SAA makes major route cuts

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  • capetonianm
    Participant

    This reply has been reported for inappropriate content.

    Of course all the debts from the past can be written off.

    Landing fees, fuel, maintenance, overflying fees ….. I understand that debts to ZA flyers may be written off as it is ‘only’ (mostly white) taxpayers’ money so they can carry on squeezing that lemon dry, which is a disgrace but it’s what you expect from a corrupt failing state.

    What what about debts to overseas suppliers? They are not going to be written off and the ‘new’ SAA won’t be given access until the debts are settled.

    In fact, it’s probably wishful thinking :

    Mia Lindeque | about 3 hours ago

    JOHANNESBURG – The National Transport Movement (NTM) on Wednesday claimed a new airline would be established to replace South African Airways (SAA).

    According to NTM, this was discussed at the latest meeting between unions and Public Enterprises Minister Pravin Gordhan.

    Unions believe that SAA can still be rescued and jobs saved.

    Over the weekend, the department agreed with business rescue practitioners on a moratorium on the signing of retrenchment agreements until Friday.

    NTM president Mashudu Raphetha said he was concerned that jobs would be lost in the process.

    “It is with great regard that after having had the meeting with the minister, the new airline will be born out of SAA. We have tried our level best to ensure that the airline still flies [and] we need to participate in the formation of the airline in order to keep most jobs,” he said.

    However, Numsa and the South African Cabin Crew Association said the next 48 hours would be crucial.


    AMcWhirter
    Participant

    The SA government has announced this morning that a new airline SAA 2020 will emerge in the next few days.

    Lengthy statement via Twitter.


    capetonianm
    Participant

    the department did, however, appear confident of the restructured airline’s capacity for profitability long-term. “The creation of a new, dynamic airline, with the correct corporate structure, led by skilled, competent and experienced management and staffed at competitive and benchmarked rates will allow for the new SAA to compete in the post Covid-19 world,” it said.

    That’s not going to happen. Someone’s been smoking their socks.


    SimonS1
    Participant

    the department did, however, appear confident of the restructured airline’s capacity for profitability long-term. “The creation of a new, dynamic airline, with the correct corporate structure, led by skilled, competent and experienced management and staffed at competitive and benchmarked rates will allow for the new SAA to compete in the post Covid-19 world,” it said.

    That’s not going to happen. Someone’s been smoking their socks.

    Exactly. All this in a county where a minister had to be suspended and give a grovelling apology for breaking lockdown rules, and ANC officials are alleged to have stolen and sold off food parcels for those in need.

    You would need to be a real rope a dope to believe in anything that requires competent people. Maybe Dudu Myeni is available for the comedy sequel.


    SimonS1
    Participant

    The SA government has announced this morning that a new airline SAA 2020 will emerge in the next few days.

    Lengthy statement via Twitter.

    Classic comedy. You wouldn’t get better on the BBC.


    GivingupBA
    Participant

    capetonianm wrote, “Someone’s been smoking their socks.”

    Thanks – that phrase made me laugh – and humour is in short supply in these Covid-19 days.

    More broadly, thank you for all of your useful posts about SAA over a long time. All very useful, and typical of the reasons why I log on to BT a couple of times a day.


    GivingupBA
    Participant

    capetonianm wrote, “Someone’s been smoking their socks.”

    Thanks – that phrase made me laugh – and humour is in short supply in these Covid-19 days.

    More broadly, thank you for all of your useful posts about SAA over a long time. All very useful, and typical of the reasons why I log on to read BT a couple of times a day.


    capetonianm
    Participant

    In this article from Fin24, the elephant in the room is only briefly mentioned :
    No mention has as yet been made of where the funding for such a process would be coming from.
    Possible answers are :
    a) It’s not going to happen.
    b) The taxpayer, and as I said in an earlier posting which someone with no knowledge or understanding of the situation, and no spine, has marked ‘inappropriate’:

    This is who is paying South Africa’s tax


    Currently a paltry 13% of the South African population of 56 million people are the ones paying income taxes – with the other 87% not contributing anything (though still contributing to VAT).
    On the basis of personal income tax, the top 1% or so of taxpayers (the 480,000 people earning more than R750,000 per year) pay 61% of the total income tax bill.
    “And I just want to point out that, by almost any standard, this is an extraordinary burden to lay on such a small portion of the population,” he said.

    ANALYSIS | SA airline industry in danger of collapse, no sign of state aid
    May 02 2020 07:00 Carin Smith
    Africa airlines

    South African airlines have a vital role to play in enabling the economy to try and rise out of the coronavirus induced recession.

    Yet, the country’s airline industry itself is in danger of collapse due to flight bans since the start of the lockdown on 27 March, leading to zero revenues.

    Although government has already announced various Covid-19 aid programmes, there has, so far, not been any indication of assistance specifically to enable the airline industry to survive.

    Restricted air travel will only commence at lockdown Level 3, full domestic air travel at Level 2 and regional and international air travel at Level 1. Some airlines, like Comair and FlySafair, have already indicated that they will likely only be allowed to fly again by September, October or even November.

    “We recognise that the primary objective is to prevent the virus from spreading, but the longer the airline industry is unable to fly, the more severe the risk becomes of loss of jobs and loss of airlines,” warns Chris Zweigenthal, CEO of the Airlines Association of Southern Africa (AASA).

    For him it is incorrect to blame the airline industry as spreading the virus as passengers had contracted the virus prior to travel and unfortunately travelled whilst carrying the virus.

    “We believe the airline industry can provide very safe and reliable transport to get the economy going around the country and when borders open, we can get regional and international travel back on track.”

    AASA will continue to work with all stakeholders in order to make this possible.

    He argues that, whilst airlines currently will fight to survive the pandemic, international airlines cannot simply step in to fill the void should local airlines not survive. While they are able to fly international flights to SA, foreign-owned companies are legally prohibited from flying domestic routes.

    Before the start of the pandemic, the air transport and tourism industries in SA supported a total of about 472 000 jobs and contributed about R180 billion to GDP each year.

    The International Air Transport Association (IATA) now estimates that in SA 252 000 jobs are at risk and the contribution to the SA economy could be reduced to R97 billion.

    Iata CEO Alexandre de Juniac has been quite emphatic that governments should support all airlines, regardless of whether they are owned by a state, private-sector shareholders or any combination of the two.

    Zweigenthal similarly believes that any Covid-19 airline aid – if any – should be given to all SA airlines, whether they are state-owned or not.

    Aviation economist Joachim Vermooten also agrees, and adds that such government aid should be distributed pro rata according to an airline’s market share, otherwise it will create a distortion to competition.

    Airports Company SA (ACSA) and the SA Civil Aviation Authority (SACAA) and the Air Traffic and Navigation Services (ATNS) would also most likely need Covid-19 assistance, he says.

    Vermooten notes that airlines are very expensive to run. Even before the coronavirus pandemic and lockdown led to the grounding of airlines, it is estimated that South African Airways (SAA) incurred losses of about R6 billion a year.

    “Without a few competitive airline networks, it is impossible to have a functional economy. Clear provision has to be made for competing airline networks to start post the coronavirus pandemic,” says Vermooten.

    SAA has been in business rescue since December last year. After a request for R10 billion was rejected by government on 10 April, the business rescue practitioners (BRPs) indicated that they do not have the funds to continue running the company beyond the end of April and might end up having no other option but to apply for liquidation.

    A deadline for unions to accept a proposed employment termination agreement which would enable a structured winding down was set for 17:00 on Friday 1 May. Over the past 13 years SAA has incurred over R28bn in cumulative losses.

    On Thursday, unions Numsa and SACAA filed an urgent application with the Labour Court in a bid to stop the BRPs’ retrenchments at SAA. On Friday the Department of Public Enterprises issued a statement in which it describes a Leadership Compact between the department and unions with the vision of trying to restructure SAA into a “new airline”. No mention has as yet been made of where the funding for such a process would be coming from.

    Minister of Tourism Mmamoloko Kubayi-Ngubane said on Wednesday that government had reached no final decision yet on the fate of SAA, but she is hopeful that a decision may have been made by the end of June.

    Low-cost airline Mango is a subsidiary of SAA. What its future holds, is as yet unclear. Whether it in itself is profitable or not is questionable, according to some industry experts.

    State-owned regional airline SA Express, which was forced into business rescue by one of its creditors earlier this year, was placed in provisional liquidation on Tuesday when its BRPs threw in the towel after it could not provide a rescue plan which satisfied government and their request for further funds was also rejected.

    JSE-listed Comair, the owner of kulula.com and the local operator for British Airways informed its shareholders on Thursday that it is lobbying the state for “special aid” through industry initiatives.

    When SAA went into business rescue, it still owed Comair about R790 million from a R1.1 billion settlement in a competition case. It is unclear how much of that it will be able to recoup.

    Comair started a restructuring process in March, which would include job losses.

    Fin24 reported in March that regional airline SA Airlink plummeted to a loss of R365 million in November 2019 – compared to a profit of R84 million in September and R50 million in October – as a result of SAA withholding revenue from ticket sales when it went into business rescue.

    Elmar Conradie, CEO of low-cost airline FlySafair, said during a recent webinar that the biggest impact is the uncertainty about when they will be able to fly again.

    “We don’t know what the demand will be once we start again. We would have to start small with a few flights a day, but would also have to be flexible to match demand if it suddenly picks up,” said Conradie.

    He would like to see some sort of leniency from government, like zero VAT and reduced aviation charges for a while. This would be to make it feasible to run flights on low load factors expected once flight bans are lifted.

    2 users thanked author for this post.

    SimonS1
    Participant

    On a related issue I see Comair has also gone into business rescue.

    https://www.biznews.com/briefs/2020/05/05/comair-covid-19-business-rescue


    AMcWhirter
    Participant

    Bloomberg reporting on a possible alliance with Air Mauritius / SAA / Kenya Airways.

    [possible paywall]

    https://www.bloomberg.com/news/articles/2018-12-26/air-mauritius-three-african-airlines-in-talks-to-form-alliance


    capetonianm
    Participant

    https://www.timeslive.co.za/sunday-times/opinion-and-analysis/2020-05-10-up-up-and-away-corruption-riddled-saa-was-once-a-source-of-pride/

    A history of a once great airline ruined by the corruption, theft, fraud, nepotism of Jacob Zuma’s band of thugs and thieves.


    capetonianm
    Participant

    A commentary on the viability of a ‘new SAA’. A pipe dream, a flying pig, which if it flies will be another black hole for the taxpayer until it goes bust.

    https://www.timeslive.co.za/sunday-times/opinion-and-analysis/2020-05-10-gordhans-saa-flight-of-fancy-can-only-end-badly/


    capetonianm
    Participant

    This morning’s Sunday Times has a couple of pieces about SAA, its history, and the pipe-dream of a ‘New SAA’ which will be properly run. I am not sure if these links will work as it may be behind a paywall but I think the site allows a couple of free reads.

    https://www.timeslive.co.za/sunday-times/opinion-and-analysis/2020-05-10-up-up-and-away-corruption-riddled-saa-was-once-a-source-of-pride/

    https://www.timeslive.co.za/sunday-times/opinion-and-analysis/2020-05-10-cartoon–will-new-saa-fly-or-is-gordhan-suffering-from-unjustified-optimism/

    SAA-pig

    Attachments:

    LuganoPirate
    Participant

    It must not be forgotten that many of the surrounding States also rely heavily on SAA to bring them tourist and business travel. Namibia, Botswana, Zimbabwe, Zambia and Lesotho all need SAA due to the limited links to the rest of the world and the benefits international connections bring to them.

    LH and now KLM and Qatar serve Windhoek, and the rest are pretty much dependent on SAA who feed into them via JNB and CPT. How long before other carriers will start serving these countries making them less dependent on SAA, cutting tourism to SA as many tourists will include a stay in SA on their way to or from Maun etc?


    capetonianm
    Participant

    SAA-photo
    The idea of a ‘new SAA’ is fading further from reality as it now seems that there is no plan for funding, and the business rescue practitioners had their snouts in the trough.
    As I said before, someone has been smoking their socks. Look at the photo!

    https://www.iol.co.za/business-report/companies/further-r77bn-pivotal-to-saa-rescue-48033364

    Further R7.7bn pivotal to SAA rescue

    By Siphelele Dludla Time of article published 7h ago
    JOHANNESBURG – Loss-making state-owned airline business rescue practitioners require a financial commitment from government in order to resuscitate successfully, writes Siphelele Dludla

    SAA BUSINESS rescue practitioners (BRPs) have argued that the stateowned airline cannot be salvaged without any commitment for further funding from the government.

    Siviwe Dongwana told Parliament on Friday that the rescuers needed the government to commit at least R7.7 billion more for SAA to be successfully restructured. The government has declined to grant SAA any more funding after giving the airline R5.5bn, saying that the BRPs must come up with a rescue plan within allocated resources.

    Dongwana said the funding commitment would enable the BRPs to complete the SAA business rescue plan which has been in the making for six months now.

    “Our view is that in the absence of funding, the best way forward is not to liquidate but it is to run a structured wind down and the draft business rescue plan is contemplating a winding down process,” Dongwana said. “To the extent that we do not have a committed amount to support the business rescue and the restructuring of the company it becomes difficult to do that. It is up to us as business rescue practitioners to look at how we respond adequately to this issue.”

    https://www.moneyweb.co.za/news/companies-and-deals/how-was-r5-5bn-spent-by-saa-brps-gordhan-wants-answers/
    How was R5.5bn spent by SAA BRPs? Gordhan wants answers
    Minister says government has seen little progress and has been in the dark on the rescue process.

    Attachments:
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