Oxford Economics: SAA to boost SA’s economy by R32bn in 2030

South African Airways (SAA) has been the subject of much scrutiny and challenges over the past decade, culminating in its entry into business rescue in 2019. However, a recent study commissioned by SAA from Oxford Economics Africa has shed light on the airline's significant economic contribution to South Africa. The report, which analyzed the direct and indirect activities of SAA, revealed that the airline's Gross Value Add to the country's GDP in the 2023-2024 financial year amounted to a substantial R9.1 billion. To delve deeper into these findings, Marietha Jacobs, Senior Econometrician at Oxford Economics Africa, joined CNBC Africa for an insightful discussion. The study aimed to understand SAA's impact on the economy, encompassing not only its day-to-day operations but also activities across its supply chain and the wages it pays to its employees and those within its supply chain. These various elements collectively contribute to SAA's overall economic contribution. Additionally, the study examined the economic activity enabled by SAA, including the facilitation of international tourism and trade, which further boosts economic growth. The findings of the study projected a significant increase in SAA's economic impact on South Africa's economy, with the figure expected to soar from R9.1 billion to R32.6 billion by 2030. This growth is anticipated across all key elements, namely its core impact, tourism impact, and trade impact. The projections were based on SAA's revenue, flight, and passenger forecasts up to 2029-2030, providing a five-year view of the airline's potential economic contributions. The key inputs into the economic model included SAA's strategic plans and revenue projections. With regards to the direct impact of SAA, which comprises its core activities and supply chain operations, the study estimated a figure of R8.8 billion for the 2023-2024 financial year. This number is predicted to rise to R22.6 billion by 2030, driven by SAA's plans to expand its routes to key international markets such as the EU, China, and North America. The study also analyzed the indirect impact of SAA, highlighting the growth in the group's procurement expenditure from R2.7 billion in 2023-2024 to an impressive R13.3 billion in 2030. This expansion is largely fueled by SAA's increased operations and the subsequent rise in spending, particularly on areas such as fuel and other business services. Furthermore, the study explored the induced impact of SAA, emphasizing the ripple effect of the airline and its supply chain's wage payments on the broader South African economy. As SAA expands its routes and operations, the study foresees a boost in economic activities and further expenditure within the country. The conversation also touched on the trading partners of SAA, with a focus on key markets such as China, Germany, and the United States. The study acknowledged that the economic performance of these trading partners could influence SAA's cargo volumes and overall business operations. While uncertainties, such as changes in trade policies and tariffs, may pose challenges, the core message of the study remains clear: SAA plays a vital role in the economic landscape of South Africa and is poised for substantial growth as it expands its operations both locally and internationally.