SAA on brink of financial collapse

victoria@aviationnews-online.com
By victoria@aviationnews-online.com November 28, 2019 12:36

SAA on brink of financial collapse

South African Airways (SAA) is on the verge of financial collapse following its failure to pay its staff, as the airline struggles to gain the funds in order to avoid its demise.

South Africa’s flag carrier needs to secure approximately $135 million to survive, the Financial Times has reported.

In the past few decades, SAA has been granted state aid worth billions of dollars to stay aloft, but the airline has struggled to compete with rivals such as African and Gulf airlines.

President Cyril Ramaphosa now faces a dilemma with SAA on the brink of collapse. He pledged to turn around state companies that were looted under his predecessor, Jacob Zuma. Added pressure comes from the fact that Ramaphosa needs to shore up strained public finances.

Any bail out for SAA from the government has seen Tito Mboweni, the finance minister, reluctant to approve.

In a statement on Wednesday, Pravin Gordhan, minister for state-owned companies said that South African Airways suffered a “sudden deterioration” in its finances after a recent strike grounded flights.

SAA was forced to cancel nearly all its domestic, regional and international flights scheduled for 15 November and 16 November, in a bid to minimise the impact of disruptions for its customers.

The cancellations followed industrial by members of the South African Cabin Crew Association (SACCA) and the National Union of Metalworkers of South Africa (NUMSA).

The strike action came after the airline said it was set to undergo a major restructuring plan, which SAA said could lead to 944 job losses among the 5,146 staff employed.

The outcome of the strike saw the plan to axe 900 jobs get put on hold; as well as the airline explain that workers would receive a backdated paycheck increase of around 5.3%.

In another bid to sure up its financial standing, SAA suspended all services between Johannesburg and Hong Kong from 23 November until 15 December.

No comments have been issued by the SAA and South Africa’s Treasury.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com November 28, 2019 12:36