South African Airways (SAA) acting CEO Nico Bezuidenhout has firmly denied reports that a stake in the airline is going to be sold to Air China. “Categorically, SAA is not in any talks with any airline to sell itself at the moment,” he stated at a media briefing at the SAA head office at OR Tambo International Airport, east of Johannesburg. “We’re not engaged with Air China in terms of selling a stake to Air China.”

He pointed out that selling part of State-owned SAA was a prerogative of government. However, SAA had three significant subsidiary operations: low-cost carrier Mango; maintenance, repair and overhaul business SAA Technical; and airline caterer Air Chefs. Selling part or all of any of these was a prerogative of SAA, but would require the approval of the shareholder (government).

“Air Chefs: there is definite [market] interest in that entity,” he reported. There is also interest in Mango. SAA is busy collecting these expressions of interest and will forward them to government during the first quarter of this financial year (which started on April 1). “We have not made any recommendations to the shareholder yet.”

Bezuidenhout also noted that SAA’s fleet acquisition plan had been significantly altered. The fall in fuel prices meant that there was no longer an urgent need to replace the airline’s four- engined Airbus A340 wide-body aircraft. (The airline has renegotiated its leases for three of these aircraft, saving R112-million a year, and is busy renegotiating the leases on the other five, which is expected to save another R150-million a year.) And the company is also using its other aircraft more intensively.

Ten new Airbus A320s have been delivered under a contract originally signed in 2002. Unfortunately, at that time SAA agreed to pay a premium on the price. “They’re great aircraft to operate,” he stated. “They’re great from a customer point of view, but every time we took delivery of one of the aircraft we had to take an impairment on our accounts.” This has had an impact on the company’s liquidity and insolvency situation.

As a result, SAA had to renegotiate the deal (which was for twenty A320s in total) with Airbus. This has been successfully done, and instead of getting the ten premium-priced A320s, the airline will get five A330 wide-body airliners at market price and so suffer no impairments. “It’s a very real and material saving,” he pointed out.

Thus, the fleet’s shape and size is now set for the next few years. “At this point in time we are not in the market for a single new wide-body aircraft,” he affirmed. The replacement of its eight A340s will be looked at over the next three to six years.

The company is also putting a lot of effort into realigning its services, to ensure better connections between domestic, regional and intercontinental flights. SAA will continue to operate in the domestic market but Mango’s operations will be expanded. “The entity (Mango) will be increased in size, as far as the domestic market is concerned.”

SAA is also looking at its staff complement. The base year for comparison is 2009, because that was the year the airline saw both its lowest staff, and highest passenger numbers. “Right now, there are 14% more people employed in this company than in 2009,” he highlighted. The reasons for this increase are being investigated in a process that is nearly complete. The airline is seeking to reduce its head count, while avoiding retrenchments – for example, by encouraging voluntary early retirement. “We need to find a balance.”