SAA looks at Togo airline to expand in West Africa

SAA CEO Monwabisi Kalawe. Picture: PUXLEY MAKGATHO

LOSS-MAKING South African Airways (SAA) is considering a stake in a Togo-based airline as part of a strategy to develop its West African business.

An SAA team would visit Ghana early next month to assess that country’s potential as a regional hub for SAA-operated flights, SAA CE Monwabisi Kalawe said this week. Setting up a hub in the region is one of the key points for the airline’s long-term turnaround strategy.

Mr Kalawe said the trip was at the invitation of Ghanaian aviation officials, after they had signed an agreement for the Airports Company SA (Acsa) to upgrade airports there.

One of the options under consideration is to partner with Ghanaian investors in acquiring part of Asky, which operates out of the Togolese capital, Lomé, and relocate it to Accra.

Asky (pronounced A-Sky) began commercial operations in 2010, having been formed at the instigation of West African states following the collapse of pan-African airline Air Afrique.

Shares in Asky are held mainly by private-sector investors, although the presence of Ethiopian Airlines as a strategic shareholder could be an obstacle to SAA’s plans.

The Ethiopian national carrier is the fastest-growing African airline and is SAA’s most potent Africa-based competitor.

Mr Kalawe gave no indication of the cost of an Asky deal. SAA has long been waiting for a multibillion-rand capital injection from the Treasury and has been surviving by borrowing against a R5bn government guarantee.

Mr Kalawe also declined to respond to market suggestions that SAA’s losses this year could sharply deteriorate after improving from R703m in 2012 to R425m last year.

He reiterated previous statements that if SAA’s turnaround strategy worked, the airline would break even by 2018-19 before entering a period of sustained profitability.

Mr Kalawe himself has been under fire recently after he was accused of personally trying to buy shares in troubled Senegal Airlines after it proposed that SAA acquire a stake early this year.

After denying the allegations, he was backed up by both the SAA board and former public enterprises minister Malusi Gigaba.

Mr Kalawe said SAA originally wanted to create flight hubs in both East and West Africa, but after deciding the former was almost saturated — mainly through the operations of Ethiopian and Kenyan airlines — decided to concentrate on West Africa.

Nigeria and Senegal were both considered as bases for the region before SAA settled on Ghana.

He said West Africa was under-served by airlines.

An SAA hub in Ghana would make air travel to and within the region more convenient. It would also enable SAA to expand its profitable African services.

If all goes according to plan, West Africa will eventually account for 10% of SAA’s operations, compared to 2% now.

SAA will have to make a decision soon on new long-haul aircraft. Its fleet of wide-body aircraft is less fuel-efficient than new-generation aircraft.

Mr Kalawe confirmed that the aircraft would be leased. “We simply don’t have the money to purchase.” SAA hopes to start taking delivery from 2017. “We can’t be profitable without them.”

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