It was a shared tweet yesterday which rang the alarm bells, when it was suggested that South African Airways’ (SAA) current CEO, Nico Bezuidenhout, one of several the airline went through over the past few years, had raised the prospect that an airline, with which SAA has a strategic partnership agreement in place, may be interested in acquiring a share in the financially hamstrung airline.
South Africa, a member of global industry leader Star Alliance, is one of three on the continent of Africa after Egypt Air and Africa’s leading airline, Ethiopian, but largely due to its unfavorable location in terms of aviation geography, it has struggled to make a larger impact, in the alliance as well as on the continent itself. Despite this, it appears that Etihad may be interested in buying a share of the airline.
While sitting pretty for South-South connections, like to Australia and South America, the key routes from other continents are regularly using other entry points into the continent for onward connections with Nairobi and Addis Ababa, the two most commonly-used hubs to change planes and fly on with Skyteam member Kenya Airways or Star Alliance Member Ethiopian Airlines.
Not a word has come out of the Etihad head office in Abu Dhabi over the suggestion that a share acquisition could be on the cards, perhaps because Etihad’s top management also knows about aviation geography and has equally concluded, as have many aviation pundits, that along those terms, SAA is simply located at the wrong end of the continent to become a serious hub and spoke addition for a suitor.
Additional details were then sourced from the South African aviation fraternity who confirmed that SAA has apparently instituted a 90-day emergency plan to get the airline back on financial track, suggesting further that what SAA is really looking for is a strategic partner with deep pockets to finance a bailout, which the South African government has been slow in supporting and putting their money where their mouth is.
Bezoidenhout, who served before – and with a measure of success – as CEO, had initiated a long-term, 12-year turnaround plan to unfold in four phases but subsequent CEOs, acting and substantive, clearly lost sight of financial discipline and prudence and ran the airline back into the deep red. The source confirmed that part of the 90-day plan is to identify a suitable strategic and financial partner capable of closing the growing gap between revenues and expenditures with a cash injection, and then perhaps in a major management shakeup, turn the fortunes of SAA around.
Of course, seasoned aviation observers will know that Etihad, which was named, took several years to come to a deal with Alitalia, which was equally debt ridden, running up losses as if there was no tomorrow, and was, just like SAA, facing action from strong labor unions not happy about pending job cuts and streamlining operations with the aim to save money.
Time will no doubt tell, and it will be a game of cat and mouse to see what additional information can be obtained over the next three months as the 90-day plan now hangs over SAA, and the success of which will very likely be nothing short but make or break.