South African Airways gets government backing

By Andy Hoskins, published 6/12/19

The South African government has implemented a ‘business rescue plan’ to secure the future of struggling South African Airways.

A statement issued by South Africa’s Department of Public Enterprise said the process will allow SAA to continue operating and that “there will not be any unplanned stoppages of flights or cancellation of flights without proper notice should that be necessary”.

Existing lenders will inject R2billion (£104million) and the government another R2billion to keep the state-owned airline flying and commence a restructuring process before it seeks a “strategic equity parner”. SAA has not made a profit since 2011.

Minister P J Gordhan says the rescue plan will “help to restructure and reposition the entity into one that is stronger, more sustainable and able to grow and attract an equity partner”.

Gordhan continues: “This is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline.”

The airline is believed to have attracted the attention of Middle East-based airlines and, in more recent months, Ethiopian Airlines and the Virgin Group.

Jon Danks, Head of Marketing & Communications UK&I at SAA, said the airline must internally restructure before seeking a buyer, but said the UK market is performing well.

“We deployed our new A330-300 from London last year, business class is good and load factors are good,” he told The Business Travel Magazine.

“Just under 50% of our business [from the UK] flies beyond Johannesburg. The demand for that is buoyant and strong. It’s very much operations as normal from London and business travellers shouldn’t see any immediate impact.”

Danks added: “Now we have the liquidity to operate as normal, to restructure and then to look for the right partner to take advantage of the potential in sub-Saharan Africa.”