Is a New Flag Carrier the Answer?
South Africa is looking forward to creating a new and thriving national airline out of the struggling state-owned carrier, which is on the brink of liquidation.
The ideal replacement for South African Airways would require both private and public sector participation. This would allow it to remain profitable through vital airlift capacity and trade connections. The business rescue team has been working to save the airline since December, but efforts were severely disrupted by the current global crisis.
A newly restructured airline is set to be the new national carrier. The transition to the new airline will not be easy as much is unknown about post-COVID-19 life. The new airline will hopefully have a solid corporate structure, led by skilled, competent, and experienced management. It is also expected to compete in a post-COVID-19 world where demand will be less than what it once was.
The Fall of South African Airways
South Africa’s flag carrier, which began operations back in 1934, has not made a profit for the last seven years. In fact, it was already struggling when COVID-19 hit the airline industry hard.
The recovery plan by SAA’s administrators, led by Les Matuson and Siviwe Dongwana before the COVID-19 crisis, was to get the company back on track. Last month, when the government refused to provide a bailout package, they started the process of liquidating the airline. Additionally, all employees were asked to agree to severance packages.
Unfortunately for SAA, the coronavirus has proved to be the final nail in the coffin. SAA, which last made profit close to a decade ago has been racking up losses of $1.4bn over the last six years and has been relying on bailouts by the South African government to remain in service.
Preparing for the Unknown
The whole aviation industry has been plunged into crisis by the coronavirus pandemic. The launch of a new airline carrier, though good news for its nearly 5,000 employees, is headed towards uncertainty.
The announcement made by the Ministry of Public Enterprises of South Africa sounds more like a protection from the vultures eyeing the imminent death of SAA. Several private operators such as Comair, FlySafair and Airlink are jostling to take over its few profitable activities.
Many would say that the downfall of SAA could have been avoided, as the airline was still flying amid huge losses. However, COVID-19 seems to have sealed the airline’s fate. We hope with the new proposed plan, a newly-restructured SAA will somehow get back to its ‘good old days’.