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COVID-19 outbreak contributed to SAA’s financial problems: BRPs

The national carrier relied on government bailouts for years to stay afloat, however this week, it failed to secure funding from the Public Enterprises Department.

Picture: @flysaa_care/Twitter

JOHANNESBURG - South African Airways (SAA) business rescue practitioners (BRPs) said the COVID-19 outbreak has contributed to the cash strapped airline's financial problems.

The national carrier relied on government bailouts for years to stay afloat, however this week, it failed to secure funding from the Public Enterprises Department.

The department said the COVID-19 pandemic has further stretched national government resources.

SAA was placed under business rescue last year because it was bankrupt.

Business rescue practitioners are now proposing job cuts of about 4,700 jobs in two weeks as a solution to save the troubled airline.

Before the COVID-19 outbreak hit South Africa, practitioners cut short certain trips with the aim of saving costs.

They now have offered severance packages to all its staff saying a successful turnaround strategy was not possible.

Aviation expert Guy Leitch said the business rescue process would not succeed: “But there will be other creditors with more pressing claims against SAA’s money and the airline is hopelessly insolvent already with its assets being far exceeded by its liabilities. So, once the few assets are sold, there won’t be any money left to pay retrenchment packages to the employees.”

Government as the only shareholder of the airline has the final say on the proposal made by the practitioners to unions and employees.