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South African Plans Post-Pandemic, Post-Restructuring Restart
Following a rough 2020, South African Airways is hoping that 2021 will bring forth a new face to the long-time struggling flag carrier. The long-struggling airline expects to restart operations around July or August 2021 as the airline hopes that finding a fresh start post-pandemic will kickstart a new era for travel in and around South Africa.
The flag carrier has had a history of struggling to turn a profit, relying heavily on the South African government to bail out losses and allow the carrier to continue to keep the country connected through a domestically flagged aircraft and airline. Pre-pandemic, the carrier had lost roughly $1.4 billion and the funds necessary to keep the carrier going were declined as the airline was pushed into administration to streamline the financially burdening carrier.
The administration started back in early 2020, with the airline opting to suspend the primary carrier’s operations in September 2020 as a way to offset losses. As a result, 80% of South African Airway’s staff would be cut and the airline’s few operations would go silent as the airline decided that the best way to stem losses was the just go silent until passenger counts recover. Despite the flag carrier suspending operations, competitors including Airlink and Kulula continue to operate domestic operations to keep customers moving.
On top of announcing a target start timeframe, CEO Thomas Kgokolo said that situation remains dynamic and the airline will evaluate the recovery window before deciding if this expected restart timer is still viable. In the meantime, the airline will continue to operate in its low-cash spending mode post-administration.
Following the release from restructuring, the company received R7.8 million ($550 million) in a bailout for the primary carrier. This deal did not include subsidiary Mango, who had its own issue of a missed payment suspending flights back in April.
Despite a slashed workforce and exiting restructuring, there are still some barriers before the 87-year-old carrier will be allowed to take to the skies again. The largest of which is a dispute with pilots over missed wages prior to and during the pandemic. The airline continues to meet with the workforce, hoping to iron out a deal as soon as possible so that work can begin on reinstating flights.
Externally outside the airline’s control and already noted by CEO Thomas Kgokolo, the recovery rate will play a critical role in determining if the late summer restart window is still obtainable. South Africa specifically has been plagued with a slow vaccination rate, with a low number of doses being administered. At the time of writing, the African Union CDC notes that just 0.7% of South Africa’s 59.3 million citizens have received at least one dose of any COVID-19 vaccine. This comes despite 825,000 vaccines arriving in the country and only 47.91% of those vaccines being utilized. Part of the is a fallout of the suspension of AstraZeneca branded shots following reports that they were offering ‘minimal protection’ for early recipients which the country had banked heavily on acquiring for mass vaccinations.
Referring back to the airline, additional attention will continue to be put on attempting to find equity in the private market willing to take on some of the ownership of South African Airways. The South African government finds the carrier as a burden and hopes that splitting the shares with another company that could help manage it better could see the carrier vault itself into a more solid financial footing. While the carrier notes that there are some companies willing to invest, deals are still very much in progress and yet to fully meet the desired end product the government of South Africa is looking for.
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