The embattled South African Airways this week returned four more leased airplanes to their lessors, leaving the airline with only five to use, and with several questions about its ability to continue operations.
This comes after the airline had initially returned 17 aircraft in mid-June, followed by a second batch of another 14 aircraft earlier this month to multiple countries in Europe.
After the return of the second batch, SAA was left with only nine aircraft and with this week’s return of four more, it has only five planes to run its business with.
At the moment, three A319s and one A330-300 are being stored in South Africa. In terms of the rescue plan, the airline will require six aircraft when restarting operations, fin24 reports.
When SAA went into business rescue in December 2019, its fleet consisted of nine owned aircraft and 40 leased ones.
However, the airline’s business rescue practitioners decided to have all agreements the state-owned airline had for the lease of planes terminated by the end of July.
The return of the most recent batch of planes to their lessors was because they had elected to initiate the termination of the leases, which would put the planes back into their control, the rescue practitioners said.
Meanwhile, the nine aircraft actually owned by SAA – five A340-300s and four A340-600s – which have been for sale since January, have still not attracted any buyers and are unlikely to do so.
The reasons for this are that the market globally is in the doldrums and nobody has an appetite to buy new aircraft, said aviation expert Linden Birns, managing director of Plane Talking. The planes are now one generation old, which means they would be costly to run from a technological viewpoint, which makes them less attractive to buyers.
In fact, Birns says, it might be better for SAA to just dismantle the aircraft and sell all usable parts for scrap, including the engines, seats, brake pads, toilets and so on. The aliminium used in airplanes’ bodies can’t be recycled for aviation and usually ends up as soda drink tins.
But if the airline needs six aircraft to operate, in terms of the rescue plan, the question remains where will SAA get these planes from as it does not have money to buy new planes. It is also unlikely that lessors would want to enter into new lease agreements.
Although it should in theory be possible for airlines to negotiate cheaper lease rates than before the Covid-19 pandemic, which saw air traffic plummeting and airlines around the world incur staggering losses, there are problems as far as South Africa is concerned, according to Birns.
First of all, how will SAA pay for the leased planes as government has refused to a further bail out of the airline in terms of the rescue plan, while the department of public enterprises and Treasury only gave a letter of commitment to “mobilise” funding for the rescue plan.
Finance Minister Tito Mboweni has repeatedly dodged the issue of where this funding will come from, most recently on Thursday during the debate on National Treasury’s budget vote in parliament.
In the light of this and other thorny questions around the costly maintenance of leased aircraft, which have to be returned to lessors in the same condition as they were leased in, lessors are not likely to be eager to lease any more planes to SAA.