South African Airways leases two A350-900’s

south-african-logo-1.jpg

South African Airways, a state owned basket case of an airline if there was one, has been in a constant state of precarious financial trouble for years.

One of its biggest problems has been costly operations, with a fleet consisting of 9 A340-600’s and 7 A340-300’s, it has one of the largest four engine fleets outside of the worlds major European and Asian operators. Even with a fleet of 11 A330, it struggles not to make staggering state-funded losses, effectively funded by all tax payers.

A350-South-African-1024x599-800x468.jpeg

Some of its most important routes are to the US -JFK & Washington Dulles (IAD), but it’s a considerable distance (7,969 miles (12,825Km), and thats been the reason behind the A340 fleet being kept in service so long.

The trouble is the A340-600’s fuel consumption is nearly 40% more than the latest A350-900 versions, and it’s that that’s driving the need to replace them.

d3nt3yqxsaass9z.jpg-large.jpeg

In reality the airline and the South African treasury can’t afford to buy the A350’s so they will be leased, but they should provide a better return per seat kilometre than the A346’s. If they work out, and they prove themselves – which is of course theoretically inevitable, more could be on the cards and they should quickly assist in getting the airline into a positive balance sheet.

However, this is South Africa, and the airline is subject, as all state owned airlines are, to constant political interference. One of the airlines biggest costs is labour, and it has never been allowed to do what it needs to do to cut the workforce, as politicians worry more about jobs than the airlines profits, until it reports losses, when they moan about costs. Then they won’t let the airline cut the jobs it needs to and the cycle continues.

249de08f91a3f5ed36e36b40095368c6-a350_2.jpg

South African has an opportunity to reap rewards from aircraft like the A350. If it can persuade the government to allow it more, it will be able to replace its long range A340’s with viable economic aircraft. They have the range, and South Africa is a long way from its main markets.

One route that may provide benefits and increase market share on over time is LHR-JNB, which has BA and Virgin Atlantic flying twice a day at peak periods, up against South African. Modern aircraft and lower ticket prices should attract new customers.

The first pair of A350-900’s should arrive by October, in time for the South African summer and its busiest time of the year. The leaseholder hasn’t yet been officially agreed, but it’s looking like it might be through Airbus’ own leasing arm.

Advertisements