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South Africa’s national cash-strapped airline will be replaced by a new airline after years of mismanagement and debt, the government said on Friday, as plans for its rescue have been clouded by the coronavirus outbreak.
South African Airways (SAA) was placed under a state-approved response plan in December as a last resort to save the company from total collapse.
All of its flights have been grounded since South Africa closed its borders and entered a five-week national blockade in March to curb the spread of Covid-19.
Last month, the government rejected a request for R10 billion ($ 531 million) of additional funds from SAA’s commercial managers, claiming that the pandemic had exhausted resources.
The public business ministry said on Friday that a “bold new approach” would be required for South Africa to maintain competitive air transport capacity after the “fog of economic uncertainty” caused by the coronavirus.
“The creation of a new dynamic airline, with the correct corporate structure … will allow the new SAA to compete in the post-COVID-19 world,” the ministry said in a statement.
“The new national airline will be well positioned to fly again and contribute to the South African and African economy.”
There was no clear timetable for the creation of the “new restructured airline” that will involve both public and private participation.
According to the ministry, it will be financed by a series of parties that will allow the state “to continue to play a key role.”
SAA employs more than 5,000 workers and is the second largest airline in Africa after Ethiopian Airlines.
Like most South African state enterprises (SOE), it has failed to make a profit for more than a decade and survives on government bailouts.
“The transition to the new airline may require sacrifice,” the statement said, adding that employees “may be displaced.”
To date, South Africa has recorded at least 5,647 coronavirus cases, the highest in Africa, including 103 deaths.
Some containment measures were lifted on Friday and economic activity is slowly starting to resume in certain sectors.
But Transport Minister Fikile Mbalula said Friday that it was still too early to think about ending air travel restrictions.
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