South African Airways A340-600

MIAMI – South African Airways (SAA) is set to lay off its entire 4,700-strong workforce after failing to convince the government to provide more financial help, risking the collapse of the 86-year-old national airline.

According to a proposal to eight labor groups, SAA has offered a severance package to all staff starting in May after administrators concluded that a successful turnaround is now unlikely.

The compensation includes one-month pay per year of service and will depend on the successful disposal of assets such as real estate, according to the document from a report by News24.com.

Photo: Dirk Grothe | Aviation Photography

The South African carrier has not made any profit since 2011, having relied on bailouts and state-guaranteed debt agreements and bankruptcy protection for years. So far, SAA has been flying cargo planes and chartered flights in recent weeks, but no commercial passenger services.

But COVID-19’s unexpected fallout entails SAA’s demise, as the company was already cutting routes and planning job cuts before the outbreak happened.

According to Gulf News, Public Enterprises Minister Pravin Gordhan said that the cost of fighting off the COVID-19 pandemic translated to zero cash for any form of bailout. Even worse for SAA, Finance Minister Tito Mboweni said the airline’s demise might help strengthen state finances.

Photo: Dirk Grothe | Aviation Photography

Selling assets to gain cash


According to Bloomberg, SAA administration chiefs Les Matuson and Sizwe Dongwana plan to sell assets to repay creditors. In addition, according to industry insiders, two highly valued nighttime operating slots at London Heathrow could be up for grabs.

After having seen nine CEOs pass by its ranks in the last ten years and aloof back-and-forth oversite by the Department of Public Enterprises and the National Treasury, SAA, a state-owned company, has become, like many other state companies, technically insolvent without state support.

Moreover, the company has been riddled with mismanagement and corruption scandals over the years, most notably under the presidency of Jacob Zuma, which ended just 2 years ago.

What is about to happen to SAA is nothing short of a warning to financially weak carriers grappling with the ongoing fallout of the COVID-19 pandemic, especially those that are doing so without any form of government assistance.

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