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South African Airways Is Nearly Out of Business
Meg Butler April 20, 2020
Bad news for South African Airways comes just on the heels of their failed bid for financial aid from the South African government: South Africa’s flag carrier may be forced to close.
While South African Airways hasn’t officially announced ending operations, it has announced its plans to lay off all of its 4700 employees at the end of the month of April. Each of the employees will get a severance package equal to roughly one weeks’ pay for each year of service. However, those severance packages depend on “successful disposal of assets such as real estate.”
South African Airways says its “unlikely” that they will be able to make a quick turnaround. However, South Africa’s Department of Public Enterprises has said that “there are discussions with the unions on alternatives to the current South African Airways business model, success of the business rescue process, and the best possible outcome for the airline’s employees.”
While the coronavirus has had a devastating effect on South African Airways, this is not the first time the airline has been in financial trouble. The last time the airline made a profit was in 2011, and it has been dependent upon state-guaranteed debt agreements for years.
However, with the coronavirus putting more stress on South Africa’s economy, no more financial support has been extended to the airline. Furthermore, South African Finance Minister Tito Mboweni said that South Afric Airways’ closure could actually help ease some of the burden on the country’s finances.
No matter what it all boils down to mismanagement whether it was from governmental interference, payoffs or whatever else bad management is the root cause which is the first place you look when there is a take over merger etc. The failure to bring in experienced managers always spells doom. I have flown SAA many times all within the continent over the years and had found the planes to be clean, food was much better than any US airline in main cabin, some even first class food, service was good on board, timelines customer service slow sometimes marginal. Now it appears Ethiopian will be the last major carrier in the continent, hopefully Airlink will survive.
Slightly off topic but relates to above comment about race. The same political party now uses race as the basis for financial aid due to Covid crisis. The decision was challenged in the High Court but did not succeed. An appeal is apparently planned. One example of the race based aid system is that a small hotel, whose two owners are white, had to let 46 staff members go because they (the owners) do not qualify for government aid - due to being white. A less draconian policy was followed at SAA with staff appointments but it was clearly enough to sink this ship. My first trip on SAA was in 1973 (and a domestic flight as recently as 1Feb2020) and I can honestly say I saw the decline (service delivery standards, flight delays/cancellations, customer service issues) over the decades since then. FWIW - SAA and SA Express are bound together financially and will sink together. Mango and SA Airlink are separate entities and may survive as their "Covid problems" are the same as any other airlines'. Except that SA Airlink used SAA's booking system for ticket sales and SAA then paid the money over to SA Airlink. But that has not happened since around December 2019 and SA Airlink is now owed hundreds of millions ZAR because of the non-payment by SAA. And for those who are curious: No - I do not live on the African continent.
When a political party defines itself by racial identity it can hardly be racist to point out such and note the failures of such a philosophy which puts race above all, including competence.
Gizzabreak, I sure hope that's an attempt at humor. Even if it is, racist much?
I commuted monthly between The US and South Africa In the late between 1998 and 2000, and since then have returned every three years or so, usually on SAA. Their decline has been due to poor management, appointed by the gov’t, and an inability to make hard decisions. For me, their service was mostly very good and I looked forward to flying with them. I also admired the pride that most of their employees had for South Africa. Whatever happens, there will always be a fond place in my heart for SAA.