South African Airways battles for financial survival
South African Airways is to be placed into a “business recuse” following a sharp deterioration in its financial position.
The flag-carrier has battled mounting losses for a number of years, and will now seek an equity partner as the South African government looks to limit its liability.
The carrier last made a profit in 2011.
Officials said they planned to bring in a business rescue practitioner to take charge of the carrier and “perform the function of operating the airline with the assistance of management”.
The government will also inject R4 billion (£200 million) into the carrier to avoid imminent collapse.
The state-owned carrier said strike action last month had severely impacted its financial position.
Full service resumed on December 1st, with the airline agreeing to a six per cent pay rise for cabin crew.
A statement from South African Airways said: “South African Airways is today in a position to announce that the board of directors of SAA has adopted a resolution to place the company into business rescue at the earliest opportunity.
“As previously announced, the South African Airways board of directors and the executive committee have been in consultations with the shareholder, the department of public enterprises, in an effort to find a solution to our company’s well-documented financial challenges.
“South African Airways understands that this decision presents many challenges and uncertainties for its staff.
“The company will engage in targeted communication and support for all employee groups at this difficult time.
“South African Airways will endeavour to operate a new provisional timetable and will publish details shortly.
“The company greatly appreciates the continued support of both its customers and partners in the travel industry around the world.
“It is important to point out that services operated by South African Airways’ subsidiary airline, Mango, will continue as usual and as scheduled.”
The airline is the first South African state group to enter business rescue since the ruling African National Congress took power in 1994.
However, it is increasingly seen as expendable, with the government keen to divert resources to other areas of the economy.