SAA CEO Matshela Seshibe Outlines Challenges and Recovery Path Amid Middle East Tensions
South African Airways (SAA) is navigating a complex operating environment as rising jet‑fuel prices, governance shortcomings, and shifting travel demand test the airline’s post‑rescue trajectory. In a recent interview with Business Day, newly appointed CEO Matshela Seshibe detailed the carrier’s priorities, the impact of the ongoing US‑Israeli conflict with Iran, and the steps being taken to stabilise finances and restore confidence.
Fuel Cost Surge and Operational Adjustments
Since hostilities began in late February, the price of aviation fuel has climbed more than 140 %, a development Seshibe described as “the single biggest cost pressure” facing the airline. Jet fuel typically accounts for roughly 30 % of an airline ticket price, meaning the increase directly translates into higher fares and thinner margins.
To mitigate the effect, SAA has:
- Revised its cost‑model and value‑chain framework to capture real‑time fuel price movements.
- Engaged passengers in a collaborative effort to absorb fare adjustments where possible.
- Implemented daily monitoring of fuel markets, allowing rapid tactical responses.
These measures aim to keep the airline from slipping into a net‑negative cash position while demand remains volatile.
Governance and Financial Reporting Priorities
Auditor General findings for the 2024/25 financial year highlighted “poor” financial reporting, revenue losses, significant deficiencies in internal controls, and accounting inefficiencies. Seshibe acknowledged that these weaknesses led to a disclaimer opinion, meaning auditors could not rely on SAA’s statements.
In response, the airline has made governance a focal point for the current fiscal year:
- Establishing a dedicated governance task‑force reporting directly to the board.
- Rolling out enhanced internal‑control frameworks aligned with King IV™ principles.
- Investing in staff training and upgraded accounting systems to improve data integrity.
The CEO stressed that building the “building blocks” for improvement will be reflected in the upcoming financial year 2027 (F27) reporting cycle.
Passenger Demand Shifts and Network Tweaks
Ticket sales have softened, particularly among “value” travellers on domestic routes. Business, government, and long‑booked foreign travellers continue to show stable demand, whereas budget‑conscious passengers are re‑evaluating the trade‑off between flying and driving.
Seshibe noted:
“Before the hostilities began, it was cheaper to fly to Durban than to drive your own car. Consumers will continue to make these trade‑offs as fuel prices fluctuate.”
To align capacity with demand, SAA has made strategic adjustments:
- Reduced frequency to Gaborone from two flights per week to one.
- Cut back on certain Cape Town‑based routes.
- Undertaken a market‑by‑market review of travel timing and load factors.
These actions are intended to preserve cash while maintaining core connectivity for higher‑yield segments.
Workforce Expansion and Financial Outlook
Following an aggressive restructuring that trimmed the workforce to around 500 employees during the corporate rescue phase, SAA has since increased headcount to approximately 1,700 staff—a rise of about 30 %. The airline now reports a turnover exceeding R10 billion, signalling significant top‑line growth.
Nevertheless, Seshibe cautioned that revenue expansion has not yet been matched by financial‑accounting maturity, a gap reflected in the Auditor General’s report. Ongoing efforts focus on closing that divide through:
- Adoption of International Financial Reporting Standards (IFRS)‑compatible processes.
- Regular reconciliation cycles between operational and finance teams.
- External audits conducted quarterly to provide early warning of discrepancies.
Outlook: Hoping for a Swift Resolution to Regional Conflict
Like many industry peers, Seshibe expressed hope that the Middle East dispute will be resolved soon, allowing fuel prices to stabilise and SAA’s recovery—initiated after exiting corporate rescue in April 2021—to regain momentum. He emphasized that, under current assumptions and strategies, the airline’s business fundamentals remain solid:
“With our current partners across the value chain—suppliers, agents, passengers, bankers, and shareholders—SAA’s business fundamentals are strong and will be sustainable for the future.”
The carrier continues to monitor daily fuel‑price evolution, demand trends, and governance improvements, aiming to avoid a relapse into financial distress while positioning itself for long‑term resilience.
