SAA’s R354 Million Loss Shows National Airline Still Caught in Turbulence

Despite bigger revenues and promises of recovery, the national airline nosedived into a R354 million loss. What went wrong?

When Transport Minister Barbara Creecy confidently declared that South African Airways (SAA) had turned a corner and was finally contributing to the economy, South Africans might’ve allowed themselves a brief moment of cautious optimism. But that hope was short-lived.

Just days later, the airline’s audited financials for the year ending March 2024 told a different story and it wasn’t pretty. Instead of the profit that had been touted, SAA posted a net loss of R354 million, reversing its previous year’s R210 million profit.

So what happened?

Rising Costs, Falling Confidence

On paper, things didn’t look so dire at first. Revenue rose 23% year-on-year to R7 billion, which would normally be good news. But SAA was slammed by a combination of global and local pressures.

Jet fuel costs soared from R1.3 billion to R1.9 billion, thanks in part to the ongoing war in Ukraine. At the same time, the airline faced a global aircraft shortage, which drove up leasing prices by over 30%.

Add to that the delays in new aircraft delivery, and SAA found itself grounded, financially and operationally.

According to SAA spokesperson Vimla Maistry, the airline also suffered a R415 million loss due to exchange rate volatility, particularly the rand’s weakness. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell from a positive R436 million to a negative R90 million. It was a hard crash from the optimism of the year before.

Still Flying, But at What Cost?

Despite its troubles, SAA operated 10 aircraft over the financial year, servicing 15 destinations. Flights increased by 42%, with new routes from Johannesburg and Cape Town to São Paulo.

And there are bright spots. The airline reported R1.4 billion in cash and no debt. Its equity position stands at R6.4 billion, providing some cushion. But that doesn’t mask the deeper concern: SAA is still not profitable, and South Africans are footing the bill.

‘They Got Money for Mahala’, The Critics Respond

As soon as the financials were released, the public reaction was swift and unforgiving.

Economist Dawie Roodt didn’t mince words:

“It’s a big mess. They got money for mahala. They tried to whitewash it.”

He speculated that asset impairments may have played a role, pointing to a broader problem with how SAA accounts for value or, more accurately, the lack of it.

Political analyst Piet Croucamp went even further:

“They neither have the political will, nor the skills to manage the entity. They keep trying and the public keeps paying.”

Social media, predictably, wasn’t kind. On X (formerly Twitter), hashtags like #SAAfail and #GroundedAgain began trending locally, with users expressing frustration over another bailout scenario potentially brewing.

A Reconstruction or Just More Spin?

SAA CEO John Lamola insists the airline has entered a new phase. He described the period covered by the financials as one of “uncertainty”, saying the airline is now focusing on strategic restructuring, better governance, and modernising its fleet.

He also noted that the results marked the last outstanding audit from the business rescue era, and SAA had implemented an Audit Health Plan to improve reporting and controls.

One eyebrow-raising item: an initial R431 million gain reported from clearing past business rescue debts had to be reversed, turning what would have been a R71 million profit into a R354 million loss, a sobering reminder of just how fragile the recovery narrative really is.

Should South Africa Still Have a National Carrier?

That’s the question many are asking, and not for the first time.

Over the years, billions of rand have been poured into SAA. It has undergone business rescue, had executives reshuffled, routes slashed, and strategies rewritten. And yet, here we are again, talking about a loss, not a lift-off.

For now, SAA remains flying. But with trust dwindling, economic headwinds blowing strong, and public patience wearing thin, one has to wonder: Is it time to finally cut the cord?

Or will South Africans keep paying for an airline that can’t stay out of the red?

{Source: The Citizen}

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