South Africa Airways Denied Needed Support
The South Africa flagship carrier may be headed for chapter 11 liquidation in wake of the pandemic
South Africa Airways, already reeling from a Covid-19 protection measure of suspending all international flights, has learned this week that it will not be receiving a sorely needed lifeline of funds from its government owner.
The African flagship has been evading bankruptcy and secured a $272 million infusion from the government and development sources last December, of which some $190.7 million was received. The carrier has not made a profit since 2011 and relies on government support. It has reportedly lost some $2 billion over the past 13 years. On March 20, South Africa Airways announced it would be suspending all international operations until the end of May.
According to reports in Africa and U.S. news sources, Finance Minister Tito Mboweni, who long advocated shutting off funding for the airline, said Tuesday that the carrier’s closure was a way to save funds as the country deals with the fallout of the coronavirus pandemic. However, it is no secret that even before the coronavirus outbreak and global travel to a halt, the administrators had cut routes and started consultations working with employment contracts and layoffs for the airline’s 4,700 employees.
“All options are now blocked to any form of real continuation of the airline,” said Peter Attard Montalto, Director and head of Capital Markets Research at Intellidex, which is a South African research and consulting company. “Basically the only option now is liquidation,” the analyst noted in a Bloomberg report.
