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Sat, 07 Dec 2019 09:30 GMT

South African Airways Needs Radical Restructure After Crippling Strike

Business

7Dnews London

Sun, 01 Dec 2019 19:53 GMT

Cash-strapped South African Airways (SAA) has discussed receiving more funds from lenders to secure the carrier's operational and structural transition, the country's public enterprises ministry said on Sunday December 1st.

The airline has been struggling financially since 2011, without making any profit, and is dependent on government bailouts to remain solvent. In addition, SAA was hit by a crippling strike last month which has taken it to the brink of collapse.

The department, headed by minister Pravin Gordhan, issued a statement saying that the struggling state-owned airline could not continue in its present form and would need a "radical restructuring" to ensure financial and operational sustainability.

SAA said it could cut more than 900 jobs as it looks to stem severe financial losses.

Its financial position worsened dramatically after November 15th when two of its largest unions began an eight-day strike over pay that forced SAA to cancel hundreds of flights.

In another blow, two large travel insurers in South Africa on Friday November 29th stopped covering SAA tickets against insolvency as doubts grow over whether the airline can survive.

According to independent aviation economist, Joachim Vermooten, the South African government needs to be decisive on the issue of SAA, in order to help soften the blow that is currently undermining the struggling airline from all sides.

“The crucial issue is that the government ultimately has to decide what to do with SAA. Either it needs to operate it at a profitable commercial basis, or it needs to go out and fund the airline with enough money that can cover the losses that are incurred,” Vermooten says.


Africa