South African Airways has been denied any further funding by its government owner as the national carrier looks for ways to recover from the coronavirus crisis and a local form of bankruptcy protection.
The airline’s business rescue practitioners Les Matuson and Siviwe Dongwana, who were put in charge in December, 2019 were told by the SA government to instead source cash from available resources, according to a letter they sent to affected parties.
“We are currently assessing the impact of this development on the business-rescue process and will communicate any decisions to be made,” they said in the letter.
The embattled airline, which began operations in 1934, has racked up R26bn ($1.3bn) in losses over the last six years and has depended on a series of state bailouts to keep it running. The grounding of all of its passenger flights, aside from charters to repatriate stranded citizens to select destinations, due to the coronavirus lockdown have further decimated its revenue stream.
Finance Minister Tito Mboweni has long advocated shutting off funding for the airline, and recently cited the carrier’s closure as a way to save funds as the country deals with the fallout of the coronavirus pandemic.
Even prior to the COVID-19 outbreak ground global travel to a halt, the business rescue practitioners had cut routes and started consultations with more than 4 700 employees about job losses.
Industry pundits said all options are now blocked to any form of real continuation of the airline and the only option now could be to liquidate.
The development is a blow to the ambitions of Public Enterprises Minister Pravin Gordhan, who has been keen to keep the airline running to both preserve jobs and act as a flagship carrier for the country.
