The successful turnaround of Cathay Pacific, the flag carrier of Hong Kong, after the airline plunged into crisis because of Covid-19 lockdowns, through smart strategic partnerships, a new aviation industry-experienced management and board, impeccable governance, improved efficiency and customer-friendly service, offers a turnaround path to South African Airways.
In July 2025, SAA published its financial results 10 months late. It reported that a R431-million accounting error has wiped out its previously published profit for the 2023/24 financial year. This error caused a loss of R354-million, a reversal from the previously reported profit of R60-million.
The company has battled with managing its finances since 2018. Its 2019-2022 financial audits were only completed recently. In the past, SAA has been beset by mismanagement, corruption allegations and loss-making. Between 2007 and 2022 it received bailouts of more than R50-billion from the government. In March 2025, the Special Investigating Unit announced it had formally added SAA to a list of state institutions to be investigated on allegations of “serious maladministration, corruption and unlawful conduct”.
On the upside, SAA generated revenue of R7-billion, which showed a 23% year-on-year increase for the company. It reported healthy cash and cash equivalents of R1.4-billion. It had R6.4-billion in equity. SAA’s revenue rose 183% to R5.7-billion in 2022/23. And has no borrowings. It has now eliminated its past obligations. Since September 2021, since it restarted its operations following business rescue, SAA has increased its networks to 16 routes. It doubled its aircraft fleet to 18. Its number of flights increased by 42%.
However, without an equity partner, SAA is systemically vulnerable to any financial volatility. The airline’s proposed equity deal with the Takatso Consortium, which would have seen a 51% stake taken over by private investors, collapsed in March 2024.
As SAA struggles with finding an equity partner and state ownership of the airline having been ineffective, it needs a new, more diverse share ownership model, which excludes the state from being the major owner, although still giving the state a part-ownership role.
The diverse private-public-state shareholder ownership model of Cathay Pacific which drove its successful turnaround, could be a model for SAA.
As of March 2024, Cathay Pacific operates as a publicly listed company, with Swire Pacific, a private company, being the largest shareholder. Air China owns the second-largest shareholding and Qatar Airways the third-largest stake. The majority of Air China is owned by the state-owned China National Aviation Holding. This diverse shareholding structure, private, public and state-owned enterprise ownership should be looked at as an option for SAA.
Cathay Pacific plunged into a devastating crisis following Covid-19 lockdowns. The Hong Kong government, in 2020, then agreed to lead a $5-billion bailout of Cathay Pacific, taking a minority stake in the carrier. Cathay and parent company Swire Pacific had sought to raise $5-billion in new capital to help the airline survive the Covid-19 crisis. The Hong Kong government provided the bulk of the new funds by giving a $3.5-billion bailout package, consisting of loans and preferred share purchases. The remaining capital came from issuing new stock. Under the bailout deal, Aviation 2020, a limited company owned by Hong Kong’s government, took 6% share in Cathay. The government would appoint two observers to Cathay’s board. By July 2024 Cathay had bought back the remaining half of the preference shares issued to the government as part of the Covid-19 bailout package during its recapitalisation in 2020.
SAA could do well by securing a cash-rich international airline partner, like a Qatar Airways, combined with a domestic private sector partner and the remainder of the shareholding could remain with the state, preferably owned or management by a specialist state entity, like, for example the Public Investment Company, rather than a government department, as is the case currently.
Cathay Pacific’s post-pandemic turnaround strategy is also instructive to SAA. Cathay Pacific brutally cut areas of the company that were non-essential. The airline closed down Cathay Dragon, the regional arm of the airline (equivalent to state-owned SA Express) in order to streamline its operations. The 35-year old Cathay Dragon had tanked during the Covid-19 lockdown crisis. To bring down costs and increase efficiencies, the airline used the pandemic to get rid of all of its older aircraft such as the expensive-to-operate Airbus A340, which SAA continues to use. Furthermore, as part of its post-Covid-19 turnaround strategy, the organisation right-sized its staff numbers, and reduced the pay of remaining staff.
Cathay Pacific has tightened up its governance. Poor governance led to SAA being placed in business rescue on 5 December 2019.
Appointments and contracting are made based largely on merit. The company has focused on making decisions, whether on deciding on routes or vendors, based on maximising its commercial profitability, rather than on political considerations.
The airline has a management team of incredibly talented, industry-proven individuals widely respected in the global aviation industry. Again, SAA can take a leaf from this.
In late 2022, Cathay Pacific appointed an experienced top management and board to steer the turnaround. Ronald Lam, Cathay Pacific’s CEO since 2023, has been with the airline since 1996. He has extensive experience in commercial, cargo and customer operations, having also led the low-cost carrier HK Express. Patrick Healy, executive chairperson since 2019, has more than 30 years with Swire Group. He held leadership roles across aviation and consumer businesses, including CEO of HAECO Xiamen and managing director at Swire Coca-Cola HK (Cathay Pacific, 2019).
Cathay Pacific pivoted its strategy on operating as an international aviation connecting hub. It has capitalised on Hong Kong’s position by building a strong network across Asia, connecting key regional markets to global destinations. Its central location enables efficient east-west and north-south connectivity, essential for both business and leisure travel. SAA has huge potential to operate in a similar way, connecting East to West. There is a huge market to connect Asia and South America, Africa and Australia/Asia as well as Europe and Australia.
In a highly competitive aviation market, Cathay Pacific, has focused on delivering leading, world-class, superior, efficient, clean and friendly services as a differentiator. In 2024 it was named in the Skytrax World Airline Awards, the fifth-World’s Best Airline, the World’s Best Economy Class airline and the World’s Cleanest Airline. A revitalised SAA can, like Cathay Pacific, prioritise delivery efficiency, and superior, clean and friendly services. To do so it must be depoliticised, appoint management and boards based on merit, ensure impeccable governance and make smart strategic partnerships. It must improve efficiencies, and prioritise providing customer-friendly and clean services. DM
Emil Gumede is an aviation analyst based at Sussex University.
This is an extract from his occasional paper, “Rebuilding South African Airways Through Strategic Partnerships and Improved Governance”, Inclusive Society Institute.