On Sunday 1 December, Minister of Public Enterprises Pravin Gordhan said that South African Airways (SAA), which has just emerged from a crippling strike, will undergo a ‘radical restructuring process’.
‘SAA has been through difficult challenges over the years, and more particularly in the past few weeks,’ the Department said in a statement.
The National Union of Metalworkers of SA and the SA Cabin Crew Association strike ’caused immense damage to the reputation, operations, and the deterioration of the finances of SAA’.
Last week insurance company Sanlam said that it would no longer sell ticket insurance on SAA bookings and the Flight Centre Group said that it would stop selling SAA tickets.
The statement from the Department of Public Enterprises continued to say that the airline ‘cannot continue in its current form. The airline group will now go through a radical restructuring process, which will ensure its financial and operational sustainability. There is no other way forward.’
In order to keep its planes in the air and airline staff paid, the airline’s board and the executive committee spent last week in negotiations with the department and the Treasury to try and secure a loan guarantee of at least R2bn.
However, there has been no indication whether the negotiations were successful at all. According to Bussines Day it is believed that ‘Treasury had not budged on the loan guarantee’ and as commercial banks won’t finance the airline, ‘this has left SAA with only three options: liquidation, business rescue or radical restructuring.’
According to Business Day, job cuts which were already agreed with unions ‘now will need to be far deeper and will have to be negotiated sooner.’
‘SAA is determined to remain open for business. Management is also committed to ensure financial sustainability going forward,’ said statement.
‘[The] SAA board and management will intensify its marketing campaigns to rebuild confidence in the airline and will take bold initiatives to increase its market share.’
Image: Christopher Griner
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