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Troubled South African Airways gets government lifeline to stay solvent

Troubled South African Airways gets government lifeline to stay solvent
South Africa’s beleaguered flagship carrier, South African Airways (SAA) has received a 4 billion rand ($272 million) lifeline from the government and banks.

It’s the latest in a series of government bailouts the struggling company has received in recent years.

“Our desire is that the restructured airline will mark the beginning of a new era in South African aviation,” the country’s public enterprises minister, Pravin Gordhan, said on Friday while announcing the plan. “It is also important that the reliance on government finances be reduced as soon as possible to minimize disruption to SAA services, customers, staff and other stakeholders.”

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State-owned SAA has not made a profit since 2011 and has depended on government bailouts to stay solvent.

Under the new plan, a “business rescue practitioner” will take control of the airline and help restructure the company, attempting to stabilize its operations and finances.

“This set of actions should provide confidence to customers of SAA to continue to use the airline because there will not be any unplanned stoppages of flights or cancellation of flights without proper notice should that be necessary,” Gordhan said, adding that the company will try to retain as many jobs as possible as the business is reconfigured.

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SAA said it would try to operate a new provisional flight schedule.

The airline was hit by an employee strike last month that forced it to cancel hundreds of flights and pushed it to the brink of collapse. Later, two major travel insurers stopped covering its tickets against SAA becoming insolvent.

On Wednesday, an unnamed deputy minister told Reuters that he had received an official letter saying President Cyril Ramaphosa had called for a change of approach to SAA and that the airline would enter “voluntary business rescue.”

For more stories on economy & finance visit RT's business section

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