South Africa’s Department of Public Enterprises has just announced that South African national carrier SAA (South African Airways) has been placed into bankruptcy protection. The losses, ever-present, have been blamed on corruption as well as incompetent leadership, especially during recent years. The airline’s former CEO, resigned earlier this year, saying his turnaround strategy was being compromised by a lack of state funding and too much bureaucracy.
Today, the SAA Board of Directors and the Executive Committee have been in consultations with the Department of Public Enterprises (DPE), to find a solution to the situation of the airline.
The main objective for the South African President Ramaphosa, as stated, is to make sure that the restructured airline will be able to bring in millions of tourists to South Africa. At the same time, this new environment could help create more jobs in tourism and related sectors. A synergistic work with other African airlines will be able to support the growing continent's markets, improving trade and travel businesses all over Africa.
The airline will now enter a business rescue process, receiving 4 billion Rand ($270 million), of which 2 billion is from the government. The Public Enterprises Minister, Pravin Gordhan, is sure that this operation is “not a bailout”. Instead, he calls it “the provision of financial assistance to facilitate a radical restructure of the airline.” The business rescue commissioner in charge of the operation, who is in the process of being appointed, will have to reduce the personnel of the airline. Recent estimates have put the cut at 944 jobs out of a total of more than 5000 employees.