South African Airways 'faces liquidation' as government pulls funding

Published: 19 April 2020 - 5 a.m.

State-owned South African Airways will lay off its entire workforce and faces liquidation after the government refused to provide the 86-year-old carrier with additional financial aid, according to media reports.

Administrators believe that a successful turnaround is unlikely and the airline has offered severance deals to all 4,700 employees from the end of April, according to a proposal seen by Bloomberg.

The Department of Public Enterprises said in a statement: “There are discussions with the unions to the current South African Airways business model, success of the business rescue process, and the best possible outcome for the airlines employees.”

SAA has been a loss-making business for years and last turned a profit in 2011 but has been kept afloat by the government.

In December, the airline was taken over by administrators in a rescue bid to turn the airline around.

Last week it was revealed that government told administrators that they could not expect further funding beyond what has already been promised and that the airline has to find cash elsewhere.

While SAA has been operating some cargo and charter flights in recent weeks, the Covid-19 pandemic has forced it to cut all passenger flights and ticket sales have evaporated.

Airlines around the world are expected to lose $314 billion in revenues this year, according to the International Air Transport Association, because of government lockdowns.

Administrators are tasked with selling SAA’s assets, including aircraft and two valuable slots and London Heathrow Airport.

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