South Africa's new found international acceptance has forced its flag carrier sub- stantially to upgrade its fleet of long-range, wide-bodied aircraft and go on a billion dollar spending spree to compete with growing competition.

South African Airways will spend $1.1 billion acquiring some 10 new wide-bodied aircraft over the next three years and a further $23.6 million upgrading part of its 16-strong B747 fleet, due to be completed by April 1996.

The tourist boom, which has seen load factors rocket to 85 per cent in 1995 from the low seventies last year, has earned SAA a record profit of $66.6 million for the financial year ending 31 March 1995, compared to a loss of $6.3 million for the previous financial year. A source at SAA says the airline is expecting profits to grow by over 25 per cent this year, mainly due to the country hosting the Rugby Union World Cup.

But along with the benefits to SAA has come greater competition from foreign carriers. Only 16 foreign carriers flew to South Africa 18 months ago - a figure that now stands at 63.

'We are feeling the heat. Many of the carriers, especially those from the east, operate state-of-the-art equipment which has obliged us to upgrade our service and aircraft,' says a spokesman. He adds that SAA expects a 17 per cent increase in tourism for 1995/96, and that the planned additions to the fleet would increase capacity by up to 10 per cent.

To supplement its fleet of four B747-400s, which operate on the UK and US routes, the airline has called for tenders from Airbus, Boeing and McDonnell Douglas to supply it with the most economically viable fleet composition available. The most likely contenders are the Airbus A340, B777, and at least two additional B747-400s. The A340 and B777 could be used on the thinner European routes and to the Far and Middle East. The new fleet will be paid for from revenue and loans raised on the international markets.

Meanwhile, the airline has been forced to lease a B747-300 as a stop gap to service increased schedules and planned new routes. Among possible destinations to start this year are Los Angeles and Toronto. Also on the cards are a twelfth frequency to London, a third to Miami and direct flights to Amsterdam and Paris.

Source: Airline Business