July 29, 2021

South African Airways saved again by the government



The government of South Africa has granted its airline South African Airways (SAA) an envelope of 10.5 billion rand (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, Minister of Finance Tito Mboweni announced a new allocation for South African Airways, which will be paid for by “cuts in the budgets of ministries, public entities and conditional grants”. This new funding in addition to R16.4 billion already allocated in the February 2020 budget, for the settlement of guaranteed debt and interest. But the minister warned: “ the continued funding of inefficient and non-functional public enterprises must be reconsidered. We are determined not to break the fiscal framework, whatever the demands ».

In opposition, the Democratic Alliance (DA) unsurprisingly criticized this rescue plan which ” chooses South African Airways to the detriment of South Africa “. MP Geordin Hill-Lewis said according to ch-aviation that the country will continue to ” pay for one 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 the airport of Johannesburg-OR Tambo, who believed herself saved last July after having been on the brink since December (and already given for dead and then resuscitated, more particularly during the Covid-19 pandemic). In the red since 2011, the company of Star Alliance has been on a drip for years and subjected to endless political intervention.

According to the rescue plan unveiled this summer, the “new South African Airways” would see its effective halved to around 2,500 employees, and its great limited to “about twenty planes” for the coming years. This “new airline, restructured, competitive, created from the old” is according to the government “the best option to get back into the air immediately” – and avoid liquidation.

Recall that a first shutdown of operations last May had been stopped by justice 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 for avoid bankruptcy.

©South African Airways

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https://www.air-journal.fr/2020-10-29-south-african-airways-de-nouveau-sauvee-par-le-gouvernement-5223560.html