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mr02
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SAA considers selling off assets as debt balloons

Sun Sep 23, 2018 7:17 am

According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!
Last edited by SQ22 on Sun Sep 23, 2018 10:34 am, edited 1 time in total.
Reason: Title updated
 
P1aneMad
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Re: SAA bleeding money!

Sun Sep 23, 2018 7:26 am

SAA is bleeding money!
In other news today the sun is hot and water is wet.
 
KingOrGod
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Re: SAA bleeding money!

Sun Sep 23, 2018 7:32 am

mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!


SAA has hired some "experts" like Coleman Andrews et al and they only ever did something in order to make themselves rich. See the A320 -> B738 -> A320 cost, just for one example. The Jumbo sale and leaseback was another.

Problem is a couple of decades later its a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals.

SAA is doomed. Let it die. Bring it back as a private airline.
 
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SierraPacific
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Re: SAA bleeding money!

Sun Sep 23, 2018 7:33 am

I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.
 
jetwet1
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Re: SAA bleeding money!

Sun Sep 23, 2018 7:54 am

SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


Or.....

The South African government takes a left from Canada's book and limits the number of flights from the ME3+TK, create an artificial environment where SAA has time to breath, time to get everything in order, which would also require the South African government to let someone who knows how to run an airline actually run it.

I'm not saying they could or should do this, but to me it's the quick way to get SAA back on it's feet.
 
evanb
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Re: SAA bleeding money!

Sun Sep 23, 2018 8:02 am

SierraPacific wrote:
But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


How are A330s old equipment?
 
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piedmontf284000
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Re: SAA bleeding money!

Sun Sep 23, 2018 8:33 am

jetwet1 wrote:
SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


Or.....

The South African government takes a left from Canada's book and limits the number of flights from the ME3+TK, create an artificial environment where SAA has time to breath, time to get everything in order, which would also require the South African government to let someone who knows how to run an airline actually run it.

I'm not saying they could or should do this, but to me it's the quick way to get SAA back on it's feet.


Even if they could do this, without having to grandfather EK and QR current operations, it would not save SA.. They are a lost cause. They have been going down this road for 10+ years and the chickens have come home to roost.

SA could go the route of Air Seychelles and get rid of long haul routes and focus on domestic ops, but there are too many LCC's now operating out of JNB, so even that wouldn't work. Plus you have a bloated management structure and a labor force of 10,000, which is crazy for an airline that has a fleet of less than 50 planes and only 30 destinations. SA is nothing more than a welfare job for many citizens and it's costing South African taxpayers millions of dollars that could be better spent elsewhere.
 
TC957
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Re: SAA bleeding money!

Sun Sep 23, 2018 8:51 am

SAA should do just fine without government intervention. Run it as a business by business people not as a jolly for the governments benefit. If AI and MH can recover, so can SA.
 
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Mortyman
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Re: SAA bleeding money!

Sun Sep 23, 2018 11:10 am

SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.



Their average long haul fleet age is 10,4 years. Not that bad.

1191 330-243 07/02/2011 ZS-SXZ
1210 330-243 23/03/2011 ZS-SXY
1223 330-243 06/05/2011 ZS-SXX
1236 330-243 01/07/2011 ZS-SXW
1249 330-243 06/09/2011 ZS-SXV
1271 330-243 07/12/2011 ZS-SXU
1745 330-343 01/12/2016 ZS-SXI
1754 330-343 06/12/2016 ZS-SXJ
1757 330-343E 13/12/2016 ZS-SXK
1779 330-343 01/04/2017 ZS-SXL
1792 330-343 12/06/2017 ZS-SXM

378 340-313X 27/10/2010 ZS-SXG
410 340-642 20/12/2002 ZS-SNA
417 340-642 24/12/2002 ZS-SNB
426 340-642 11/02/2003 ZS-SNC
531 340-642 07/11/2003 ZS-SND
534 340-642 18/11/2003 ZS-SNE
544 340-313E 08/03/2004 ZS-SXA
547 340-642 28/01/2004 ZS-SNF
557 340-642 28/01/2004 ZS-SNG
582 340-313X 07/04/2004 ZS-SXB
590 340-313X 27/04/2004 ZS-SXC
626 340-642 14/04/2005 ZS-SNH
630 340-642 16/05/2005 ZS-SNI
643 340-313E 30/05/2007 ZS-SXD
646 340-313E 05/07/2007 ZS-SXE
651 340-313E 05/07/2007 ZS-SXF
 
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janders
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Re: SAA bailed out by government again

Sun Sep 23, 2018 2:51 pm

Shock :eek:

SAA is technically bankrupt – and bleeding cash: report
https://businesstech.co.za/news/busines ... sh-report/


South African Airways will not present any financial results for the 2017/18 year because it’s technically bankrupt, and continues to burn through cash.
The group’s debt has ballooned to R28 billion, while it only has assets to the value of R13 billion, while its monthly costs are between R350 million and R450 million.
Sources say the airline is now considering selling off some of its businesses to help raise funds, as the banks will not longer lend it money.
"We make war that we may live in peace." -- Aristotle
 
sixfootscream
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Re: SAA considers selling off assets as debt balloons

Sun Sep 23, 2018 3:36 pm

SAA like most state-run companies are nothing, but an bottom-less pits of which tax money is thrown in. Quite frankly I am sick and tired of it. My mother is working her back off just to keep paying more and more taxes in ZA.
SAA is a lost cause. Their A340s cabin product is outdated. They can't compete with foreign airlines flying into ZA. As much as job losses would occur if SAA would to be shut down , it must be down. SAA failed to adapt to this highly competitive market which is South Africa. We got enough carriers and flights to chose from. VS will go double daily on LHR-JNB-LHR ,LH serves both JNB and CPT. EK serves JNB/DUR/CPT with frequent flights. TK and QR are big players too. These carriers are making money flying to and from ZA.
SAA has an incompetent management team. No matter what aircraft SAA operates, it wouldn't make a difference. Their business model is simply not sustainable. It is a case of adept or die and unfortunately SAA choose long ago to die!
 
Mboyle1988
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Re: SAA considers selling off assets as debt balloons

Sun Sep 23, 2018 5:24 pm

I mean South Africa has been pretty much going down the tubes for 28 years...That’s what happens when you effectively have single party rule.
 
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SierraPacific
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Re: SAA bleeding money!

Sun Sep 23, 2018 5:38 pm

evanb wrote:
SierraPacific wrote:
But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


How are A330s old equipment?


They are not old equipment but they cannot compete with European airlines and the ME3 when it comes hard product. The cabins of the aircraft (which the customer cares about) are very dated with service that is hit and miss.
 
Antarius
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Re: SAA bleeding money!

Sun Sep 23, 2018 5:43 pm

jetwet1 wrote:
SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


Or.....

The South African government takes a left from Canada's book and limits the number of flights from the ME3+TK, create an artificial environment where SAA has time to breath, time to get everything in order, which would also require the South African government to let someone who knows how to run an airline actually run it.

I'm not saying they could or should do this, but to me it's the quick way to get SAA back on it's feet.


Canada is a slightly different case due to a few strong airlines present to fill a void caused by limits. Also the US3 are right south of the border making a 1 stop a fairly easy proposition.

IMO, the government should do what benefits the populace, not SAA. Limiting the bilaterals will cause prices to rise as SAA has repeatedly demonstrated they cannot run an efficient and sustainable operation.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
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lightsaber
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Re: SAA bleeding money!

Sun Sep 23, 2018 6:07 pm

SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.

The business climate is tough. I do not see a way to turn around SAA.

One party rule works until it doesn't. SAA will be subsidized, so they have no worries until the whole economy has trouble...

Lightsaber
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smartplane
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Re: SAA considers selling off assets as debt balloons

Sun Sep 23, 2018 8:08 pm

South Africa and India. Similar problems, different scale. Who will successfully re-structure first? Should India offer to assist, using South Africa as the experiment?
 
jfk777
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Re: SAA bleeding money!

Sun Sep 23, 2018 8:31 pm

KingOrGod wrote:
mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!


SAA has hired some "experts" like Coleman Andrews et al and they only ever did something in order to make themselves rich. See the A320 -> B738 -> A320 cost, just for one example. The Jumbo sale and leaseback was another.

Problem is a couple of decades later its a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals.

SAA is doomed. Let it die. Bring it back as a private airline.


The reason for SAA's 737-800 was an order 777 in the mid 1990's and canceling the order so they have deposit monies at Boeing. Use or loose it, the 737 was the plane most useful at SAA then, today a 787-9 would be great.
 
evanb
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Re: SAA bleeding money!

Sun Sep 23, 2018 11:08 pm

SierraPacific wrote:
They are not old equipment but they cannot compete with European airlines and the ME3 when it comes hard product. The cabins of the aircraft (which the customer cares about) are very dated with service that is hit and miss.


I agree that the hard and soft product is inferior to ME3, but I'd think it's hard to argue that the hard and soft product are inferior to European airlines, especially BA which is the largest competitor.
 
evanb
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Re: SAA bleeding money!

Mon Sep 24, 2018 6:18 am

jfk777 wrote:
The reason for SAA's 737-800 was an order 777 in the mid 1990's and canceling the order so they have deposit monies at Boeing. Use or loose it, the 737 was the plane most useful at SAA then, today a 787-9 would be great.


Not entirely. There were B777-200ERs on order which Andrew switched for more B747-400s that Boeing we’re unable to deliver (may have been Swissair of Philippine Airlines) - this was shortly after 9/11.

He wanted to consolidate the short haul fleet around B737s by removing the A300s and A320s. The B738s were available pretty cheaply from Boeing just after 9/11.
 
KingOrGod
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Re: SAA bleeding money!

Tue Sep 25, 2018 10:54 pm

jfk777 wrote:
KingOrGod wrote:
mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!


SAA has hired some "experts" like Coleman Andrews et al and they only ever did something in order to make themselves rich. See the A320 -> B738 -> A320 cost, just for one example. The Jumbo sale and leaseback was another.

Problem is a couple of decades later its a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals.

SAA is doomed. Let it die. Bring it back as a private airline.


The reason for SAA's 737-800 was an order 777 in the mid 1990's and canceling the order so they have deposit monies at Boeing. Use or loose it, the 737 was the plane most useful at SAA then, today a 787-9 would be great.


That is not correct, the 777 deposits were used to purchase two additional B744s (B747-4F6s to be exact). I believe these were the cancelled Philippine Airlines order, and became ZS-SBK and ZS-SBS respectively with SAA delivered in December 1998.

The 738s were not the best fit for SAA either, given they had already been outiftted with the A320 and ancilliaries. The 738 order in 2000, as far as my sources go, was due to Coleman's political connections Stateside - the marginal (at best) differences between the 738 and A320 were not enough to justify a total switch like what Coleman did. Then when Coleman got the boot, Andre ordered Airbus again. Another massive waste of money.
 
KingOrGod
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Re: SAA bleeding money!

Tue Sep 25, 2018 11:05 pm

evanb wrote:
jfk777 wrote:
The reason for SAA's 737-800 was an order 777 in the mid 1990's and canceling the order so they have deposit monies at Boeing. Use or loose it, the 737 was the plane most useful at SAA then, today a 787-9 would be great.


Not entirely. There were B777-200ERs on order which Andrew switched for more B747-400s that Boeing we’re unable to deliver (may have been Swissair of Philippine Airlines) - this was shortly after 9/11.

He wanted to consolidate the short haul fleet around B737s by removing the A300s and A320s. The B738s were available pretty cheaply from Boeing just after 9/11.


Not entirely either. Lets sort some facts out here :)

The 744's were delivered around 3 years before 9/11, December 1998.

And the 738's were not acquired as cheaply as intimated as that order was also prior to 9/11. ZS-SJA was delivered June 2000 already.

FYI 9/11 was in 2001, and thus had no influence on these deals.
 
iadadd
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Re: SAA considers selling off assets as debt balloons

Tue Sep 25, 2018 11:18 pm

When was the last time SAA made a profit ?

I don't believe I'm saying this, but perhaps it's time to let SAA go. Or completely revamp itself as a major regional connector for Star Alliance in the Southern Africa region, but I even doubt this would work because Southern Africa is relatively unpopulated and lacks large travel demand.

It's long haul network is already at token levels (8 destinations outside of Africa) so it won't be too hard to effectively dismantle it.
 
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jetKIWI
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Re: SAA considers selling off assets as debt balloons

Tue Sep 25, 2018 11:23 pm

How does SAA do on the JNB - JFK and IAD routes?
 
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lightsaber
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Re: SAA considers selling off assets as debt balloons

Wed Sep 26, 2018 12:36 am

iadadd wrote:
When was the last time SAA made a profit ?

I don't believe I'm saying this, but perhaps it's time to let SAA go. Or completely revamp itself as a major regional connector for Star Alliance in the Southern Africa region, but I even doubt this would work because Southern Africa is relatively unpopulated and lacks large travel demand.

It's long haul network is already at token levels (8 destinations outside of Africa) so it won't be too hard to effectively dismantle it.

I second the question. It wouldn't matter much if the airline folded. But would South Africa allow ownership rules that would encourage investment? Airlines require significant FDI and the money flows aren't strong from what I've seen.

International long haul will be filled. It is domestic and regional...

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716131
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Re: SAA considers selling off assets as debt balloons

Wed Sep 26, 2018 7:26 am

jetKIWI wrote:
How does SAA do on the JNB - JFK and IAD routes?

Kind of unprofitable that I learnt last year.
If it's not Boeing, I'm not going!
 
716131
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Re: SAA considers selling off assets as debt balloons

Wed Sep 26, 2018 7:30 am

iadadd wrote:
When was the last time SAA made a profit ?

I don't believe I'm saying this, but perhaps it's time to let SAA go. Or completely revamp itself as a major regional connector for Star Alliance in the Southern Africa region, but I even doubt this would work because Southern Africa is relatively unpopulated and lacks large travel demand.

It's long haul network is already at token levels (8 destinations outside of Africa) so it won't be too hard to effectively dismantle it.

Hmmmm, don't know when they last made profit, but I'll say over the last decade they probably made it, they probably used to have large profit than maybe other African Airline or even Asian airline too. It's hard to think about SAA in modern days, less than 50 passenger aircraft, continue loosing money, always on pressure by the country's government etc.
If it's not Boeing, I'm not going!
 
716131
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Re: SAA considers selling off assets as debt balloons

Wed Sep 26, 2018 7:34 am

mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!

Let me think out a much realistic one, You said that "SAA should have hired an expert in aviation so he/she can make drastic changes". To me, SAA should just merged to one of the Bigger airline from Asia or Europe? and then it's going to be great, simple!
If it's not Boeing, I'm not going!
 
716131
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Re: SAA bleeding money!

Wed Sep 26, 2018 7:39 am

KingOrGod wrote:
mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!


SAA has hired some "experts" like Coleman Andrews et al and they only ever did something in order to make themselves rich. See the A320 -> B738 -> A320 cost, just for one example. The Jumbo sale and leaseback was another.

Problem is a couple of decades later its a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals.

SAA is doomed. Let it die. Bring it back as a private airline.

Not even decades, maybe a few years from now they will become "a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals."
If it's not Boeing, I'm not going!
 
KingOrGod
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Re: SAA bleeding money!

Wed Sep 26, 2018 8:27 pm

SQ789 wrote:
KingOrGod wrote:
mr02 wrote:
According to a article,https://www.news24.com/SouthAfrica/News/saa-bleeds-cash-20180922,SAA is bankrupt and may consider selling some assets. It may sell its catering wing and outsource SAA Cargo or operate full cargo aircraft since it is a profitable business. Banks have refused to make loans to is and its debt rose to R28 billion($2 billion). What do you guys think about this? SAA should have hired an expert in aviation so he/she can make drastic changes!


SAA has hired some "experts" like Coleman Andrews et al and they only ever did something in order to make themselves rich. See the A320 -> B738 -> A320 cost, just for one example. The Jumbo sale and leaseback was another.

Problem is a couple of decades later its a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals.

SAA is doomed. Let it die. Bring it back as a private airline.

Not even decades, maybe a few years from now they will become "a political toy and one cannot run a business successfully either, when your posts are filled by unqualified individuals."


You misunderstood my post which I admit wasn't clear.

I was referring to a point in time around 1995 or so (if not earlier) when SAA was still a functioning entity. The subsequent decades have pretty much brought nothing but the worst upon worst to SAA in terms of CEO's and bloated numbers.
 
KingOrGod
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Re: SAA bleeding money!

Wed Sep 26, 2018 8:41 pm

lightsaber wrote:
SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.

The business climate is tough. I do not see a way to turn around SAA.

One party rule works until it doesn't. SAA will be subsidized, so they have no worries until the whole economy has trouble...

Lightsaber


But isn't this the problem now. I spent 30+ years of my life building that economy. And now it lies practically in ruins.

People are getting tired of spending billions on a political toy while the masses go hungry. It's to be expected though.
 
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LAXintl
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Re: SAA considers selling off assets as debt balloons

Sun Oct 07, 2018 4:51 pm

Airline Weekly has a story about SAA CEO Vuyani Jarana visit to NYC two weeks ago and provided and update on his restructuring efforts.

Some points:
> Expects US $400mil loss this fiscal year
> Focused on trying to convince lenders and political leaders that difficult cost cuts combined with new revenues can turn tide by 2021.
> Domestic losses are "easing" thanks to the deployment of Mango
> Inflight product needs update. As example need inflight connectivity for business clients
> Intra Africa has lots of potential, esp Western Africa.
> U.S is a growth market. Like to move beyond JFK and IAD service. Eyeing more stops in West Africa, particularly in Nigeria a large market to U.S. on its own.
> Australia "doing well"
> Germany "okay"
> UK "losing lots of money"
> Longhaul flying has low utilization due long sits at destinations. Considers altering schedules for more daytime flights.
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lightsaber
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Re: SAA bleeding money!

Sun Oct 07, 2018 6:01 pm

KingOrGod wrote:
lightsaber wrote:
SierraPacific wrote:
I think a more newsworthy event would be a South African company not bleeding money :lol:

But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.

The business climate is tough. I do not see a way to turn around SAA.

One party rule works until it doesn't. SAA will be subsidized, so they have no worries until the whole economy has trouble...

Lightsaber


But isn't this the problem now. I spent 30+ years of my life building that economy. And now it lies practically in ruins.

People are getting tired of spending billions on a political toy while the masses go hungry. It's to be expected though.

SAA's fortunes are, of course, tied to the economy. What matters is airlines are used to aid investment and right now the South African economy is scaring away investment; anyone who has read Bernstein knows that investors like to calculate with as much certainty from the government as possible. There is not enough certainty at this time. I do not see the political will to avoid populist scare tactics versus business. So fewer people will fly to go invest.

Lightsaber
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LAXintl
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Re: SAA considers selling off assets as debt balloons

Wed Oct 24, 2018 5:01 pm

More government money....

South African Airways will receive US$348.9 million through a special appropriation bill to settle debt maturing between now and March 2019. Additionally, SA Express was allocated $83.7 million.

https://www.iol.co.za/business-report/c ... e-17620856
https://www.destinyconnect.com/2018/10/ ... -lifeline/
From the desert to the sea, to all of Southern California
 
evanb
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Re: SAA considers selling off assets as debt balloons

Wed Oct 24, 2018 7:39 pm

LAXintl wrote:
More government money....

South African Airways will receive US$348.9 million through a special appropriation bill to settle debt maturing between now and March 2019. Additionally, SA Express was allocated $83.7 million.

https://www.iol.co.za/business-report/c ... e-17620856
https://www.destinyconnect.com/2018/10/ ... -lifeline/


It's not more or new money. It's the appropriations bill to pay money previously promised. Previous cash injections have been criticized for the Minister using some discretionary funds whereas they're now earmarking appropriations for it. Appropriations can generally only be proposed through the formal budgeting process (in February "Budget Speech or October Medium Term Budget Policy Statement).
 
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lightsaber
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Re: SAA considers selling off assets as debt balloons

Wed Oct 24, 2018 9:03 pm

LAXintl wrote:
More government money....

South African Airways will receive US$348.9 million through a special appropriation bill to settle debt maturing between now and March 2019. Additionally, SA Express was allocated $83.7 million.

https://www.iol.co.za/business-report/c ... e-17620856
https://www.destinyconnect.com/2018/10/ ... -lifeline/

Where is the government getting this kind of funds?

The mines must now give away so much and costs have gone up, I'm seeing prior investment promises restated as new lower investments that meet the MRR.

Anyone who has read Bernstein knowns the property (land laws) must be made more clear. I'm shocked the estimated corn planting is up.

The economy drives SAA's prospects.

Lightsaber
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jfk777
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Re: SAA considers selling off assets as debt balloons

Wed Oct 24, 2018 11:58 pm

LAXintl wrote:
Airline Weekly has a story about SAA CEO Vuyani Jarana visit to NYC two weeks ago and provided and update on his restructuring efforts.

Some points:
> Expects US $400mil loss this fiscal year
> Focused on trying to convince lenders and political leaders that difficult cost cuts combined with new revenues can turn tide by 2021.
> Domestic losses are "easing" thanks to the deployment of Mango
> Inflight product needs update. As example need inflight connectivity for business clients
> Intra Africa has lots of potential, esp Western Africa.
> U.S is a growth market. Like to move beyond JFK and IAD service. Eyeing more stops in West Africa, particularly in Nigeria a large market to U.S. on its own.
> Australia "doing well"
> Germany "okay"
> UK "losing lots of money"
> Longhaul flying has low utilization due long sits at destinations. Considers altering schedules for more daytime flights.


How does SAA loose its shirt on flying to London ? They should have never joined the Star alliance, they should have joined OneWorld. All SAA's major beyond Africa market are flown by OW airlines, BA, Cathay and Qantas are all OW airlines. It would have been better to join them then try to beat them.
 
lutfi
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 1:35 am

Presumably because it is a big market with lots of one stop and non-stop competition. BA and VS will take the high yield stuff, leaving SAA to compete with the one stops
 
eamondzhang
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 2:33 am

jfk777 wrote:

How does SAA loose its shirt on flying to London ? They should have never joined the Star alliance, they should have joined OneWorld. All SAA's major beyond Africa market are flown by OW airlines, BA, Cathay and Qantas are all OW airlines. It would have been better to join them then try to beat them.

Here we go again, descending the SA management issue into "wrong alliance" again. Regardless of which alliance SA is in there's gonna be no help whatsoever with their management capability, and forget about meaningful cooperation between these airlines and SA as this will create duopoly. I don't think I need to emphasis this more.

SierraPacific wrote:
evanb wrote:
SierraPacific wrote:
But seriously, flying old equipment to Europe and The US cannot be a sustainable business model. The only way I see SAA surviving is eliminating long haul and focusing on feeding international carriers via a strong regional network.


How are A330s old equipment?


They are not old equipment but they cannot compete with European airlines and the ME3 when it comes hard product. The cabins of the aircraft (which the customer cares about) are very dated with service that is hit and miss.

Their A333 has the fabulous Vantage XL but no product can help with SAA's management capability - heck EK's 777 got a worse product than SAA's A340 fleet but still got away with it.

Michael
 
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cv990Coronado
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 8:21 am

SAA's problems can be brought down to one main problem, and that is the SA Government:-

They interfere with all credible leadership.
They don't/won't permit labour reduction/restructure.
Their policies have destroyed the SA economy.
Their unemployable friends and associates are given jobs at SAA.
They control and influence SAA purchasing which is both corrupt and inefficient.

In short, no different equipment, reducing foreign competition changing the network or anything else will fix SAA if the SA government is still in control it.
Sadly, they can't remove themselves from it for political and ideological reasons. Therefore, it will continue to be bailed out, as it has been previously and as are similar South African parastatals, until one day, all will collapse.
SSC-707B727 737-741234SP757/762/3/772/WA300/10/319/2/1-342/3/6-880-DAM-VC10 TRD 111 Ju52-DC8/9/10/11-YS11-748-VCV DH4B L
 
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readytotaxi
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 8:34 am

Let's stand Alitalia and SAA back to back, then one bullet to the head will solve both problems.
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evanb
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 10:48 am

jfk777 wrote:
How does SAA loose its shirt on flying to London ? They should have never joined the Star alliance, they should have joined OneWorld. All SAA's major beyond Africa market are flown by OW airlines, BA, Cathay and Qantas are all OW airlines. It would have been better to join them then try to beat them.


SAA have a number of challenges to London:
1) It really started to go bad for them when BMI went until and it lost its domestic and regional connections but also a lot of its UK sales and distribution capacity.
2) At much the same time, the UK imposed visas for South Africans which dramatically slowed South African originating traffic, for both the UK and European interline connections. This forced SAA to shift much of its European connecting traffic to Frankfurt and Munich.
3) At the time of joining Star Alliance, SAA and BA wouldn't have received approval from the competition authorities for codesharing, so joining OW would have been moot.
4) EK, ET, QR and TK have lowered yields dramatically.

Since reducing to one daily and introducing the A330-300 with the new business class products, SAA have reported dramatic improvements on London. The new CEO has even gone as far as saying that the route is now profitable.
 
jfk777
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 11:06 am

What happened to the slots from the cancelled second daily flights ? Sold or leased out ?
 
evanb
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 12:15 pm

jfk777 wrote:
What happened to the slots from the cancelled second daily flights ? Sold or leased out ?


Leased for 5 years. Rumor is that they were leased to BA.
 
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cv990Coronado
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 12:56 pm

evanb wrote:
jfk777 wrote:
What happened to the slots from the cancelled second daily flights ? Sold or leased out ?


Leased for 5 years. Rumor is that they were leased to BA.


Well, that was smart, the previous management sold the CPT flight slots to SQ and the money is now long gone.
SSC-707B727 737-741234SP757/762/3/772/WA300/10/319/2/1-342/3/6-880-DAM-VC10 TRD 111 Ju52-DC8/9/10/11-YS11-748-VCV DH4B L
 
parapente
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 1:07 pm

Is it possible for them to switch to One World?
 
evanb
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 1:11 pm

cv990Coronado wrote:
evanb wrote:
jfk777 wrote:
What happened to the slots from the cancelled second daily flights ? Sold or leased out ?


Leased for 5 years. Rumor is that they were leased to BA.


Well, that was smart, the previous management sold the CPT flight slots to SQ and the money is now long gone.


Why was selling them a poorer move than leasing them out? They got one of the highest prices ever for a slot pair.
 
evanb
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 1:19 pm

parapente wrote:
Is it possible for them to switch to One World?


Possible, but the business case isn't great.
1) AA isn't going to be a significant improvement over UA in terms of US market. Might lose AC relationship which would be huge.
2) They already have a strong codeshare with JJ in spite of *A.
3) They will gain BA, but lose LH which significantly weakens their European market. Europe as a whole is more important for South Africa than the UK as a subset. Furthermore, Comair will put up the fight of their lives to stop this.
4) They're blocked from cooperating with QF by Australian competition authorities.
5) QR isn't much different compared to TK, ET, EK for SA.
6) CX doesn't provide anything more advantageous to SQ.
 
Airlinerdude
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Re: SAA considers selling off assets as debt balloons

Thu Oct 25, 2018 9:02 pm

It's unfortunate to see SAA in the shape that it is today. I would have thought that lower prices in SA would have contributed to an overall cost structure advantage in comparison to BA/LH/EK/etc. Obviously there must be a lot of internal corruption that is haemorrhaging cash from the company.

If I were the consultant being hired to help restructure SAA, I definitely would recommend some major changes. The first would be to downsize the long haul fleet. SAA's aircraft utilization is terrible; not all to their own doing, they are disadvantaged when flying to Europe because their aircraft have to sit on the ground all day in Europe. I know the operating economics of the 346 aren't favourable, but shedding the majority of the 343 fleet would be my preferred option. JFK requires the 346 while HKG/PER both require the 343/346. Therefore, cutting the 343 fleet in favour of the 346 would allow them to continue operating these destinations.

In terms of destinations, I would recommend that SAA shed the JFK operation in lieu of operating to EWR. I ran the LF with JFK and it looks like SAA operated with a 72% LF between JNB & JFK. With EWR they could take advantage of the connection opportunities that UA & AC would provide in EWR. Star alliance has almost zero presence in JFK that would benefit SAA. One of the comments made above suggested that SAA was looking at adding other fifth freedom routes to N.A. The obvious one to me would be a JNB-LOS-IAH route. There's a significant South African population in Texas that could probably take advantage of this route, as well as the higher yielding oil traffic between LOS & IAH. The direct JNB-IAH is actually only 3% shorter than via LOS.

Now when it comes to product, I would suggest that SAA follows an LH/LX/BA approach when it comes to their short haul product. Configure with 319/320s in a single class layout with the variable J/Y capacity layout. The majority of SAA's short haul routes are less than two hours long. It would given them great revenue generating ability to be able to have flexibility to sell greater J seats on routes that demand it, while selling greater Y seats on intra-African routes that might not have the J demand.

Lastly, the most controversial recommendation I would have would be to scale up the use of the Mango subsidiary. Instead of keeping Mango on short haul routes, transfer some of the 343s/332s to Mango and have them operate as a EW-like concept for SAA. Base them at DUR where there are no elevation penalties and fly to destinations like LGW/DUS/CDG/ZRH/DEL etc and connect the passengers onto the rest of South Africa with their 738s. This would help them regain marketshare in markets where they've completely lost out to the incumbent player. Also, it might help target the price sensitive passengers that SAA cannot do with their mainline brand.
 
Cunard
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Re: SAA considers selling off assets as debt balloons

Fri Oct 26, 2018 12:50 am

evanb wrote:
cv990Coronado wrote:
evanb wrote:

Leased for 5 years. Rumor is that they were leased to BA.


Well, that was smart, the previous management sold the CPT flight slots to SQ and the money is now long gone.


Why was selling them a poorer move than leasing them out? They got one of the highest prices ever for a slot pair.


Regardless of the fact that SAA got one of the highest prices ever for a slot pair at LHR the point that was being made still implies as ''the money has long gone''.
94 Countries, 327 Destinations Worldwide, 32 Airlines, 29 Aircraft Types, 182 Airports, 335 Flights.
 
Cunard
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Re: SAA considers selling off assets as debt balloons

Fri Oct 26, 2018 12:59 am

readytotaxi wrote:
Let's stand Alitalia and SAA back to back, then one bullet to the head will solve both problems.


What a ridiculous comment to make!

So two long standing national airlines are in financial problems and you make immature statements like that.

So you would actually like the two airlines to both be put down and become history and your obviously not thinking about the many thousands of employees that would be affected.

As the saying goes, Never trust anyone who wears a ridiculous looking comedy ''false beard and matching hat'' :-)
94 Countries, 327 Destinations Worldwide, 32 Airlines, 29 Aircraft Types, 182 Airports, 335 Flights.

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