Twist in SAA saga: new rescue plan approved
South African Airways (SAA) rescue plan was approved by creditors on July 14, 2020, ensuring that the airline will continue to function as long as the government provides the funding to keep it afloat.
At least 10 billion rand ($596 million) are required to do so, another sacrifice to the state-owned enterprise that has not made profit since 2011. It has been put under bankruptcy protection in December 2019, even before the COVID-19 crisis, and has been swallowing money ever since.
It is unclear whether the South African government will follow through with the plan and provide necessary funds, as it has a history of not agreeing to do so and forcing the carrier to sell assets just to compensate laid-off employees. Together with the majority of the industry, SAA shifted to cargo hauling and repatriation flights during the quarantine, sinking even deeper into debt.
Fundamental restructuring of the airline was proposed as a part of the new plan, with massive layoffs and reductions of the fleet. Previous attempts sparked conflicts with trade unions and the government, something the new plan will most likely do as well.
As an alternative, privatisation of the airline and creation of an entirely new company in its place were proposed earlier, highlighting the amount of uncertainty in SAA’s future. The carrier was created in 1934 and, should the new plan fail, will become the second South African airline to collapse this year.
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