South African Airways on the brink, after state denies support

Vytautas Kielaitis

The government of South Africa announced its decision not to grant another 10 billion rands ($532 million) of emergency aid to South African Airways. The survival of the carrier, whose fragile situation has worsened due to the impact of the coronavirus epidemic, is more uncertain than ever.

The national airline has been into administration since December 2019. But on April 14, 2020, the appointed administrators of South African Airways (SAA) announced that the government “could not provide additional funds” and could not guarantee a loan. Over the past three years, more than $1.1 billion have been injected into the company, which did not record any profit since 2011. 

The South African ministry of state-owned enterprises indicated that it would examine “options” to help SAA. “We are convinced that South Africa needs viable and sustainable airlines,” the ministry said in a statement.

A brief moment of hope came in January 2020, when SAA secured a 3.5 billion rands ($240 million) funding from investors, including the state-owned Development Bank of Southern Africa. The following month, a new restructuring phase was announced, which included several route cuts in order to become a “sustainable and profitable business.”

However, it appears that the efforts were not enough to keep the company airborne, especially with the industry-wide crisis caused by the ongoing pandemic. After Flybe, which collapsed early in March 2020, SAA could be another collateral victim of COVID-19.

For now, SAA did not modify its flight plans and is still operating several repatriation and cargo flights dedicated to the coronavirus relief effort.

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