SAA UIF bailout

Image via Wikimedia Commons

Public Enterprises concerned over market turbulence in SAA restructuring

A ‘review’ would be needed of Thursday’s announcement that several routes had been cut from the embattled airline.

SAA UIF bailout

Image via Wikimedia Commons

The Department of Public Enterprises said on Friday 7 February that it was “concerned” that restructuring decisions taken by the business rescue practitioners (BRPs) in charge of South African Airlines (SAA) had caused “market and customer uncertainty that may jeopardise the long-term future of the airline”. 

Review of decision to cut routes

Government would be making representations to the BRPs in order to “balance the necessity for trimming unprofitable routes with the need to ensure the future sustainability of both the airline and South Africa’s aviation industry,” the department said via an e-mailed statement. 

A “review” would be needed of Thursday’s announcement that several routes had been cut from the embattled airline.  

“Our submission will include a proposal that the route network changes announced by the BRP be reviewed to ensure the sustainability of the airline.

Voluntary business rescue

“While understanding the impact of the business rescue process on the restructuring of routes, staffing and costs, the government and business rescue practitioners are both committed to a viable SAA as an outcome of this process,” said the department. 

The airline went into voluntary business rescue in December. 

In Thursday’s press statement, BRPs Les Matuson and Siviwe Dongwana said several international, domestic and regional routes would be stopped effective March 1. The BRPs also said more fuel efficient aircraft would be used, and certain assets would be sold-off to try and make the state carrier profitable. 

Retrenchments and economic impact

Domestically, only the Johannesburg and Cape Town routes would remain, although Cape Town would be scaled down. 

They also said that retrenchments would likely have to be made, which did not sit well with the SA Cabin Crew Association (Sacca).

KwaZulu-Natal’s premier, Sihle Zikalala, issued a statement soon after the BRP announcement, saying closing SAA’s Durban routes would negatively impact the province’s economy. 

By African News Agency (ANA); Editing by Desiree Erasmus