South African Airways (SAA) has secured a R1 billion government guarantee as rising fuel costs add to the pressure on the state-owned airline, which continues to face questions over its financial position and reliance on government support.

National Treasury Director-General Duncan Pieterse confirmed the guarantee, clarifying that it is not a direct cash allocation. Instead, the government would be required to pay up to R1 billion only if SAA defaults on its loans due to rising jet-fuel costs.

Rising jet-fuel prices amid the US-Iran conflict and disruption around the Strait of Hormuz have added further pressure to airline operating costs.

Guarantee Comes as Fuel Prices Climb

The guarantee provides financial backing for SAA as it navigates higher fuel costs. Jet fuel is one of the airline industry’s largest expenses, leaving carriers exposed to sustained price increases.

The arrangement does not necessarily mean SAA has received R1 billion in cash to fund operations. It serves as security for its loan obligations, with the government only liable if the airline defaults.

The support follows years of state assistance, with SAA having received approximately R50 billion in bailouts to date.

 SAA Still Searching for an Equity Partner

Treasury and the Department of Transport are working to find a strategic equity partner for SAA, following Cabinet approval for a renewed search after the proposed Takatso Consortium deal collapsed in 2024.

Pieterse said bringing in a partner was necessary to reduce the airline’s reliance on further bailouts.

SAA reported a profit of R30 million in the 2024/25 financial year, while the wider group, including SAA Technical and Air Chefs, recorded R162 million. It is worth noting that the airline’s profit was largely driven by the sale of its Heathrow Airport landing slots, raising questions about the sustainability of its underlying financial performance.

The airline’s latest financial statements have yet to be released, with forecasts reportedly pointing to a difficult period ahead.

Concerns Over Profitability

Dr. Guy Leitch, editor of SA Flyer magazine and an aviation industry professional, has questioned whether SAA is operating profitably enough to sustain itself without further government assistance.

Leitch warned that weaker travel demand and higher fuel costs could constrain the airline’s ability to expand key routes. He also raised concerns about whether the Auditor-General could flag SAA as a going concern, following a disclaimed audit opinion on its 2024/25 financial statements. Describing the situation as a return to the airline’s “bad old days”, Leitch also expressed scepticism about the prospects of securing an equity partner, pointing to concerns over state intervention in SAA’s management.

Finding an investor remains a key part of government’s plans to put the airline on a more sustainable financial footing. However, with fuel costs rising, questions surrounding its profitability and a new equity partner still to be secured, SAA faces continued pressure to demonstrate the sustainability of its operations without continued state assistance.