(Another) Decision Day at SAA.
Today, Monday 2nd December, is another in a long series of important, perhaps crucial days in the recent tortured history of South African Airways.
The recent eight-day strike of cabin, check-in and technical employees at the airline may have pushed the organisation up to, if not over the edge. The strike is estimated to have cost the airline approximately $3.4m a day. That loss didn’t help in the cause of paying employees on time; at the due date in November the airline was only able to pay half-salaries and could only find the remainder (and the annual ’13th cheque’) a few days later.
In recent days, one of the largest travel agents, the Australian-based Flight Centre in South Africa stopped selling tickets for SAA over concerns over it’s ‘long-term viability’. Meantime two major players in the travel insurance business; Travel Insurance Consultants (TIC) underwritten by Santam, and Hollard Travel Insurance have stopped their travel supplier insolvency benefit for SAA.
As with any state-owned organisation; the politicians have a major stake; and in this case are sending mixed messages; the Finance Minister Mboweni has refused to offer additional guarantees to reassure commercial lenders, but the Public Enterprises Minister Gordhan wants to save the airline.
As for today, a Board meeting is scheduled, and the two ministers are expected to attend. The central questions are whether to allow the airline to enter bankruptcy, go into business rescue, or to continue to provide guarantees.
We’ll keep you up to date on developments.
