SAA plans $1.5bn fleet upgrade

Chief financial officer Richard Forson told reporters that SAA was negotiating with US aerospace firm Boeing and European manufacturer Airbus and would make a decision in the next few days.

"We are going to submit our proposal to the SAA board on Sunday," he told reporters. He said a decision would be made after a demonstration on Friday of the new Airbus A340-600 - expected to make its market debut later this year - and the Boeing 777 at the Johannesburg International Airport.

SAA spent $680 million in 2000 on 21 Boeing 737-800 aircraft under former chief executive Coleman Andrews. Its fleet of 14 long-haul aircraft - out of a total of 60 - are due to be replaced because they are about 30 years old.

Forsan said SAA still reserved the right to buy second-hand aircraft. They had R2 billion ($175 million) in reserves available to spend, while the remainder of the money would have to come from debt funding, he said.

Earlier on Thursday, the government said it would buy back the Swissair Group's 20% stake in SAA for R382.5 million ($33.3 million) - R1 billion less than it sold it for three years ago.

Swissair collapsed in October when a fall in traffic after the September 11 attacks in the United States triggered a cash squeeze at the heavily indebted group.

Forsan said both Boeing and Airbus had indicated they would be able to deliver aircraft this year, and conclude the transfer by the end of 2004. It is highly unlikely SAA would choose a combination of Boeing and Airbus planes for the long-haul fleet, he said.

At present, SAA does not have any Airbus aircraft in its fleet of 60. Forsan said with the number of aircraft taken out of circulation since September 11, it was unlikely that SAA would find buyers for its old aircraft, and they would probably be scrapped.

The flagship carrier reported a headline loss of R735 million in the 2001 financial year versus a R32 million loss in the previous period.

Earnings forecasts for 2002 have been reduced from reaching breakeven to a modest narrowing of losses because of a sharp rand depreciation in the final months of 2001 and a weaker market following September 11.

SAA currently flies to 700 destinations and has 10 000 staff members.