SAA sets sights on West Africa expansion

SAA turnaround strategy will take years to achieve. Image:SAA

Chief executive Monwabisi Kalawe, who started at the airline in June, has moved fast to firm up a way forward for SAA, for whom establishing a hub in West Africa has long been a strategic goal.

Boosting connectivity between south and west will lift intra-regional trade and shore up SAA's share of the African market which has attracted interest from the wealthy, aggressive Gulf carriers.

Air connectivity in West Africa is weak and it is still the norm for those flying to a neighbouring country to have to fly through Europe because of vast under-investment in the sector. Airline Association of Southern Africa's chief executive Chris Zweigenthal says aviation is being held back by ill-considered protectionist policies.

Establishing a hub in the region would potentially give SAA access to the more than 300m people in the 15-member Economic Community of West African States. The hub allows an airline to have its own support services at an airport and serve as a transfer point for passengers where direct services are not available.

Five countries being considered

Kalawe told Business Day that SAA was reviewing the suitability of at least five African countries - Nigeria, Ghana, Senegal, Gabon and Togo - for a new base. Feasibility studies should be concluded in six to 12 months.

Lagos could be SAA's West Africa hub. Image: Wiki Images

SAA's latest turnaround strategy identifies Africa as its major strategic focus. "There is an intense focus on taking advantage of the African opportunity for all key areas: passengers, cargo and technical services," Kalawe said.

"We are investigating setting up a hub for cargo and passengers in West Africa. There is a lot of movement between West Africa and the US; West Africa and Asia. There are also a lot of people who want to come to Southern Africa and now they often have to go via Europe," he said.

Kalawe said SAA would be working with Air Traffic Navigation Services and Airports Company SA in the coming months to identify overlapping projects between the three state-owned groups that are focused on extending the reach of their services into Africa, as part of identifying the best location for a hub.

Commenting on the "Nigerian national carrier" project, Kalawe said SAA had been approached by a group of Nigerians. He did not identify them but said it was a government group. "They would like us to explore working together in Nigeria," he said.

These discussions had been handed over to the departments of international relations and co-operation and public enterprises, Kalawe said.

Nigeria considering a new airline

A new hub would provide technical services. Image: Wiki Images

Nigerian national carrier Nigeria Airways collapsed in 2003. According to reports in recent months, a number of Nigeria's leaders have been talking about the creation of a new carrier, Nigeria One.

Kalawe has moved to bring stability to SAA and staunch losses at its subsidiaries.

"Loss-making catering unit Air Chefs will soon have a new chief executive after Alison Crooks and SAA reached a confidential consensual termination agreement," Kalawe said adding that at struggling SAA Technical, the chief financial officer Sikhumbuzo
Zulu had been suspended. "A disciplinary process was under way," Kalawe said.

SAA is still awaiting a much-needed capital injection to restructure its debt-crippled balance sheet. The airline is surviving on a R5bn guarantee from the Treasury.

The tabling of the airline's financial statements has been delayed for a second year as the Department of Public Enterprises has had to ask the Treasury to extend the guarantee beyond the initial two-year period.

The turnaround strategy plots a 20-year journey for the airline and sets the scene for the integration of all of the state's aviation assets under a single holding structure.

The plan has many parts and includes the rationalisation of the long-haul routes - all of which are loss-making - new partnerships through code share agreements, and a wide-body fleet renewal.

Source: Business Day via I-Net Bridge