South African Airways May Not Be Liquidated After All
South Africa’s government does not want South African Airways (SAA) to be liquidated. The state-owned carrier has been…
South Africa’s government does not want South African Airways (SAA) to be liquidated. The state-owned carrier has been heading towards a collapse amid the global health crisis. However, today’s news means that there could be a twist of fate for the airline.
The operator filed for a form of bankruptcy protection in December, following a prolonged period of financial struggles. It has not been profitable for nine years and has already received over a billion rand ($1.07 billion) in bailouts in the past three years.
This level of monetary support has been met with a mixed response. Several politicians and citizens feel that it is a waste of public funds. With SAA already in a bad state, the pandemic has further added salt to its wounds.
However, South African public enterprises minister Pravin Gordhan spoke to a parliamentary committee about what the government has planned for SAA. According to Reuters, he said that talks are ongoing with rescue specialists in charge of the airline on how best to save it.
“In our view, if this wind-down process the business practitioner team seem to be on at the moment continues as they proposed, it will not serve the original objective that we set for the business rescue process,” Gordhan said, as reported by Reuters.
“That is also a matter of contention between the shareholder and the business rescue practitioners.”
Ultimately, Gordhan affirms that the state wants to see SAA restructured into a new airline. Additionally, he expressed that there should be no fire sale of essential assets, nor should there be any movement towards liquidation. Altogether, he feels that there could be many alternative solutions.
Even though the restructuring sounds like a daunting task, it could be done quicker than expected. According to CNBC Africa, former SAA CEO Vuyani Jarana believes the process can be completed in just two weeks.
This progress could hopefully bring some positive news for SAA’s employees, which have been facing layoffs. Moreover, two of their trade unions are seeking court action to try to block the redundancies. This issue is due to be officially discussed at a hearing tomorrow.
Even though there were reports that the government will not pump more money into SAA, it does not want to see its flag carrier die. Therefore, it is open to looking at other options to ensure that the company survives.
Simple Flying reached out to South African Airways for comment on its situation. We will update the article with any further announcements.
What are your thoughts on what the airline is going through? Do you see it recovering amid the current crisis? Let us know what you think of the predicament in the comment section.