South African Airways bailout talks stall

In light of a poor financial outlook at South African Airways (SAA), including lack of cash for flight operations, the airline has addressed reports of impending bankruptcy, assuring customers and stakeholders that its flights are continuing to operate as normal.

“The airline is aware of media reports suggesting that it will cease operations. SAA is always committed to transparently communicate with all stakeholders, including customers, about any material or significant operational changes that may have an impact on flight schedules,” the airline issued an official press release on January 20, 2020.

In order for the airline to avoid collapse and ensure connectivity, the South African government placed the carrier under bankruptcy protection in December 2019, including a $272 million bailout to keep flights running. With not a single profitable year since 2011 and a bailout sum that amounts to $2 billion through the years, the airline was looking for a strategic partner to help it navigate through tough weather.

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The airline’s business rescue practitioners held talks with the government at the weekend to try to find a solution on the funding gap but as of Sunday evening, no solution had been found.

Last week, a senior trade union official said SAA could have to suspend some flights and delay salary payments if the government doesn’t come up with a plan to provide the funds soon.

On Sunday, the public enterprises ministry said it was talking with the National Treasury to raise funds for SAA.

The airline is one of several South African state entities, including power company Eskom, mired in financial crisis after nearly a decade of mismanagement.

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Recent reports reveal that at least, a dozen flights to and from the SAA hub in Johannesburg have been grounded.

The cancelled departures include the Monday evening flight to Munich. The loss of this flight will trigger payments of €600 to each passenger under European air passengers’ rights rules.

Ten flights to and from Durban and six links with Cape Town have been axed. In addition, some SA Express services have been grounded. These have SAA flight numbers but are operated by a separate carrier.

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