South African Airways Receives Government Bailout Package

South African Airways (SAA) has once again been saved from collapse after the airline received funding of 3.5 billion South African Rands ($239 million USD) from a state-owned bank.

The team overseeing the rescue package, the Business Rescue Practitioners declared: “We can confirm that the Development Bank of South Africa has committed 3.5 billion Rands ($239 million USD) in funding to South African Airways.

After receiving funding, SAA will begin restructuring its operations aiming to become more efficient. This will include canceling and consolidating flight schedules where there is low demand. Union bosses will pressure for the minimal disruption that could affect 5,000 of the company employees.

As part of the South African Companies Act, companies that are granted bankruptcy protection are assigned a business rescue practitioner, who assists the company in developing strategies to seek financial solvency. 

South African Airways hasn’t made a profit since 2011 and has only continued to operate with more than 20 bn Rand ($3.8 billion USD) in government aid, according to Reuters.

Last November the airline took four Airbus A350-900s, two were previously operated by Hainan Airlines and the remaining two are being sub-leased from Air Mauritius. The new arrivals will replace some of the older A340s.

“After we received the four new Airbus A350-900, it has become necessary for us to sell our older models to accommodate the new models with superior features such as the quieter cabin, relaxing in-flight environment and more extra-legroom seats in economy class and lie-flat beds in business class,” said Zuks Ramasia, SAA’s Acting CEO.

The A350 began operations on Jan. 21 flying between Johannesburg’s O.R Tambo International and New York’s John F. Kennedy Airport. From February the XWB will be deployed to Frankfurt, Germany.

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Jose Antonio Payet

As a geography nerd, Jose has always been fascinated by the complexities of the airline industry and its ability to bring the world closer together. Born and raised in Peru, now studying in the UK. he has travelled around America, Europe and South East Asia. His favorite aircraft is the Boeing 767-300, which he has flown many times during his childhood; although now the A350 is slowly growing up on him.

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