July 6 (Bloomberg) -- South African Airways, the state-owned airline, needs to start flights to every African capital city and cut routes to destinations on other continents, Public Enterprises Minister Malusi Gigaba said.
“The African routes are profitable, but they are being undercut, undone by the unprofitable international routes,” he said in an interview in Pretoria, South Africa’s capital, yesterday.
The airline will add flights to Ivory Coast and Congo Republic in August and September, it said June 27 and has begun flying to six new African destinations since October. The airline serves 20 African destinations, it said in its 2011 annual report.
South African Airways has this year stopped flights between Cape Town and London as it competes with Virgin Atlantic Airways Ltd. and British Airways, a unit of International Consolidated Airline Group SA. Gigaba said in May that the company will need government money to fund aircraft purchases. No immediate assistance is planned, he said yesterday
The airline was in talks with the Department of Public Enterprises and the National Treasury for funding of between 4 billion rand ($490 million) and 6 billion rand, Johannesburg’s Business Day newspaper said on Feb. 15, citing Chief Financial Officer Wolf Meyer.
SAA needs a new strategy and to prioritize flights to Africa, Gigaba said.
“It needs a whole new re-think,” he said.
While the state recognizes the strategic importance of the airline for South Africa, it cannot keep approaching government for financial assistance, he said.
National Treasury and the Department of Public Enterprises are discussing re-capitalizing SAA “for the medium to long term,” needed more information from the carrier, commented Gigaba.
SAA, which is based in Johannesburg, competes with airlines including Nairobi-based Kenya Airways Ltd. and Ethiopian Airlines in servicing African routes. SAA is a former unit of state transport company, Transnet SOC Ltd.
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