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Photo: South African Airways
Last Wednesday (October 27), South African Airways announced that it had received an additional financial contribution to assist the South African government. This contribution was $ 640 million. These amounts are in addition to the R 16.4 billion ($ 1 billion) that the company has received since February.
All of these amounts are government contributions designed to help the state company balance its cash and pay off amounts of debt. The comprehensive restructuring of SAA is scheduled to begin, which will require the company to reduce its mesh size and fleet to adapt to the new reality.
A hard-hitting plan will result in the SAA reducing 44 aircraft to just 6 and keeping just 20% of its current staff. The return of several aircraft has already begun, 33 aircraft have been returned to their lessors, leaving the SAA with 3 A319, 1 A330 and 8 A340.
As part of the restructuring plan, it is planned to increase the number of aircraft to 36 by the end of 2021. In addition, about 1,000 new employees who were laid off this year are expected to be hired.
Covid-19 was not the main reason behind the SAA crisis. Before the pandemic spread around the world, the company had suffered continuous losses for 10 years. In those years, there is an accusation from an organization called The Organization Undoing Tax Abuse (OUTA) that indicates that there was a boycott of the administration of the SAA.
OUTA cites SAA as a “vain project” and that managers “steal from the poor.” In a statement on the FlightGlobal website, the organization says that the company’s rescue plan cannot be carried out.
“We are extremely concerned about the grant … to implement what we believe to be an impractical corporate bailout plan at SAA,” said Wayne Duvenage, CEO. “We understand that debts have to be paid, but we cannot see more valuable tax revenue being wasted to resurrect a dying business,” the executive added.
