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SAA likely to face aircraft shortage

Mar 06 2011 10:23 James-Brent Styan

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Pretoria - South African Airways (SAA) urgently needs to acquire eight new aircraft or the airline could have too few aircraft to service its routes next year.

Sake24 has established that the national airline’s leases for most of its Boeing 737-800 fleet expire in 2012.

The problem is that the aircraft to replace the Boeings are expected only from 2013 onwards.

SAA is currently using almost all of its 20 Boeings on its domestic and regional flights.

Having eight fewer aircraft could have serious consequences.

In response to the impending crisis SAA has now invited parties who could lease eight A320 aircraft to SAA to express interest in doing so.

These aircraft should be delivered to SAA in 2012 and the airline said it wanted to conclude a contract for between 10 and 12 years.

SAA spokesperson Fani Zulu said the problem was that the delivery dates of the new aircraft did not synchronise with the expiry dates of the Boeings’ lease agreements.

One reason for this was that the contract with Airbus for the new A320s had been renegotiated.

The contract was renegotiated in 2008 at the last minute when SAA discovered that the original contract for 15 new A320s, which the airline had thought cancelled, had in fact not been cancelled.

Airbus had informed SAA accordingly, and had said SAA was still responsible for the contract – which at the time was worth almost $727m.

According to the original contract concluded in 2002, Airbus would have delivered the 15 aircraft to replace the fleet of Boeings in 2010/11.

In 2004 SAA had decided to cancel the contract when the airline was facing bankruptcy after R6bn worth of hedging losses had more or less wiped out its capital. The cancellation had however never been officially acknowledged by Airbus, which had ultimately led to the two parties renegotiating the contract.

SAA had gone even further and ordered an additional five aircraft.

Zulu said SAA now wanted to avoid the situation of a lease coming to an end and the airline being without a replacement.

That was why the invitation, consisting of two options, was now being extended to interested parties.
The first option was effectively an exchange deal.

SAA wanted the lessor to lease aircraft to SAA, and then to accept in exchange SAA’s aircraft due to be delivered from 2013 onwards.

The second option would be to enter into short-term leases of a few months to a year with leasing companies to bridge the period until the new aircraft were received. Zulu said that the second option would probably cost SAA considerably more.

An independent analyst who wished to remain anonymous said SAA would probably have great difficulty finding parties to provide such aircraft on lease at short notice.

The closing date for interested parties to respond was Friday.
saa  |  boeing  |  flights  |  airbus



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