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New routes to help fund SAA aircraft

Dec 21 2010 11:05 James-Brent Styan

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Toulouse - South African Airways (SAA) will undertake six new routes in Africa In 2011, one of which is a brand new destination: Cotonou in Benin, West Africa.

The other five are former SAA destinations that had been shut down and would now be reopened.

SAA spokesperson Fani Zulu said one of the routes would be to Cameroon and one to Ghana. He declined to provide more details.

SAA was busy with final negotiations on flight and parking rights, he said. The company’s strategy was to expand into Africa, which offered the most profitable routes.

Zulu said SAA could possibly also introduce a new route to China.

He said the expansion was being made possible by SAA’s acquisition of six new aircraft. From next year the airline would receive new A330 long-distance Airbuses to replace its A340-200s.

The new aircraft would be used en route to, inter alia, London and Frankfurt. The quality of the product en route would also improve.

State won't pay for new planes

However, the airline will have to work hard to balance its books because the government has indicated that no money is available to help pay for the new aircraft.

That is why SAA aims to broaden its operations in Africa, which offers good demand and better profit margins, said Zulu.

The expansions are fundamental to SAA’s strategy to strengthen its balance sheet.

He said the new aircraft would not enlarge the company’s fleet, but would replace old planes.

Although SAA would not have additional aircraft, from 2011 more regular flights are to be undertaken on profitable routes, such as between Cape Town and Johannesburg. The existing fleet would also be used more effectively, and new aircraft would be more fuel efficient.

Assembly of the first new A330 destined for South Africa has been undertaken in Toulouse over the past few weeks.
 
By the end of February, SAA would take receipt of the first of these aircraft, each costing $191.5m. They would be leased to SAA by an international leasing company, Aircastle.

However, the airline’s expansion plans for 2011 need careful consideration as the International Air Transport Association (Iata) last week cautioned that prospects for 2011 had weakened.

Iata’s retiring head, Giovanni Bisignani, said airlines are expected to produce a profit of $9.1bn next year.

The industry could expect tougher conditions than in 2010, he said. These included more expensive oil, slower gross domestic product growth for countries and increasing indebtedness, making transport more difficult.

Iata reckoned that next year African airlines would only manage to break even, after achieving profits of $100m in 2010.

- Sake24

For business news in Afrikaans, go to Sake24.com.
saa  |  africa
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