More trouble builds for South African Airways as they incur more financial loss

More trouble builds for South African Airways as they incur more financial loss

South African Airways’ Financial Struggles Persist

Despite promises of financial sustainability, South African Airways (SAA), the national airline of South Africa, has once again reported financial losses during the first part of the 2024 financial year.

Continuing Monetary Losses

The state-owned airline recorded a loss of R 150 million for the initial three months of the fiscal year 2024, as reported by Daily Investor. This information was disclosed by South Africa’s National Treasury in a report presented to Parliament’s Standing Committee on Appropriations.

SAA’s Revival and Expansion Efforts

South Africa’s flag carrier resumed operations in September 2021, albeit on a much smaller scale with a reduced route network compared to its operations before entering business rescue in December 2019. Despite these challenges, the airline has gradually expanded its scheduled services, securing more aircraft and introducing additional routes.

Rising Staff Numbers and Operating Costs

Before entering the business rescue process, SAA had a sizable staff contingent, with some employees enduring months without salaries. Many opted for severance packages during the protracted rescue process. Daily Investor notes that SAA has increased its staff count, contributing to its operational expenses. Exiting business rescue with 1,200 employees, the airline has seen this number grow to over 2,000 within 18 months.

Challenges with Passenger Numbers and Revenues

SAA has faced difficulties in attracting a significant number of passengers on its flights recently, resulting in operating costs exceeding revenue. The National Treasury estimated that SAA’s average load factor for the first quarter was 60% for domestic travel and 49% for regional travel. The airline’s revenue of R1.1 billion fell short of the budgeted R1.4 billion by 22%. Reduced demand for domestic and regional travel in the previous three months is cited as the primary reason for this revenue shortfall.

International Flight Resumption

Despite its financial struggles, SAA is set to resume international flights next month when it reinstates flights to Sao Paolo, Brazil. This marks a significant milestone as it will be SAA’s first intercontinental flight since discontinuing all intercontinental routes in 2020.

SAA’s ongoing financial challenges underscore the difficulty of achieving financial sustainability and reducing reliance on government funding for the national airline.

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