Monday, 2 December 2019

All options on the table for struggling South African Airlines

It has been reported that some intense discussions have been ongoing over the last few days between South African Airways (SAA) and its lenders in an effort to secure some much-needed rescue funds. 

The cash-strapped airline is looking to revise its operational and structural position as government ministers are contemplating pulling the plug on the loss-making carrier.  transition, the country’s public enterprises ministry said on Sunday.  SAA hasn't made a profit since 2011 and has been existing on government bailout after government bailout to just survive. Pravin Gordhan, of the South African Public Enterprises Ministry, has said the struggling state-owned airline could not continue in its present form, it needs “radical restructuring” to ensure financial and operational sustainability. “Over the past few days there have been intense discussions with lenders to secure the necessary funds to cover the operational and structural transition over the next few months,”.

According to reports, the ministry is looking at a number of options to turn around SAA, including a large portion of the operation being taken over by Ethiopian Airlines, or a joint partnership being formed between the two enterprises. 

"The government is committed to a viable, sustainable, profitable national airline. It is our collective responsibility as South Africans to support SAA in its efforts to restore sales confidence among its customer base and rebuild revenues in the shortest possible time."

The airline has been further hit by mass strike action that resulted in hundreds of flights being cancelled,  with more on the way.  Another blow occurred when two large domestic travel insurers stopped covering SAA tickets against insolvency at the start of the weekend as doubts increase over the airline's ability to survive. 

"SAA is determined to remain open for business," the ministry says. "Management is also committed to ensure financial sustainability going forward." 

Recommended for you...

No comments: