South African Airways (SAA) is close to finalising a new deal with Airbus that will recommit the carrier to 15 A320s originally ordered in 2002, and could include additional A320s plus potentially more A340s.
SAA late last year issued requests for proposals to Airbus and Boeing for a wide mix of new narrowbodies and widebodies. But industry sources say SAA has decided against accepting any of the offers, which would have allowed the carrier to renew its entire 50-plus aircraft fleet by 2020. Instead SAA in recent months has been in exclusive negotiations with Airbus over settling a long-running dispute by re-visiting and expanding its original 2002 order.
SAA in 2002 ordered 15 A320s for delivery from 2010 as well as 11 A319s and 15 A340s, which have already been delivered. In 2004 SAA said it was cancelling the A320 part of the order, but Airbus never acknowledged the cancellation and continued to keep the order in its books.
Sources believe the new deal will ensure the 17 737-800s operated by SAA and the four 737-800s operated by SAA low-cost subsidiary Mango will eventually be replaced by A320s. They say the deal will likely include about 20 A320s and potentially six A340s.
An SAA spokeswoman confirms that "SAA and Airbus are currently in negotiations and good progress is being made on reaching an agreement". But she wouldn't rule out a future acquisition of Boeing narrowbodies, saying "SAA will continue operating a mixed narrowbody fleet until such a time that a decision is made on a long-term fleet".
The spokeswoman wouldn't say when the agreement with Airbus is expected to be finalised but one source says board approval will likely occur at SAA's annual general meeting in September.
Mango CEO Nico Bezuidenhout confirms a transition to an all A320 fleet is the most likely outcome for the low-cost carrier. Mango, which subleases all four of its 737-800s from SAA, had been considering taking more 737-800s from SAA in the event its parent ordered A320s and switched to an all-Airbus narrowbody fleet. But Bezuidenhout now says Mango prefers to be part of the new Airbus purchase.
"If SAA goes with Airbus we'd be the only 737-800 operator in southern Africa. From a maintenance, spares and training standpoint it doesn't make sense," he says.
While Mango is not currently looking for additional aircraft, Bezuidenhout says the carrier plans to expand its fleet to 10 aircraft within three to five years. He adds Mango, which is participating in the evaluation of new aircraft from "a group context", hopes there is an outcome soon because leases on Mango's 737-800s start expiring in 2010.
Airbus and SAA have not yet decided on delivery slots for the new A320s but sources say short-term lease extensions for some of the 21 737-800s at SAA and Mango are likely. Most of these leases come up for renewal in 2011 and 2012 - or 10 years after the aircraft, which were ordered in early 2000, were delivered.
Sources say while Airbus never cancelled SAA's A320 order because it never received proper notification, it has re-allocated the carrier's original delivery slots. But given the current downturn, there could be opportunity for SAA to take over A320 slots from other carriers.
The soon-to-be-completed deal with Airbus is a blow to Boeing, which was hoping to convert SAA or at least Mango into an all-Boeing narrowbody operator. But Airbus clearly had an inside track because SAA was potentially liable for 1.5 billion rand ($183 million) in unpaid pre-delivery payments (PDPs) if it formally cancelled its A320 order. These PDPs were listed as "potential challenges" in an SAA presentation to South Africa's parliament last month and Bezuidenhout confirms the liability from the original Airbus order has been a factor in the new aircraft evaluation process.
SAA also began looking at new widebodies last year to meet a mix of short and long-term requirements. SAA had said it required additional widebodies for growth from 2010, replacements for its six leased A340-200s from 2012 or 2013 and next-generation widebodies - either 787s or A350s - from about 2015.
But the SAA spokeswoman says the expansion plan the carrier announced last May, which envisioned the acquisition of growth aircraft from as early as 2009, has been put on hold. "Market conditions at that time indicated that we would need extra aircraft to operate additional routes planned, but due to the economic downturn this was not realized," she says.
SAA also confirms it has deferred evaluation of the 787 and A350. "SAA's longer term fleet plan will be undertaken in line with network requirements and the restructuring plan. This will be based on a competition with manufacturers to be undertaken in due course."
But sources say for the A340-200 replacement requirement Airbus now has on the table six new A340-500/600s, which could become part of the A320 settlement. SAA already operates nine A340-600s plus six A340-300Es. While the -300s and -600s were all delivered earlier this decade the A340-200s are all now at least 15 years old according to Flight's ACAS database.
Source: Air Transport Intelligence news
