SAA fails to follow through on plans to lease more aircraft

Washington DC
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South African Airways (SAA) had dropped plans to lease three additional widebody aircraft by April and has deferred similar plans to lease three additional narrowbody aircraft.

In May, SAA said it was seeking to lease three additional widebody and three additional narrowbody aircraft in its current fiscal year to meet an immediate requirement for more capacity. The six additional aircraft were part of a board-approved new fleet plan that also included ordering new aircraft for delivery from 2010.

SAA head of business development Jason Krause says that, after looking several months for three Airbus A330 or A340s to lease, the airline has concluded it will be unable to find suitable widebody aircraft that can be delivered prior to its 31 March target date.

"When we started looking there weren't many aircraft, and what was becoming available was at a high cost. Now more aircraft are available but it doesn't meet our operational spec," Krause says.

He adds that the carrier does not "want to fly three odd balls" and reconfiguring the aircraft to SAA's specification would require too much time and money.

Industry sources say leasing companies were also reluctant to respond to SAA's tender because SAA only wanted to commit to a two-year lease term. Krause acknowledges this was an issue, and says SAA may be willing to commit to longer leases but wants to first see the outcome of a request for proposals for new aircraft that it plans to release in early 2009.

Krause points out the current gap for potential deliveries of leased aircraft and new aircraft is small, as SAA is hoping to begin taking delivery of new widebodies in 2010.

He says the number of leased widebodies may also change. "I'm not sure it's three given the current demand outlook," he says.

Krause says SAA is more likely to go forward with its plans to lease three more narrowbody aircraft. But he says it is also unrealistic that SAA will take delivery of any additional narrowbodies by the end of March.

He says SAA has received several offers for narrowbody leases and will take another look at availability in early 2009, with a view possibly to completing three lease deals at about the time it decides on its medium and long-term fleet.

"Hopefully by the middle of next year we'll have some certainty with the plan going forward," he says.

SAA currently 28 narrowbodies, including 17 Boeing 737-800s and 11 Airbus A319s. Four of its 737s are subleased to low cost subsidiary Mango.

On the widebody side, SAA operates nine Airbus A340-600s, six A340-300s, six A340-200s and one Boeing 747-400 which it reactivated at the end of last month.