South African Airways has been losing money for years, though the severity of the situation increased a few weeks ago, when the company entered “business rescue.”
South African Airways’ inefficient fleet
South African Airways has a countless number of problems, not the least of which is that they have an inefficient fleet and an inefficient route network:
- The backbone of South African Airways’ long haul fleet is their A340s, which are not fuel efficient
- The airline loses money on most of their long haul routes for a variety of reasons, not the least of which is that their aircraft utilization is terrible, as planes sit on the ground at outstations for entire days in some cases
The airline did recently start leasing some A350-900s, which were planes that HNA Group (the parent company of Hainan) couldn’t pay for. The plan was for these A350s to start flying between Johannesburg and New York as of December 2019, though as of now these planes are just operating short haul flights.
While I understand that acquiring A350s the same time the company enters business rescue probably wasn’t smart in retrospect, having these and not using them efficiently also doesn’t seem ideal.
If the airline is going to succeed long term they need a more efficient and competitive fleet, though I understand that getting the funding for such a refresh is challenging.
South African Airways trying to sell A340s
As reported by Simple Flying, South African Airways has put nine of their 16 A340 aircraft on sale, including four A340-600s and five A340-300s. Along with that they’ve put spare engines and auxiliary power units for the planes on sale.
This is per a tender that was issued on January 10, 2020, inviting parties to bid by January 30, 2020.
The planes up for sale are anywhere between 14 and 22 years old, and most of them are still in operation.
Why the airline is unlikely to succeed with this
If South African Airways is looking to radically restructure, then getting rid of these A340s is the right move. In the event that they do in fact get offers for all nine of these planes, the airline would significantly have to cut long haul capacity, as four A350s don’t offer sufficient capacity to replace nine A340s.
Furthermore, keep in mind the A350s are just on short term lease. Even so, that type of discipline might be good for the airline.
The bigger issue, though, is that the odds of SAA being successful here are minimal. The market for old A340-300s and A340-600s is almost non-existent.
If South African Airways wants to radically change things, then selling their A340s and maybe even cutting many of their long haul routes is the right path forward.
The problem is that this attempt to sell A340s seems highly unlikely to succeed. There simply isn’t a huge market out there for used A340s, so I’d be surprised if they have any takers.
Regardless, one has to wonder what exactly they’re doing with their A350s right now. The planes are already in their fleet, yet they’re using them for short domestic flights, rather than for their New York route, where the benefits would be most significant.
As I’ve said in the past, if profitability is the priority for South African Airways, it seems they’d be much better off focusing on regional routes and partnering more closely with a major global airline, perhaps even a Gulf carrier.
That would offer them much better global connectivity in a more efficient way. But I get there’s also “pride” in having a global national airline, which is likely the reason the airline is still alive to begin with…
What do you make of SAA’s plans to sell their A340s?