got such a good track record when it comes to corruption) with absolutely no airline experience. Amongst other things she has run into the ground, is the KwaZulu Natal Water Board. None of the other members of the board has got aviation background either.
You can see that in the way the CEO is insisting to pay a R 50 million 'privilege' fee for the company that was supposed to lend the funds to purchase new aircraft. This happened after the courts ruled that such a transaction was lawful, as the company isn't even properly licensed to provide financial services.

Corruption in this country is so deeply filtered into all the cracks, it seems almost impossible to weed it out.


I have to concur. If IAG was really that interested in expanding in South Africa they could arrange for Comair to get 10 77L's or 77W's and achieve the same thing as this plan but at a fraction of the cost and not have to worry about the government interfering...
 
evanb
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:34 pm

LeCoqFrancais wrote:
I agree that switching alliances won't do much for SAA, however dropping IAD might help as its a purely political route and I'm not sure that its profitable.


JNB-IAD has been adjusted quite significantly in the last year with the DKR stop being moved to ACC four times a week. They have 5th freedom rights between ACC and IAD, in addition to DKR and IAD. Given the strong O&D market between ACC and IAD one expects that the route must be doing okay.

However, what most people seem oblivious too is that SAA's problems are structural, it's not about the individual routes, but such significant governance and management challenges that almost no long haul route can be profitable for them right now.
 
usflyer msp
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Joined: Tue May 23, 2000 11:50 am

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 4:47 pm

I think the best path forward for SAA is to follow to the LAN model and regionalize itself into a pan-African carrier. Hook up with local investors in other African countries and open up franchises around Africa. There is no reason why their can't be an SAA-Senegal or an SAA-Ghana to feed their IAD flights or an SAA-Uganda or SAA-Tanzania to feed potential flights to India and Asia. This would probably never happen as long as the carrier is government owned as it makes JNB less important but it would be good way to capitalize upon SAA's reputation for safe and reliable (although money loosing) operations and good inflight service...
 
evanb
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Joined: Thu Jan 07, 2016 3:26 pm

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 5:12 pm

usflyer msp wrote:
I think the best path forward for SAA is to follow to the LAN model and regionalize itself into a pan-African carrier. Hook up with local investors in other African countries and open up franchises around Africa. There is no reason why their can't be an SAA-Senegal or an SAA-Ghana to feed their IAD flights or an SAA-Uganda or SAA-Tanzania to feed potential flights to India and Asia. This would probably never happen as long as the carrier is government owned as it makes JNB less important but it would be good way to capitalize upon SAA's reputation for safe and reliable (although money loosing) operations and good inflight service...


They did this in the past in Nigeria and East Africa, and I think they have ambitions to do something in Ghana, but again, unless they get their house in order in terms of governance and management it doesn't matter what they do in terms of route networks, etc.
 
VSMUT
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 5:14 pm

usflyer msp wrote:
I think the best path forward for SAA is to follow to the LAN model and regionalize itself into a pan-African carrier. Hook up with local investors in other African countries and open up franchises around Africa. There is no reason why their can't be an SAA-Senegal or an SAA-Ghana to feed their IAD flights or an SAA-Uganda or SAA-Tanzania to feed potential flights to India and Asia. This would probably never happen as long as the carrier is government owned as it makes JNB less important but it would be good way to capitalize upon SAA's reputation for safe and reliable (although money loosing) operations and good inflight service...


Won't happen. They already tried that with the 49% acquisition of Air Tanzania in 2002, and burned their fingers in the process. On top of that, individual national interests are bound to create tons of hurdles. And either way, it would only create an even bigger money-pit than today.
If anything, the focus should be to increase cooperation with airlines of the more liberal neighboring nations, such as Namibia and Botswana.

IMHO, SAA will, sadly, become a minor airline along the lines of Air Namibia or Air Madagascar.
 
usflyer msp
Posts: 4364
Joined: Tue May 23, 2000 11:50 am

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 5:39 pm

VSMUT wrote:
usflyer msp wrote:
I think the best path forward for SAA is to follow to the LAN model and regionalize itself into a pan-African carrier. Hook up with local investors in other African countries and open up franchises around Africa. There is no reason why their can't be an SAA-Senegal or an SAA-Ghana to feed their IAD flights or an SAA-Uganda or SAA-Tanzania to feed potential flights to India and Asia. This would probably never happen as long as the carrier is government owned as it makes JNB less important but it would be good way to capitalize upon SAA's reputation for safe and reliable (although money loosing) operations and good inflight service...


Won't happen. They already tried that with the 49% acquisition of Air Tanzania in 2002, and burned their fingers in the process. On top of that, individual national interests are bound to create tons of hurdles. And either way, it would only create an even bigger money-pit than today.
If anything, the focus should be to increase cooperation with airlines of the more liberal neighboring nations, such as Namibia and Botswana.

IMHO, SAA will, sadly, become a minor airline along the lines of Air Namibia or Air Madagascar.


I am not suggesting that SAA go around acquiring stakes other government owned carriers. That would be a mistake. I am suggesting they get together with local business people and create new private carriers under the SAA brand that SAA can informally control. I am no quite sure what increasing cooperation with Air Namibia and Air Botswana would bring to SAA as SAA already has an extensive presence in both countries as one of the most popular long-haul carriers via JNB...
 
DDR
Posts: 1747
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 5:58 pm

Slight ot, but since a pan-African airline is being discussed, what happened to Air Afrique?
 
jfk777
Posts: 7509
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 6:44 pm

IF SAA were to leave the Star Alliance and join One World and do all the stuff with BA at LHR & AA in Miami and JFK then they should fly to AA's Charlotte hub. Neither Miami or JFK have the connections like CLT does and Delta has shown us there is a market to South Africa. SAA has an A340 problem that has to be addressed one way or another, but two engined planed are a problem from Johannesburg so what is the answer ? SAA has many problems but the fleet plan needs to be the first one solved, A340 have to do and A350 or 787 have to replace them.
 
VSMUT
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 7:07 pm

usflyer msp wrote:
I am not suggesting that SAA go around acquiring stakes other government owned carriers. That would be a mistake. I am suggesting they get together with local business people and create new private carriers under the SAA brand that SAA can informally control.


Tanzania is a great example of why this is a very bad idea. Tanzania is home to Precision Air and Fastjet, both excellent, privately owned and managed airlines. But the reason why Tanzania is insisting on restarting it's abomination of a national airline has a lot to do with some sort of mistrust towards Kenya. 49% of Precision Air is owned by Kenya Airways :roll: Fastjet struggled just to get the rights to fly between Tanzania and Zimbabwe, as it would pose a threat to Air Zimbabwe and Air Tanzania. Those countries are economically unfree, while South Africa's neighbors (for the most part *cough*Zimbabwe*cough*) are a lot more free.

usflyer msp wrote:
I am no quite sure what increasing cooperation with Air Namibia and Air Botswana would bring to SAA as SAA already has an extensive presence in both countries as one of the most popular long-haul carriers via JNB...


Simple, consolidate operations across southern Africa. The market is there, the countries in the closest part of the region are experiencing massive growth at the moment, and most likely for the next 50 years too.

They can't compete on long haul - for that the ME3 will beat them hands down for anyone going to and from Europe, while the other African airlines are much more conveniently located for traffic that originates from pretty much all of Africa. Long haul should be cut back to just a few flights to the most important destinations, such as London and Beijing.

What they should be doing is building a fleet of A320s (or 737s) and ATRs, and a good solid network throughout and within South Africa, Zimbabwe, Namibia, Botswana and Zambia. Those countries have a combined population of 85 mio, most likely surpassing 100 mio within the next 10 or 20 years. All except Namibia have a complete lack of large modern airlines. Let the other airlines fight for the scraps up in West Africa, the big untapped market is right next to South Africa.


usflyer msp wrote:
SAA already has an extensive presence in both countries as one of the most popular long-haul carriers via JNB...


The status as most popular is almost certainly one that they are going to lose when Ethiopian, Qatar and KLM start flying to Namibia later this year. It's only a matter of time before one of the ME3 start doing Botswana as well.
 
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LeCoqFrancais
Posts: 418
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Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 7:11 pm

evanb wrote:
LeCoqFrancais wrote:
I agree that switching alliances won't do much for SAA, however dropping IAD might help as its a purely political route and I'm not sure that its profitable.


JNB-IAD has been adjusted quite significantly in the last year with the DKR stop being moved to ACC four times a week. They have 5th freedom rights between ACC and IAD, in addition to DKR and IAD. Given the strong O&D market between ACC and IAD one expects that the route must be doing okay.

However, what most people seem oblivious too is that SAA's problems are structural, it's not about the individual routes, but such significant governance and management challenges that almost no long haul route can be profitable for them right now.

I was unaware that the JNB-IAD flight had a stop-over that included 5ft freedoom rights, this changes the entire image of that route.
 
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LeCoqFrancais
Posts: 418
Joined: Wed Jun 15, 2016 3:03 pm

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 7:15 pm

jfk777 wrote:
IF SAA were to leave the Star Alliance and join One World and do all the stuff with BA at LHR & AA in Miami and JFK then they should fly to AA's Charlotte hub. Neither Miami or JFK have the connections like CLT does and Delta has shown us there is a market to South Africa. SAA has an A340 problem that has to be addressed one way or another, but two engined planed are a problem from Johannesburg so what is the answer ? SAA has many problems but the fleet plan needs to be the first one solved, A340 have to do and A350 or 787 have to replace them.

I sincerely doubt the A340s is as big of an issue as you make it to be, sure the A340 is not the most fuel efficent plane flying but its not Hummer of the sky either. Before getting a new fleet, that could help but not necessarily, it is more important to fix the internal expense issue that is the main cause of financial difficulties.
 
SexyAdonis
Posts: 66
Joined: Sat Mar 13, 2010 4:21 am

Re: SAA is on the verge of liquidation.

Sun Aug 28, 2016 7:24 pm

LeCoqFrancais wrote:
SexyAdonis wrote:
Finally divesting Mango from Comair must take place, so Mango stands as a low-cost on its own right and provides completion in the domestic market to keep the fares at bay. Then a full merger of Comair into SA should happen with Comair ending its franchise agreement with British Airways.

Your post made some theoretical sense until this part. Why are you talking about Comair? Mango is fully owned by SAA and is there version of Air Canada Rouge, Comair has nothing to do with Mango. Since Comair is a completly seperate airline that operates under the Kulula and British Airways franchises I simply don't see why they are being discussed in this thread as part of the recovery plan of SAA, unless they would arrive and purchase SAA.



Would you calm down? I know Mango is fully owned by SA. The post should have read "divesting Mango from South African Airways". The company needs to focus on its core brand and competition is healthy. However the market doesn't need two premium carriers. So one premium carrier (South African Airways) and one low cost carrier (Mango) should do the trick.

The Comair success partly relies on the BA franchise which gives them credibility and brand recognition. I don't see IAG taking a stake on SA and leaving the BA franchisee to Comair. It makes no sense. Plus, Comair lacks the intendational scope that SA has and makes more sense in a fully merged privately run (no government interference) South Aftican Airways.

Sexy Adonis

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