South Africa’s government is to undertake an extensive restructuring of South African Airways, insisting that it has run out of alternative strategies for the troubled flag-carrier.
South Africa’s government is to undertake an extensive restructuring of South African Airways, insisting that it has run out of alternative strategies for the troubled flag-carrier.
The country’s department of public enterprises says the loss-making airline has been through “difficult challenges” in the past few years and particularly during the last few weeks – which have included industrial action from two unions.
These strikes caused “immense damage” to the carrier’s reputation and operations, and contributed to a deterioration in its financial position, the department adds.
“SAA, therefore, cannot continue in its current form,” it states. “The airline group will now go through a radical restructuring process which will ensure its financial and operational sustainability.
“There is no other way forward.”
The department has not detailed the nature or full extent of the overhaul but says “various options” are being considered.
But it says that, over the past few days, there have been “intense discussions” with the airline’s lenders to secure funds necessary to cover an operational and structural transition over the coming months.
“The [government] is committed to a viable, sustainable, profitable national airline,” adds the department. “It is our collective responsibility as South Africans to support SAA in its efforts to restore sales confidence among its customer base and rebuild revenues in the shortest possible time.”
SAA has been attempting to implement a long-term turnaround plan, and has received several packages of government financial support to aid with liquidity.
But the carrier has continued to turn in substantial losses and it has been hampered further by turmoil in its senior management, with multiple changes of chief executive over the last decade.
“SAA is determined to remain open for business,” says the department. “Management is also committed to ensure financial sustainability going forward.”
It adds that the board intends to take “bold initiatives” to increase SAA’s market share and “intensify” marketing campaigns in an effort to rebuild confidence in the ailing carrier.
