Business
South African Airways requires bailout to help with struggles
Fuel cost imperative
Political interference has been rife. Crucial to the plan is upgrading the fleet to more fuel-efficient planes, yet public enterprises minister Malusi Gigaba forced the board to withdraw a July 2013 request for proposals for 23 new wide-body, long-haul planes. Gigaba said it lacked “crucial elements of industrialization and localisation, which are vital to South Africa’s policies”.
New planes will cut SAA’s fuel costs, which are currently 35% of operating expenses. Considering not a single SAA long-haul route is profitable and that plane purchases typically have a lead time of five years, finalizing the contract speedily is of great importance.
There is no date for finalising the new request. “We are grappling with this new requirement for industrialisation and benefiting South Africa,” Kalawe explains. Gigaba also instructed the board that no job cuts will be allowed as part of SAA’s plans, as the “social and political cost is very high”.
Copyright The Africa Report 2014
