South African Airways (SAA) today announced that the Board of Directors of SAA has adopted a resolution to place the company into business rescue.
As previously reported the SAA Board of Directors and the Executive Committee have been in consultation with the shareholders and the Department of Public Enterprises (DPE), in an effort to find a solution to the company’s financial challenges.
The conclusion has been to place the company into business rescue.
SAA says that they understand this decision presents many challenges and uncertainties for its staff.
SAA plans to operate a new timetable and will publish details shortly.
Currently, the Johannesburg – Hong Kong route has been suspended from November 23rd to January 15th. The planned Johannesburg – Guangzhou route from January 2020 has been completely suspended.
Having received almost $4 billion in bailouts since 1994, and last earning a profit in 2011, South African Airways has been clinging on by a thread.
When South African Airways employees staged a week-long strike last month, multiple flights were cancelled and a significant amount of customers cancelled bookings; costing the airline $3.4 million each day.
All services operated by SAA’s subsidiary airline, Mango, will continue as usual and as scheduled.
November 27th, travel insurance provider Travel Insurance Consultants (“TIC”), and their underwriters, are no longer willing to cover SAA under their Travel Supplier Insolvency benefit, due to doubts concerning the long-term viability of the airline. A number of other global insurers have taken a similar approach.
On the same day, Flight Centre Travel Group South Africa has made the decision to no longer sell SAA.
Interestingly, South African Airways recently took delivery of their first Airbus A350 and committed to another two; to replace part of their ageing A340 fleet.
The loss of South African Airways will be a significant one, since the airline carries so much history. Founded 85 years ago on the 1st of February 1934, state-owned flag-carrier, South African Airways has provided flights for people all around the world, from their base at O.R. Tambo International Airport.
What are your thoughts on South African Airways’ current situation?
As a non South African, what is “Business Rescue?” Is it akin to the U.S. Chapter 11 Bankruptcy reorganization process? Or more like the British/European system which essentially leads to a rapid liquidation?
As an aside, this is not a surprise. I live in the U.S. in an area with a large South African diaspora. My South African friends fly back and forth all the time, and for the last couple of years, absolutely none of them will fly SAA. That’s sad, for what used to be an excellent carrier.
We have seen this before for African continent airlines. Executives too busy lining their pockets and overusing for their own joy rides resulting in financial,collapse of the airline. Unless honest and fiscally responsible folks are brought in and the overall corruption in the county is controlled nothing will change. Kenya airways is in a similar situation.
I truly hope that the airline will improve its profits. It is my country’s flag carrier and it would be devastating for me if the airline collapses. I have so much memories with the airline . My first flight was on one of their ATR’s from Bloemfontein ( in SA) to Johannesburg.