The carrier, despite great odds, managed to turn a reasonable ZAR398 million (US$54.2 million) this year, reversing a whopping loss of ZAR1.09 billion it saw in 2008-09. Indeed, the profit stunned many including the then acting CEO Chris Smyth, leading him to wonder aloud during the results presentation: “You must be surprised, just as we were surprised!”

With ample experience in the commercial air industry – Siza Mzimela was CEO of the low-cost SA Express carrier – she has her work cut out for her. Currently SA Express and a number of other carriers including SAA are being investigated over alleged fixing of ticket prices to maximise profits from the upcoming soccer world cup event, something Mzimela flatly denies. As for her new post: “I have no plan yet, but I do have a sense of what things to start working on,” Mzimela said, quickly adding that her first act would be to stabilise the company’s working environment.

Despite talk of privatisation – South African media have been reporting that the government is keen to hive off SAA’s divisions, among them the specialist cargo division – the cargo division has remained focused – and profitable – moving 200,000 tonnes annually within Africa, to Europe, Asia Pacific and the Americas using belly space of its passenger aircraft and its five freighters.

The freighter fleet consists of two Boeing 737-300Fs and two Boeing 737-200Fs (converted from passenger aircraft by SAA Technical) and a Hawker Siddeley 748F (used specifically for intra-Africamarkets).

Riding out the recession
Like all carriers, the global recession hit the cargo division with SAA Cargo (SAAC) spokesman, Thola Nzuza saying, “current trends are showing that the volumes have started picking up but yields are still being eroded due to oversupply of capacity available within the market.”

SAAC has been able to maintain the small rise in tonnage primarily because Siza Mzimela, South African Airways’ (SAA) newly-appointed CEO, is a determined and feisty lady and quite likely just the right person that the carrier needs to lead it out of the woods, although she doesn’t need to worry about the cargo division. Manfred Singh reports. airfreight in Africa holds prime position. The country – in fact the whole continent – does not have good ground or water transportation. Air is the only viable option in many cases.

The last couple of years has seen a growth in air traffic between Asia and Africa, driven in part by substantial Chinese investment in the continent driven by China’s hunger for minerals and ore. This traffic has, over the last year, for example kept SAAC, profitable even though revenue year to date dropped by 33 per cent compared to the previous year reflecting the impact of current global trading conditions and fluctuation on the foreign exchange market.”

The difficulties brought about by the recession, did not hamper operations and services as “most destinations were normal except where SAAC had to impose an embargo where there were inadequate ground handling facilities,” said Nzuza. Perhaps most important though, was the fact that the freighters did quite well. “Our freighters held on very well in spite of the fact that we had a very challenging year. For example, we introduced Luanda as new cargo route resulting from renewed bilaterals between South Africa and Angola,” said Nzuza.

Looking to expand
SAAC is keen to start new routes to expand its geographic footprint and while it looks to short- to medium-haul routes, SAAC is also looking for tie-ups with other African airlines. It is keen to enhance the domestic courier market which will enable it to move from South Africa into the rest of Africa. In the southern region for example, SAAC has used a road feeder network to move into countries like Botswana, Namibia,Lesotho, Swaziland and Mozambique.

As for continental Africa, SAAC piggybacks on the passenger network to touch Lagos, Accra, Lusaka, Entebe, Kinshasa, Harare, Luanda, Maputo and Nairobi. This is in addition to its dedicated freighter services in the regional markets.

While the forays into other parts of Africa by SAAC are part of the overall strategy to gain market share, SAA’s strong presence in Johannesburg remains key. It’s home hub is the hive of activity providing seamless connectivity and extensive network distribution to all domestic and international markets intoand out of Africa.

At the same time, the carrier is keen to develop strong hubs in west, central and east Africa with the enhancement of intra-Africa services. “We are planning to strengthen our presence in key markets especially in west Africa and central Africa,” said Nzuza. This strategy has seen new operations in markets like Libreville (Gabon) and Douala (Cameroon).

“Our plan is to leverage on our partners and line operations and to strengthen our freighter operations. We have been encouraged by the potential of these markets and will, therefore, focus on forming alliances and developing strategic hubs. We currently provide our customers with seamless connectivity to 20 destinations in Africa and will continue to look for new opportunities presented by our wider network,” said Nzuza.

One of the partners could well be EgyptAir (like SAA it is a member of Star Alliance), with which SAA was reported to be talking to regarding some form of tie-up.

“Any viable partnership could mean broader network and present us with opportunities to offer our customers more air freight solutions,” said Nzuza. These opportunities would come in handy considering the onslaught from the Middle Eastern carriers which have targeted Africa as one of their main areasof growth.

The Middle Eastern challenge
SAAC takes this challenge from the Middle East seriously. “We know that this may lead to yield erosion and thus shrink our market share,” Nzuza agreed. “However, SAAC is a well established business with better connections in most African destinations and therefore are confident that we will remain the leader in Africa.”

The market has also been supportive according to Nzuza: “The market has been tough and SAAC has been able to hold tight in all markets we serve. We have also offered our customers ad hoc charter service giving them more options while attending to their urgent needs which resulted in stability for our markets.”

A solid pillar has been the regional perishables sector. “The regional tonnages reflect a marginal decline on our budget. The tonnages decreased by 13 per cent – slightly lower than the previous year,” said Nzuza. However, while perishables is the most popular product, there is a range of general cargo commodities like telecommunications, auto parts, textiles, etc.

A solid focus
SAAC’s success also lies in its strategic focus. “As a business,” said Nzuza, “we remain focused on our mission and with the improving economic conditions our success lies in growing the business. Our business plan is informed by our strategic objectives, which is to grow our revenue; establish a service culture with affinity to our customers; and exploit technological advances to reduce cost of doing business.”

The strategic agenda, in fact, was chalked out when the restructuring programme was launched in May 2007. The programme ranged from simplifying and right-sizing the business. On its part, the cargo division has taken measures to reduce costs and optimise operations. The technology that has been implemented is a new generation web based system called i-Cargo. The benefit of the new system will be to improve our operational efficiencies providing, what Nzuza referred to as “our customers peace of mind and also making sure that all our revenue is accounted for as it gets captured on the system”.

In addition to i-Cargo, SAAC has joined IATA’s Cargo 2000 initiative. The cargo division hopes that the move will enhance not only its own quality product, but the quality of air cargo in Africaoverall.