South African Airways' newly revamped airline is now unlikely to return to the skies until July, despite The Department of Public Enterprises saying that it would be up and running by April 2021. In light of several ongoing issues that still need resolving, it's looking increasingly unlikely that everything will be resolved by spring.
The drawn-out business rescue package, which has been ongoing since 2019, shows no signs of coming to an end anytime soon due to many unresolved issues. Promised funding has failed to materialize while labor disputes and how the airline intends to compete in the South African marketplace have still not been answered.
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SAA rescue package
Last year, it was announced in October that the former national flag carrier of South Africa would receive government funding to the tune of R10.5bn ($684m). The money was supposed to be delivered so that the business rescue practitioners could implement their plan for the airline.
So far, only R1.5bn has been forthcoming. because the government and the business rescue practitioners disagree with each other as to how the money should be distributed.
Labor disputes
While many South African Airways employees accepted severance packages that included three months' salaries because of the COVID-19 lockdown, three of the airlines' employee unions have not accepted what the business rescue practitioners are offering.
The South African Cabin Crew Association (Sacca) and South African Airways Pilots’ Association (Saapa), along with The National Union of Metalworkers of South Africa (Numsa), have rejected what has been put on the table.
The plan was to create a much smaller airline with newer, fuel-efficient aircraft, but it will never get off the ground until unions agree on pay and severance packages. Until this issue is resolved, the future of SAA remains in a stalemate.
The SAA fleet and route network
When SAA was handed over to the business rescue practitioners in December 2019, it had 49 aircraft, of which 40 were leased. Having returned the rented planes to their owners, SAA has nine aircraft comprising five A340-300s and four A340-600s. The aircraft have been up for sale for a year but have not attracted any buyers.
The lack of interest is down to the current global aviation downturn brought on by the coronavirus and the fact that the planes are a generation old. The airline industry has moved on, with few operators wanting to fly thirsty four-engine jets anymore. If SAA began operations again, it would need to have newer, more fuel-efficient planes to fly.
According to The South African, the business rescue practitioners have planned to fly 27 routes. When speaking about when SAA might start flying again, CEO of the Association of South African Travel Agents (Asata) Otto de Vries said:
“There is currently no expectation that SAA will restart its operations before at least April.”
Since SAA stopped flying, other airlines like Airlink picked up the slack domestically and within Africa, while international airlines took care of long-haul routes. Given the current climate, if SAA were to start up now, they would face stiff competition and probably fly with many empty seats.
The South African public certainly does not want to see another state-owned business losing more money. For this reason, it would probably be better for South Africa just to let SAA die like a patient who had been suffering from a long illness.
What do you think is it time to pull the plug on SAA, or should the government keep flogging a dead horse? Please tell us what you think in the comments.