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SAA looks to African routes to become ‘self-sustainable’

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(iStock)
(iStock)

Struggling state-owned airline, South African Airways (SAA), is banking on new African routes to fulfil its goal of being self-sustainable.

SAA launched a new route to the Nigerian federal capital of Abuja on Tuesday – taking the first batch of travellers on the seven-hour flight. This is the airline’s second route to the west African country. It already has daily flights to Lagos.

“The African region contributes a significant amount to SAA’s revenue,” said SAA’s regional general manager for Africa and Middle East, Aaron Munetsi, “and this new route is definitely part of the process to become self-sustainable”.

This initiative, Munetsi said, was in line with the airline’s Africa Growth Strategy. Munetsi said research has indicated that more people in African countries wanted to travel to South Africa and take connecting flights to the rest of the world.

SAA is cash-strapped and has unstable management as it has had seven chief executive officers over the past few years. It has been surviving on R14 billion worth of government-debt guarantees. It last posted a full-year profit in 2011 and has asked Finance Minister Pravin Godhan for more guarantees.

Munetsi said most of SAA’s African routes were profitable and the parastatal was now exploring adjacent markets, which means that they are not only flying to cities but to other centres in the targeted countries, for example, in tourism and trade hubs.

“This is what we’ve been doing. We want to fly to Enugu in (the south eastern part of) Nigeria because this is where most of the traders are based. In Cameroon we’ve been flying to Douala and now we also go to Yaounde,” he said.

“We are actually seeing the positive results of the turn-around strategy we started four years ago. Our network planning unit has tools to analyse and advise us on new routes to open,” he added.

SAA has been covering the southern African region at least since the past 15 years.

South African High Commissioner to Nigeria, Lulu Mnguni, said the new route will boost the ever-increasing bilateral trading between the two countries – which currently stands at R65 billion. In 1999 the trade between the two countries was worth R120 million.

There are 120 South African companies operating in Nigeria. These include MTN, Shoprite, Game Stores and Multichoice.

Mnguni described the relationship between the two countries as “symbiotic” and downplayed what appeared to be sporadic incidents of tensions.

“If we strengthen Nigeria, we also benefit. Their economic growth is also our opportunity to grow. Like all relationships, there are problems, but we are growing stronger and stronger,” he added.

Mnguni said South Africa has been co-operating with Nigeria in agriculture, mining, tourism and infrastructure development.

The MTN saga

Meanwhile, Mnguni said that there was hope the stand-off between the Nigerian government and MTN would be solved amicably and out of court.

The Nigerian Communications Commission imposed a R60 million fine on MTN for missing a deadline to disconnect 5.1 million unregistered SIM cards.

“I’ve been meeting the government and MTN officials here. The judge has put the matter back to the parties to reach an out-of-court settlement. There is hope and if MTN has violated any policies, our history must help us to do the right thing to keep our relationship,” Mnguni added.

Nigeria is MTN group’s largest market. MTN has 62.8 million subscribers in Africa’s most populous country of 170 million people. MTN operates in 22 countries on the continent and in the Middle East.

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