The narrative of South Africa Airways is one that has been dominated by an ill-management of airline resources and state-aided financial support coupled with a decade-long run of zero profits. However, since entering bankruptcy protection in December 2019, and the halt of all operations in September 2020, efforts towards its internal restructuring have reportedly brought the flag carrier closer to securing a potential investor and the carrier’s long-awaited re-entry into the market.
In a statement on April 30, 2021, South Africa’s Department of Public Enterprises revealed that South African Airways was in the final stage of negotiations with an investor which would potentially give the carrier a firm footing needed prior to its coming exit from bankruptcy protection.
If the agreement is implemented, this could bring to the table a “much-needed technical and commercial expertise” for the airline, as reported by Bloomberg as well as a sturdy financial injection.
The identity of the investor was not revealed by the country’s government. Previously, speculation had landed on the Ethiopian Airlines Group. However, the group’s interest later veered towards having an operational partnership void of any financial injections.
This may potentially open up a new chapter for the carrier which has a history of receiving lifelines through financial injections from the South African government. Since entering bankruptcy protection alone, SAA’s administrators confirmed receiving ZAR7.8 billion ($529 million) out of a promised ZAR10.5 billion in state aid.
From the amount, ZAR360 million was allocated to compensating outstanding salaries, ZAR400 million was allotted to creditor loans and ZAR1.5 billion was put toward severance packages. The remaining funds have been set aside as capital for the carrier’s reentry to operations which will be overseen by newly appointed CEO Thomas Kgokolo who took up office on April 13, 2021.
SAA’s bankruptcy administrators reduced the carrier’s debt balance from ZAR38.7 billion ($2.6 billion) to ZAR2.8 billion ($193 million). Deeming the airline “solvent and liquid”, the administrators have now handed the control to the airline’s new management. Along with a drastically reduced debt balance, the airline has been restructured to operate with just 20% of its workforce.