Tag Archives: South African Airways

South Africa bails out broke South African Airways

South African Airways has been given a government lifeline, once again.

Finance Minister Tito Mboweni on October 28 announced that the South African government would allocated another R10.5 billion ($640.5 million) to the flag carrier.

Read more from Bloomberg.

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South African Airways suspends all operations due to rising debt

South African Airways announced on September 30, 2020 it has suspended all operations due to mounting debts.

In December 2019 the flag carrier entered reorganization.

From Reuters:

“South African Airways will be put under “care and maintenance” until funding discussions are completed, the airline’s administrators said on Tuesday.

A company’s assets can be put under care and maintenance in order to keep them in good condition when they are not being used.”

South African Airways aircraft6 photo gallery:

South Africa hopes to establish a new flag carrier from the ashes of South African Airways

South African Airways is basically bankrupt on the edge of being liquidated by the administrators.

Employees have been offered severance packages but the various labor groups have not yet agreed to the packages.

According to Bloomberg, the government of South Africa is seeking to create a new national carrier to replace SAA using the remaining assets.

SAA administrators were working on a recovery plan before the COVID-19 crisis. The virus grounded all aircraft. New they are proceeding with a liquidation of there assets after the government did not want to proceed with a bailout.

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Is this the end of South African Airways?

South African Airways is reportedly in discussions with its eight labor groups to offer severance packages for its entire 4,700 employee labor force according to Bloomberg News. This drastic action would permanently ground the airline and force the liquidation of its assets.

SAA was unable to convince the South African government for another bailout. The company has been in a form of bankruptcy protection since December.

SAA suspended its commercial operations at all our offices throughout the world on Friday, March 27, 2020 due to COVID-19.

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South African Airways faces a crisis, continued government funding is cut off

South African Airways is facing an uncertain future. Its owner, the government of South Africa, has told the bankrupt flag carrier to find other sources of funding. The government is not cutting off the carrier from future funding.

Read the full story from Bloomberg.

In other news, SAA together with the WorkAway International group repatriated over 300 South Africans from Miami International Airport – MIA to Joburg, Cape Town, and Durban.

SAA returns to Miami International Airport – MIA for the first time in over 20 years for a special repatriation charter flight.

South African aircraft photo gallery:

South African Airways cancels all domestic flights

South African Airways has made this announcement:

South African Airways (SAA) announced its decision to suspend all its domestic flights with effect from Friday, March 27 until April 16, 2020 (inclusive). The decision came after government announced a nation-wide lockdown for 21 days aimed at combatting the spread of the Coronavirus (COVID-19).

SAA supports this national effort as announced by the government, to retard, contain, manage and disrupt the rate of transmission of the COVID-19.

Last Friday, SAA announced the suspension of all intercontinental and Africa regional flights. All these flights remain suspended until May 31, 2020.

South African aircraft photo gallery:

South African Airways suspends all international and regional flights

South African Airways made this announcement:

South African Airways (SAA) has announced that it will immediately suspend all international operations until May 31, 2020 in response to a government travel ban aimed at stopping the transmission of the Coronavirus (Covid-19).

The COVID-19 pandemic and attendant travel restrictions, resulted in substantial decline in demand for air travel. The situation caused many airlines across the world to ground aircraft, release their employees, and to cancel flights. In the case of SAA, this decision means that SAA will only render services on its regional and domestic routes.

Following the declaration of the State of Disaster after the outbreak of COVID-19 in South Africa, the government announced a travel ban and issued regulations, which introduced certain measures aimed at combatting the spread or transmission of the virus.

Amongst other things, the regulations, issued on Thursday state that: “Disembarkation of foreign nationals from the high-risk countries is suspended on airports upon arrival. Embarkation and disembarkation is permissible under the following circumstances: Disembarkation of returning South African citizens and permanent residents; embarkation of departing foreign nationals, disembarkation of a declared medical emergency; foreign nationals must be approved by port health services; upon landing, crew from high risk countries shall be subject to medical screening and quarantined for 21 days”.

SAA operates in three markets that form part of countries listed in the travel ban as high-risk areas. These are the United States (Washington DC and New York, JFK), the United Kingdom (London, Heathrow) and Germany (Frankfurt and Munich). In addition, SAA operates flights to Australia (Perth) and Brazil (São Paulo) which have not been declared high-risk. All of which are now cancelled.

The airline also made this announcement:

South African Airways (SAA) announced that it is suspending all international flights with immediate effect until May 31, 2020, to support the government travel ban aimed at stopping the transmission of the Coronavirus (Covid-19).

As a direct consequence of this suspension, there was an immediate drastic reduction of demand for the African regional flights. SAA is a network carrier, which means that a significant part of the regional bookings demand is fed by the passengers that travel to or from the international destinations.

Therefore, the suspension of the international flights has resulted in the airline not being able to operate its normal network. This resulted in operation of regional flights not being commercially viable anymore.

Flights to the following destinations have been suspended as of March 20, 2020 until May 31, 2020: Accra (Ghana), Lusaka (Zambia), Harare (Zimbabwe), Victoria Falls (Zimbabwe), Windhoek (Namibia), Lagos (Nigeria), Entebbe (Uganda).

Mauritius will operate until Saturday, March 21, 2020.

This decision means that SAA will only continue to render services on its domestic route between Johannesburg and Cape Town.

South African Airways aircraft photo gallery:

South African trims its route structure to save money

South African Airways made this announcement:

The joint Business Rescue Practitioners (BRPs) of South African Airways (SAA) have announced further initiatives to support the airline’s transformation into a sustainable and profitable business.

The BRPs, Les Matuson and Siviwe Dongwana, have worked closely with key stakeholders including industry specialists, government, creditors and executive management to develop a comprehensive restructuring programme which will culminate in a Business Rescue Plan to be published in late February and subsequently presented to creditors for approval.

In line with SAA’s commitment to take urgent action to conserve cash, and create a viable platform for a successful future, key measures need to be implemented now.

These measures include targeted changes to the route network, deployment of more fuel-efficient aircraft, optimisation of organisational structures and renegotiation of key contracts with suppliers.

“The initiatives we are taking now will strengthen SAA’s business. We believe that this should provide reassurance to our loyal customers that SAA is moving in the right direction. We are focused on our mandate to restore SAA’s commercial health and create an airline that South Africans will be proud of”, commented the BRPs.

Changes to SAA’s Network

Following a careful analysis of SAA’s liquidity challenges and after consultations with all relevant stakeholders, the BRPs have identified which routes will be retained to drive the restructured national carrier towards profitability.

SAA will continue to operate all international services between Johannesburg and Frankfurt, London Heathrow, New York, Perth and Washington via Accra.

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

On February 29, 2020, SAA will close the following regional and international services from Johannesburg to Abidjan via Accra, Entebbe, Guangzhou, Hong Kong, Luanda, Munich, Ndola, and Sao Paulo.

On the domestic route network, SAA will continue to serve Cape Town on a reduced basis.

All other domestic destinations, including Durban, East London and Port Elizabeth, will cease to be operated by SAA on February 29, 2020. Domestic routes operated by Mango will not be affected by the changes.

SAA does not intend to make any further significant network changes. Passengers and travel agents can therefore feel confident about booking future travel with South African Airways.

ASSETS

To improve the airline’s liquidity, rationalisation programs are under consideration for SAA’s subsidiaries, as well as the sale of selected assets. The BRPs will continue to explore viable investment opportunities with potential investors in respect of SAA.

JOBS

The joint BRPs have stated that every effort is being taken to limit the impact of job losses in SAA and its subsidiaries.

“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”, said Matuson and Dongwana.

The BRPs will engage labor, both organized and non-organized, to reach a solution necessary for a sustainable airline going forward.

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.

The decisions and actions announced today are aimed at improving SAA’s balance sheet, creating a platform for a strong and sustainable airline and ensuring that the company is more attractive for potential strategic equity partners.

South African Airways aircraft photo gallery:

South African Airways gets emergency funding

South African Airways has made this announcement:

The business rescue practitioners of South African Airways SOC Ltd (the Practitioners), supported by the Departments of Public Enterprises (DPE) and National Treasury (NT), have been successful in obtaining the balance of the post commencement funding (PCF) required to meet the short term liquidity requirements of the airline for the period until the business rescue plan (the Plan) is published and adopted. This Plan is required in terms of Section 150 of the Companies Act and is the responsibility of the Practitioners.

The advancement of the funds comes on the back of the business rescue process which began on December 5, 2019, with the local commercial banks providing the initial PCF of R2 billion in addition to the existing exposures to SAA.

Discussions held with financial institutions have been fruitful with the Development Bank of Southern Africa offering to provide the next tranche of PCF, for a total amount of R3.5 billion, with an immediate draw-down of R2 billion. Furthermore, funding for the restructuring phase after the Plan is adopted is being considered by potential funders.

The restructuring of SAA will provide an opportunity to develop a sustainable, competitive and efficient airline with a strategic equity partner remaining the objective of government through this exercise and will result in the preservation of jobs wherever possible. SAA is a key strategic asset which needs to be positioned to provide reliable connectivity to markets within South Africa, the African continent as well as servicing selected international routes.

Stakeholders of the airline should now have comfort that the rescue process is on a significantly sounder footing, and that passengers and travel agencies and airline partners may continue to book air travel on SAA with confidence.

South African Airways aircraft photo gallery:

South African to sell nine Airbus A340s

South African Airways Airbus A340-642 ZS-SNI (msn 630) JFK (Fred Freketic). Image: 944355.

South African Airways (SAA) has put some of its aircraft up for sale to accommodate the new Airbus A350-900s the airline recently added to its fleet.

In a tender on the airline’s website, SAA said it was selling nine wide-body aircraft – – five Airbus A340-300s and four Airbus A340-600s – – and 15 spare engines and four Auxiliary Power Units, a device used to provide energy.

Copyright Photo: Antony J. Best.

After we received the four new Airbus A350-900, it has become necessary for us to sell our older models to accommodate the new models with superior features such as the quieter cabin, relaxing in-flight environment and more extra-legroom seats in economy class and lie-flat beds in business Class,” said Zuks Ramasia, SAA’s Acting CEO.

“The decision to sell the aircraft has nothing to do with the business rescue process. For some time we had planned to replace our four-engine aircraft with new generation and more efficient aircraft as part of our fleet renewal programme,”  said Ramasia.

“When we received five A330-300s in late 2017- early 2018 we had already planned to retire five A340s at that time, but due to the operational fleet undergoing maintenance, the retirement of the aircraft was postponed.  Now is the time to sell the aircraft,” she said.

Ramasia said with the new A350s which will start operating on its international route network next week, replacing the A340s has become possible. The closing date for the tender is January 30, 2020 at 11.00 am SA time.

The aircraft on sale used to operate on regional and international routes, which will now be flown by the A330s and A350-900s.

Note: The remaining Airbus A340s are now likely to be retired in 2021.

Top Copyright Photo: South African Airways Airbus A340-642 ZS-SNI (msn 630) JFK (Fred Freketic). Image: 944355.

South African Airways aircraft slide show: