Public Enterprises Minister Pravin Gordhan on Sunday said South African Airways (SAA) would undergo an extensive restructuring to save it from bankruptcy and collapse, reported Reuters.
The minister said the airline has had intense discussions with lenders to secure funds for the cash-strapped carrier’s operational and structural transition.
SAA’s going through major financial constraints as it had not made any profit since 2011. The airline is completely dependent on government bailouts to remain solvent. Last month, a crippling strike pushed it to the brink of collapse. Two of the airline’s largest employee unions -the South African Cabin Crew Association (Sacca) and the National Union of Metalworkers of South Africa- began an eight-day strike over pay that forced SAA to cancel hundreds of flights.
These strikes caused immense damage to SAA’s reputation and operations, and contributed to the deterioration in its financial position which worsened dramatically after the strike.
Adding to the woes, two large travel insurers in South Africa on Friday stopped covering SAA tickets against insolvency as doubts grow over whether the airline can survive. The move is expected to hurt ticket sales and exacerbate a cash crunch that left the airline unable to pay salaries on time this month.
The public enterprises ministry issued a statement saying that the struggling state-owned airline could not continue in its present form and would need a “radical restructuring” to ensure financial and operational sustainability.
“Over the past few days there have been intense discussions with lenders to secure the necessary funds to cover the operational and structural transition over the next few months,” the statement read.
The ministry is considering various options to turn around SAA, it added without providing further detail about the nature or extent of the overhaul.
