South African Airways will lay off all of its staff at the end of April as it heads closer to collapse. A document detailing the airline’s severance package, obtained by Bloomberg, details that 4,700 employees will leave the company in as little as 12 days. The carrier will make sales of its assets to foot the salary payouts.
South African Airways will lose nearly 5,000 staff
The coronavirus pandemic has affected so many airlines over the past few months. Reduced schedules and grounded fleets mean that airlines are rapidly bleeding through money while they weather the pandemic. However, many carriers have been able to acquire government bailouts to cushion the financial blow. Unfortunately for South African Airways, this will not be an option.
The South African government has denied additional funding to save the flag carrier after spending around $1.1bn over the past three years to get it out of jeopardy. As a result, collapse is looking like an ever more possible reality for the airline.
Consequently, South African Airways will lay off its entire employee base at the end of April. The redundancies number some 4,708 employees. South African Airways detailed its severance pay to employees in a document. It says that staff will receive one month’s salary for each year that they have been employed with the airline. Also, employees will receive a payment for unused annual leave and a further month’s pay instead of notice pay.
Despite sharing a hopeful message on social media just yesterday, it looks more likely that South African Airways will fold soon.
In the middle of difficulty, lies opportunity. pic.twitter.com/w62K9lxz3Y
— South African Airways (@flysaa_care) April 17, 2020
How will the airline pay staff?
The airline will now be forced to make sales on its assets to pay for employee severance packages. These prized possessions include the sale of two night slots at London Heathrow airport.
According to the Mail&Guardian, the document shared with employees stated that:
“…the company will make payment of the severance packages to employees on a monthly basis, over a period of six months, once the sale of assets [has] been concluded.”
Where did it all go wrong for South African Airways?
South African Airways has, in many senses, been guarding a ticking time bomb for quite a few years. It hasn’t generated any profit for the past nine years and has consistently relied on government bailouts. However, the coronavirus pandemic has most certainly not helped.
On 31st March, the airline suspended all international flights, having already stopped domestic flights the week before. Since then, it’s been operating cargo-only flights. While heroic, these trips have not generated any revenue for the airline.
While many airlines can’t operate due to #COVID19
Here you see Captain Mpho Mamashela who operated the #SAA aircraft that flew to China and landed yesterday morning in South Africa. Cargo included Pharmaceutical and medical supplies, PPE and Covid-19 testing kits.
📸 @flysaa https://t.co/bJImY4Sa7Z pic.twitter.com/9Np4Su9FVl
— Heidi Giokos (@HeidiGiokos) April 14, 2020
While the pandemic is unfortunate, South African Airways has struggled for several years. It was unable to make all-important updates that were denied by the government. It had an old fleet and needed an overhaul. Unfortunately, it not looks unlikely that it will get that chance.
So, who will replace South African Airways in the case of its demise? Unfortunately, it doesn’t look like there are mainly airlines in South Africa that can rise to the challenge of replacing South African Airways. Carriers like Kulula and FlySafair are both low-cost airlines, yet they don’t operate even half of the destinations that South African Airways does. Could the future provide an opportunity for a new airline? Or will international airlines be prompted to step in?
How do you feel about this news? Which airline could suitably replace South African Airlines? Let us know your thoughts in the comments.