Business Day: 30 June 2005
SAA flies out new Airbus amid uncertain future
Carli Lourens
HAMBURG — Although South African Airways (SAA) takes delivery of yet another aircraft from Airbus tonight, future acquisition plans are in limbo as the national carrier attempts to lift itself out of the red.
SAA has said it wants to cancel 15 of the 42 aircraft it ordered from the world’s largest aircraft maker in 2002, partly as a result of its financial woes.
The state-owned airline is caught between the pressing need to upgrade its fleet to compete with other airlines and its financial constraints.
SAA cannot afford to lose the deposit it has already paid on the 15 aircraft it wants to cancel. It would not say how much that part of the deposit is worth, but it would have run into several hundred million rand.
The airline was brought to the brink of insolvency by a now-defunct cash-guzzling hedge book that cost the parastatal R15bn between 2002 and last year. The hedge book was liquidated in June last year. It was created in the expectation that the rand would weaken, but it strengthened against the dollar,
SAA is expected to elaborate on future plans next week when it releases its annual financial results.
Airbus has said the deposit would not necessarily be lost, but could be renegotiated if SAA acquired other aircraft from the company. SAA is reviewing its fleet requirements and is looking at the European aircraft maker’s A380 — the largest aircraft in the world — despite its financial woes. The A380 list price is about R2bn.
SAA has to upgrade and expand against a backdrop of strong growth in air travel in Africa and because new aircraft can lead to substantial savings in operational costs such as fuel.