Economist: SAA may crash again before a successful launch
The relaunch of the South African Airways (SAA) on Thursday has sparked some scepticism in the business’ ability to stay in the air.
The embattled airline will resume operations on Thursday, after months of being grounded.
The national carrier was first grounded over a year ago amid the deadly Covid-19 pandemic that saw countries across the globe shut their doors in fear of rapid transmission.
At the same time, the airline was faced with the task of implementing a recovery plan put forward by is business rescue practioners.
The business rescue process was owning to the airline’s failure to turn a profit for several years, depending mostly on state bailouts.
The airline’s fortunes improved earlier this year when a strategic equity partner came to the table with plans to buy a 51% stake.
Interestingly, Takatso Consortium distanced itself from Thursday’s relaunch citing some unfinished business.
“The relaunch of the airline is separate to the engagement between Takatso and the Department of Public Enterprises to acquire a 51% stake in SAA. We have progressed the due diligence process of SAA, which is now substantially complete, and no material issues have been identified,” says Takatso’s CEO Gidon Novick in a statement.
“Discussions currently underway between Takatso and the DPE revolve around the share purchase agreement for 51% of SAA. This agreement will be subject to various approvals and pre-conditions.”
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Efficient Group economist Dawie Roodt says Takatso’s absence from the relaunch isn’t a good sign.
Roodt believes the airline’s wings are likely to be clipped again soon, if the Takatso deal continues to slow.
“Maybe it is going to happen but I don’t think it’s going to be a success and the reason why I don’t think so is because of experience. We’ve seen this movie before of relaunching South African Airways.
“It’s completely bankrupt and I still need to see where the money is going to come from to get South African Airways up in the air again,” Roodt adds.
“They need a lot of money to stay up in the air and become a successful business and I don’t think the private sector will be prepared to put in that sort of money into South African Airways and that means if the taxpayers doesn’t support South African Airway then I’m afraid I don’t think it’s going to fly,” Roodt says.
The airline is expected to open up with domestic flights from Johannesburg to Cape Town, as well as serve African destinations Accra, Kinshasa, Harare, Lusaka and Maputo.
It vowed more routes would be added at a later stage.
Listen to Roodt below:
