SAA to buy new planes as govt looks at funding

2014-07-17 08:54

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South African Airways (SAA) is preparing an order for new planes as the government reviews the carrier’s finances to ensure it remains sustainable.

SAA wants to renew its aging fleet with more fuel-efficient long-haul aircraft.

An initial tender for wide-bodied planes was withdrawn last year to refine terms that would require the supplier to promote local industrialisation, SAA CEO Monwabisi Kalawe told reporters in Cape Town yesterday.

“The target to complete the acquisition is the end of the current calendar year,” said Kalawe.

SAA posted a R991 million operating loss in the year up to March 2013, which it attributed to soaring fuel costs, a weaker rand and unprofitable routes.

The carrier says it is undercapitalised and needs government support to remain viable.

Public Enterprises Minister Lynne Brown, who oversees SAA, said her department and the National Treasury are considering how to ensure that SAA and state-owned South African Express Airways remain going.

“It has become clear to me that simply extending state guarantees to the airlines is an inadequate response to the challenge and an extraordinary intervention is required to put them on a sustainable footing and to support their turnaround efforts,” Brown told reporters in Cape Town.

“It might mean we have a different business model that rationalises the two companies. SAA is a national asset, it’s a strategic asset.”

Meanwhile, 18 of the 20 people who were injured when an SAA flight from Johannesburg to Hong Kong hit severe turbulence have been discharged from hospital, Sapa reported.

“The two passengers who sustained serious injuries remain in hospital for observation,” said airline spokesperson Tlali Tlali yesterday.

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