Aviation sector headed for crash?

Low capital, fuel prices and cash-strapped consumers are hampering recovery

- Aarti Bhana

South Africa's airlines are struggling to recover from the devastation wrought by the Covid-19 pandemic amid a weak economy, high fuel costs and capital shortages, putting the sector at risk of becoming "obsolete".

The national carrier SAA emerged from three years under business rescue in April last year, thanks to a R10.4 billion bailout. However, it is still grappling with the effects of a turbulent history marked by financial distress, operational problems and allegations of mismanagement and corruption under the helm of the late former board chair, Dudu Myeni, who was declared a "delinquent director" in 2020.

A report from the auditor general last year showed that SAA's irregular expenditure was at R22 billion in 2017-18 and had doubled by 2022 to R44.5 billion. Fruitless and wasteful expenditure increased from R24.78 million to R207.3 million over the four-year period of the audit.

Since coming out of business rescue, the carrier has tried to restore operational credibility while navigating uncertainty following the collapse of the Takatso consortium deal in March last year, SAA group chief executive John Lamola told the Mail & Guardian.

"These weren't missteps, but rather strategic growing pains, as we repositioned SAA for long-term sustainability," he said.

The deal, which was shrouded in secrecy, would have seen Takatso purchase a 51% stake in the airline for just R51, implying a R100 evaluation, with the condition that it would invest in its development.

SAA reported its first profit in more than a decade in the 2022-23 financial year. Net profit was at R252 million, while group revenue rose to R5.7 billion from R2 billion. This was the first time the group had achieved "a positive bottom line since 2012, which was achieved with only six to eight aircraft".