SAA Technical revenue plunges
83%: LOSS COMPARED TO THE SAME PERIOD LAST YEAR
Company has made a cumulative net loss of R1 billion over the last six years.
State-owned aircraft maintenance company SAA Technical (SAAT) has suffered a steep decline in its monthly revenue as the South African Airways (SAA) business rescue combined with the Covid-19 pandemic led to a drastic reduction in passenger numbers.
In March 2021, SAAT’s revenue was down 83% to R43 million compared to the same period last year when the company recorded around R246 million in revenue.
SAA accounted for only R9 million in revenue for its subsidiary in March compared to R150 million during the same month last year.
SAA’s low-cost subsidiary Mango Airlines and Comair (which operates British Airways and Kulula.com) accounted for R10 million and R16 million of the revenue respectively.
At the end of April, SAAT was responsible for maintenance and repair services for 34 aircraft fleets, including those of Mango, SAA and Comair. Prior to the pandemic outbreak, the company provided services to 86 fleets.
SAA accounts for 70% of SAAT’s revenue and 17 of its aircraft are currently maintained by SAAT, according to the aircraft maintenance company’s interim CEO Terrance Naidoo. Prior to the Covid-19 lockdown (implemented from March 2020), SAAT was responsible for 56 SAA aircraft.
Insufficient work
In a notice sent to the National Union of Metal Workers of South Africa (Numsa), the South African Transport and Allied Workers Union (Satawu), the Aviation Union of South Africa (Ausa) and Solidarity in April, Naidoo said the reduction in the number of aircraft in SAA’s fleet and those of other airlines means there is insufficient work for SAAT’s employees.
“SAAT has no choice but to seriously consider a reorganisation/reduction in the dedicated lines for wide body [aircraft] work,” he said.
Comair is out of business rescue but not all its aircraft are flying, partially due to the reduction in passenger numbers worldwide, according to Naidoo.
Comair spokesman Stephen Forbes says of the airline’s fleet of 23 aircraft, SAAT currently maintains 11 Comair-owned aircraft and four leased aircraft.
Lufthansa Technik Maintenance International (LTMI) maintains three Comair-owned and five leased aircraft.
Losses and bailouts
SAAT has no option but to consider a reorganisation
Naidoo says SAAT has made a cumulative net loss of R1 billion over the last six years. It has managed to sustain its operations with the help of continuous bailouts from government, but post-SAA business rescue, the company has to “stand on its own and generate revenue to sustain its operations”.
“SAAT cannot rely on inter-company loans nor financial bailouts to sustain its operations,” Naidoo said.
Although SAA exited business rescue in April, its subsidiaries SAAT and Mango have not been spared from the impact of the 16-month rescue process and the grounding of the SAA fleet.
SAA subsidiaries are due to receive R2.7 billion from the R10.5 billion allocated to the airline to implement business rescue.
SAAT and Mango are due to receive the bulk of the funding (R1.663 billion and R819 million respectively) but it is unclear whether these amounts will be sufficient to turn the tide.