MIAMI – The South African government steps in once more to help South African Airways (SA) to get out of financial quicksands.

The new loan of 5 billion ZAR (US$346m) will allow the ailing carrier to pay severance packages to its employees that opted for this proposed solution. The payment was expected to take place and the end of January.

South African Airways is in deep trouble since the break out of the COVID-19 pandemic, which brought a final blow to the carrier’s financial situation, already critical even before the ongoing worldwide airline crisis. SA had sought bankruptcy protection, a local form of Chapter 11, in December 2019.

The biggest bailout was granted to SA in October 2020 when the South African Ministry of Finance granted 10.5 billion ZAR (US$720m) to finance the carrier restructuring plan. The plan consists of a large resizing of the airline activity, fleet, and staff with a projected lay-off of more than two-thirds of its workforce, approximately 4700 employees.

South African Airways Airbus A350-900 ZS-SDE – Photo AirwaysMag Kochan Kleps

Local Union Responses

The restructuring plan was not supported by a number of local unions that believed more in an efficient business plan.
As reported by South African Fin 24, Dr. Dirk Hermann, CEO of Solidarity Union said, “technically, South African Airways has been insolvent for the better part of a decade.”

“This was due, to mismanagement and government interference as well as corruption. All of this damage was wreaked before the COVID-19 pandemic which destroyed global aviation.”

On the same subject, and also reported by Fin 24, Capt. Grant Back, Chairperson of the SAA Pilots Association, said that “the current offer by the Department of Public Enterprises (DPE) would result in a loss-of-jobs bloodbath and is completely unnecessary.”

Apparently, an end to the SAA saga is not yet in sight and the survival of the carrier will depend solely on the alleviation of the current crisis and the progress of the expected restructuring actions.

Featured image: South African Airways ZS-SXU Airbus A330-243. Photo: Alberto Cucini/Airways