SAA to add R32.6bn to the economy by 2029-30, study says

SAA, which emerged from business rescue in 2021, is projected to contribute R9.1 billion to the local economy in the 2023-24 financial year, and this will rise to R32.6 billion by 2029-30, according to a study published by economic advisory firm Oxford Economics Africa. 

This is based on the airline’s most recent financial statements as well as its revenue forecasts and flight and passenger projections, Marietha Jacobs, a senior econometrician at the firm, said on Wednesday.

The study says the airline is working towards rebuilding its operations and plans to bring online more domestic, regional and international routes over the medium and long term.

“As SAA expands its operations over the coming years by opening new routes, passenger and cargo volumes will rise, resulting in a substantially larger core economic footprint,” it said.

SAA interim chief executive officer John Lamola said the national carrier was “resized and repositioned to grow in a way that it will never look to the fiscal or to the shareholder for its survival”.

“It’s a sensible model on how a business and airline should choose to run itself,” he said at the launch of the Oxford Economics Africa report.

Oxford Economics Africa forecasts that SAA will support a cumulative 25 200 more jobs in 2023-24 and this will increase to 86 700 by 2029-30. The support to government revenue will increase from R1.5 billion to R6.4 billion for the same periods.

The study comes as SAA reported its first profit in more than a decade. Net profit was at R252 million for the 2022-23 financial year, while group revenue increased to R5.7 billion from R2 billion previously. According to the results, this was the first time the group had achieved “a positive bottom line since 2012, which was achieved with only six to eight aircrafts”.

Since exiting business rescue in 2021, the group was able to complete all its legacy debts, and remains debt-free.

Lamola said the airline’s approach to expansion was conservative. 

“SAA has the success that it has now because we have prudently been very conservative.  One, in the sense that in choosing the routes that we launched very carefully, and secondly, in not being caught up into the hype of wanting to recreate the giant, glorious past South African Airways,” he said.

“There is no ambition within our current strategic framework to recreate the old South Africa airways. That old South African Airways signed with a debt of R8 billion, which tells you that there were a number of very serious miscalculations.”

The national carrier currently flies 16 aircrafts, but is working on a trajectory to bring more than 40 aircrafts in the next five to 10 years. Lamola said with the “multiplier” effect, SAA would be able to fly to new routes and modify international routes.

“Those international routes generate substantive high currency for the country, and they boost our cash reserves in ways that will enable the airline to better survive between operation and muscle.” he said.