South African Airways (SAA) has sought to reassure passengers as the deadline for a four billion Rand (USD$274 million) bailout nears. The South African government has until the end of today to inject the emergency funds for the State-owned airline after it entered ‘business rescue’ in December 2019. Sources claim that without the funds, SAA will be forced to go into liquidation.
In a statement, a spokesperson for the carrier said that it “wishes to assure its customers and stakeholders that flights to all its destinations continue as normal.”
“The airline is aware of media reports suggesting that it will cease operations. SAA is always committed to transparently communicate with all stakeholders, including customers, about any material or significant operational changes that may have an impact on flight schedules,” the statement continued.
“Where there may be flight schedule amendments, such operational changes will be managed and communicated in accordance with the industry norms and practices.”
Last November, a spotlight was shone on SAA’s perilous financial predicament when the debt-laden airline announced plans to axe nearly a fifth of its workforce in a desperate bid to cut costs. But the proposal to make as many as 944 of the airline’s employees redundant drew the wrath of trade unions who staged crippling strike action in protest.
In the end, SAA agreed to reverse its plans but instead entered into Business Rescue – in South Africa, Business Rescue gives financially distressed companies the opportunity to restructure. Entering Business Rescue affords some business breathing space from paying off debt and normally involves an independent Business Practioner overseeing a full audit of how the company does business in order to reduce costs and improve cash flow.
A Business Practioner may still decide that SAA needs to make employees redundant in order to reduce costs and make the company financially sound.
SAA hasn’t yet released its financial results for 2018 but analysts believe the airline lost as much as R9 billion ($606 million). In 2017, SAA recorded a loss of R5.6 billion.
Late last week, the airline put nine long-haul aircraft up for sale, including five Airbus A340-300s and four Airbus A340-600s. In addition, 15 spare engines and four Auxiliary Power Units (APU) were also listed for sale in an attempt to boost the carrier’s coffers.
A spokesperson said the decision to sell (or at least attempt to sell) the older aircraft was not as a result of the Business Rescue process but instead was the result of the airline leasing more fuel-efficient Airbus A350 aircraft.
