South African Airways saved again by the government


The government of South Africa has granted its airline South African Airways (SAA) 10.5 billion rands (549 million euros) to enable it to implement its restructuring plan.

Having suspended its operations at the end of September except for repatriation and freight, the directors of the South African national company took nearly a month to find the funds necessary for its restructuring. On October 28, 2020, Finance Minister Tito Mboweni announced a new allocation for South African Airways, which will be paid for through « cuts in the budgets of ministries, public entities, and conditional grants ». This new funding comes on top of the R16.4 billion already allocated in the February 2020 budget for the settlement of secured debt and interest. But the minister warned: “the continued funding of inefficient and non-functioning public enterprises must be reconsidered. We are determined not to break the budgetary framework, whatever the demands ”.

In opposition, the Democratic Alliance (DA) unsurprisingly criticized the bailout which « chooses South African Airways to the detriment of South Africa ». MP Geordin Hill-Lewis told ch-aviation that the country will continue to « pay for a zombie crown corporation » and suffer the consequences of ever-increasing debt. According to him, the money for this envelope will come in particular from the budgets of the police, education, justice and the territories

This announcement should in any case put an end to months of uncertainty for the company based at Johannesburg-OR Tambo airport, which believed itself saved last July after having been on the brink since December (and already given for dead then resuscitated, more particularly during the Covid-19 pandemic). In the red since 2011, the Star Alliance company has been on a drip for years and subjected to endless political intervention.

According to the bailout unveiled this summer, the « new South African Airways » would see its workforce cut in half to around 2,500 employees, and its fleet limited to « around 20 planes » for years to come. This « new, restructured, competitive airline built on the old one » is according to the government « the best option to get back into the air immediately » – and avoid liquidation.

Recall that the first shutdown of operations last May was stopped by the courts at the last minute, a court seized by unions having declared illegal the layoff plan announced a month earlier, which provided for the departure of all employees to avoid bankruptcy.

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