South African Airways has failed to reach an agreement for more government funding, threatening to send the airline into total collapse.
The flag carrier of South Africa has detailed a plan to lay-off all of its 4700-strong workforce. According to Bloomberg, the state-owned airline will seek to offer severance deals to their staff members.
In an internal airline statement, seen by Reuters, South African Airways said that employees’ contracts would be terminated on April 30th.
“It is unlikely that the company will be successfully rescued as a result of the business rescue process. In order to make payment of the severance packages … the company is required to sell and dispose of its assets”
South African Airways statement, provided by Reuters
Once employees’ contracts have been terminated, they will be paid one month’s wages for every year that they have worked for the airline. They will also be paid for unused annual leave, according to a memo obtained by Bloomberg.
South African Airways has struggled in recent years, having last turned a profit in 2011.
The coronavirus pandemic has cost South Africa’s government heavily. Bloomberg reported earlier this week that Public Enterprises Minister, Pravin Gordhan, said that the cost of battling the coronavirus pandemic meant that no more lifelines could be extended to the airline.
In December, the South African government placed the airline in a form of bankruptcy protection. South African Finance Minister, Tito Mboweni, has said that South African Airways’ collapse could help to balance out the country’s finances.
The Daily Sabah has reported that South African Airways has received 20 billion rand ($1.1 billion USD) in government bailouts in the past three years.
South Africa’s future of air travel remains unknown, with no current airline having the capacity to replace the large state-owned carrier.
South African Airways operates an entirely Airbus passenger fleet including: A320, A330, A340 and A350 aircraft.
Article Sources: Daily Sabah, South African Dept. of Public Enterprises, Reuters and Bloomberg.
Years and years of bad management hostile trade unions unfriendly labour laws and above all total corruption from top to bottom of the organisation. Constant political interference has not helped either. This is what happens when you have nationalistion and state owned enterprises they almost always end up like this. If SAA is Liquidated there will be nothing left to pay out severance packages to almost 5,000 people a sad state of affairs and the Government / tax payer is saddled with billions of Rand in debt obligations a sad end to a once proud and efficient airline.
I’m wondering if the airline will actually ‘fire’ staff rather than ‘lay off? Where’s the insufficient performance with these staff? It’s sad when a business has to go under due to sometimes uncontrollable events.
Hi Manuel,
Thanks – lay-off is a better term indeed.
I wouldn’t be surprised to see THIS happening to many of the Flag (or not flag) carriers around the world whose government support is required to keep them in business. Unfortunately for those countries, they don’t have a US Federal Reserve that can just print money and throw it around to save the US businesses. They will be losing part of their identity – and some of their best paying and most fulfilling jobs.
Additionally, by having to sell their planes and equipment in these trying times, they will only get ‘bottom-dollar’ for them – causing a rippling effect on aviation hardware prices around the globe.
Beware to Boeing and AirBus – as the prices on these MULTITUDES of used jets parked around the globe will, IMO, cause a long-term depression of used jet prices……which has to also depress new airplane orders and new airplane prices for years to come……
Who is gonna’ buy a new airframe when you can put up a good used one for 1/4 the price?