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SAA Suspends All Operations As Government Continues to Look for Money
On Tuesday, Business Rescue Practitioners (BRPs) announced that South African flag carrier South African Airways has suspended all operations and the airline put under “care and maintenance” until the ongoing discussions between the BRPs and the government lead to a deal with suitable funding for the airline. All existing cargo and repatriation services will be completed with no new operations accepted.
The government is yet to come up with the 10 billion rand ($590. million) needed for the carrier to fly with SAA, having long been faced with a financial crisis even before the pandemic worsened the airline’s position to restructure.
“The BRPs [administrators] have made a decision to suspend all the airline operations with immediate effect and are pursuing a process to put the airline under care and maintenance until funding discussions are completed,” the administrators said in a notice to affected parties, reports Reuters.
This is according to a letter to stakeholders, in which the administrators stated, “certain progress” had been made to secure the funding, subject to certain terms and conditions.
The state-owned airline entered a local form of bankruptcy protection in December 2019 surviving with years of government bailouts.
The administrators mentioned recently that they had already engaged with some creditors who were willing to provide a portion of the money needed in the restructuring plan, having already rolled out the plan in June.
Right now, the BRPs are engaging with the government to secure the remaining portion of the money needed on recapitalization to fully implement the business rescue plan with talks about what would be the implications if the airline only secured a portion of the money.
Who Will Fill The Capacity?
South African Airlines and its low-cost subsidiary Mango Airlines have also been affected by SAA Technical withdrawing maintenance services because of unpaid bills with the move resulting in Mango Airlines grounding its entire fleet.
The airline suspended its commercial operations back in March due to the coronavirus pandemic while its low-cost subsidiary has only been operating domestic flights before grounding its fleet recently.
With South African Airlines now suspending operations while talks on where to obtain more funding for its restructuring are ongoing, the question remains on who will fill the capacity even as border restrictions continue to ease and airlines are only starting to get back to the skies again.
While the answer to that question is not yet clear, it will likely be easier for large international carriers like British Airways, Emirates, Qatar Airways to pounce on these markets than for smaller local airlines to attempt to fill the void.
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