South African Airways on the brink of collapse

Photo by Ernest Leung | AeroNewsX

COVID-19 has crippled the aviation sector, with severe cancellations and minimal passengers on all flights. However, this pandemic has disproportionately affected some, already weak airlines. There is already much evidence of this: Flybe’s rapid collapse, on the 5th of march, due to its owners: the connect airways consortium of Virgin Atlantic, Stobart Air and the hedge fund Cyprus Capital bailing out, a mere year after purchasing the already weak airline, leading to the loss of more than 2,000 jobs. However, it was certain that in this case, the direct cause was the significant drop in revenue, caused by dropping booking numbers and rising flight and booking cancellations. It now seems that the coronavirus pandemic has now set its sights on its latest victim. After failing to secure additional funds from the South African Government, the airline’s very existence is now in jeopardy, as they are now planning to lay off the entire workforce, with more than 4700 staff being offered severance deals from the end of April. Despite administrators attempting to reach an agreement with the various labor unions, a Bloomberg report suggests there is now a proposal suggesting that a successful turnaround is now unlikely.

Photo by Anselm Ranta | AeroNewsX

South African airlines, like Flybe, already entered this crisis in a very weak position: since joining the Star Alliance in April 2006, the airline has since been restructured, and services have slowly dwindled, with SAA ending its longstanding London-Cape Town route in 2012, and an end to non-stop services to Beijing and Mumbai in 2015. The airline has since attempted to rectify its loss-making long haul fleet, leasing 4 A350-900s, serving destinations such as New York, however, the fact remains that the airline has failed to make a profit since 2011, despite consistent bailouts from the South African Government. Similar to other airlines, some of which we have reported on such as Finnair, SAA has been operating their cargo wing at least partially, delivering medical and basic supplies across the globe, however, it seems their time in the skies may be finally coming to a close, as the pandemic has no end in sight, as SAA continues to bleed funds.

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