SAA cancels flights, moves ahead with restructuring

Embattled national carrier SAA has announced various restructuring plans, including the closure of domestic, regional and international routes, the possible sale of assets and retrenchments.

The struggling airline will close down three domestic and more than 20 international and regional routes at the end of February. It is also considering selling some of its assets and reducing the number of employees. 

SAA will cease to operate routes to Durban, East London and Port Elizabeth, joint business rescue practitioners, Les Matuson and Siviwe Dongwana, said in a statement on Thursday. The route to Cape Town would be operated on a reduced basis. 

Domestic routes operated by SAA subsidiary Mango will not be affected by the change in the national airline’s network. 

Regional services to be retained include those from Johannesburg to Blantyre, Dar es Salaam, Harare, Kinshasa, Lagos, Lilongwe, Lusaka, Maputo, Mauritius, Nairobi, Victoria Falls and Windhoek. 

SAA will close services from Johannesburg to Abidjan (via Accra), Entebbe, Guangzhou, Hong Kong, Livingstone, Luanda, Munich, Ndola, and Sao Paulo, but will continue to operate all international services between Johannesburg and Frankfurt, London, New York, Perth and Washington (via Accra).

The changes will take effect from February 28. 

Matuson and Dongwana said the closure of the routes was part of their plans to “to drive the restructured national carrier towards profitability.”  The airline does not intend to close any other routes. 

The business rescue practitioners intend to “explore viable investment opportunities with potential investors in respect of SAA” by looking into the sale of some of the airline’s assets and that of its subsidiaries. 

According to the the airline’s 2017 financial statement, which was the last time SAA presented its books, the airline’s assets amounted to nearly R16-billion. Its subsidiaries include SAA Technical, food company Air Chefs and ailing domestic flight carrier SA Express — which the high court ordered to go into business rescue. 

In order to return the airline to profitability, Matuson and Dongwana say that job cuts are inevitable. 

“It is our intention to restructure the business in a manner that we can retain as many jobs as possible. This will help provide a platform to a viable and sustainable future. However, a reduction in the number of employees will unfortunately be necessary,” they said.

“The BRPs (business rescue practitioners) will engage labour, both organised and non-organised, to reach a solution necessary for a sustainable airline going forward.”

The airline announced in November that it could cut up to 944 jobs following nearly a decade of financial losses. This led to a four-day strike by workers and a R500-million a day loss for the airline during the industrial action. 

As part of the business rescue process, the government pledged R2-billion rand in funding to avert the collapse. This was preceded by another R2-billion in loans from private creditors in December. 

After the government missed its own January 2020 deadline to provide the funding, the Development Bank of South Africa granted SAA R3.5-billion in loans. The first tranche of R2-billion was disbursed last week while the rest of the funding will be given to the airline at a later stage. 

“The BRPs wish to underline their support of the president’s proclamation for the Special Investigating Unit to examine some of the airline’s contracts. This measure will help in assessing viable agreements and in reducing SAA’s cost base,” Matuson and Dongwana said. 

Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian
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