SAA cancels flights

201

South African Airways (SAA) cancelled more than 20 domestic flights between its Johannesburg hub and Cape Town and Durban this week and 10 international flights to and from Munich, the airline said, as it fights for survival.

SAA is running short of cash after government failed to provide R2 billion ($137 million) in emergency funding it promised when the airline entered business rescue last month.

The state-owned airline was “consolidating flights to match capacity and demand” and would consider further schedule changes over the coming days.

“These cancellations represent a responsible strategy to conserve cash,” SAA said in a statement, adding it was working to accommodate affected customers on other flights.

SAA is one of several South African state entities, including power company Eskom, mired in financial crisis after nearly a decade of mismanagement.

The state companies’ financial problems are seen as one of the biggest threats to Africa’s most industrialised economy and helped push the country’s credit rating to the brink of junk status.

SAA’s statement showed cancellations on the domestic and Munich routes started on Monday and will last until Friday.

SAA said changes to the Cape Town route were because it had been operating training flights on recently acquired Airbus 350-900 aircraft, which temporarily resulted in surplus capacity.

Regarding the Munich cancellations, it was company policy to review flights with low demand the national carrier said.

The airline’s business rescue practitioners held several rounds of talks with government on the promised funding, but failed to reach agreement, according to a person briefed on the talks.

On Sunday, the public enterprises ministry said it was talking with National Treasury to raise funds for SAA.

Last week, a trade union official said SAA might suspend some flights and delay salary payments if government didn’t come up with a plan to provide the R2 billion soon.

Two other unions thought government was deliberately sabotaging rescue efforts by not providing the funds.

Government treatment of SAA and whether it is willing to sacrifice jobs will send a signal ahead of a bigger battle with unions over Eskom, struggling to keep the lights on and drowning in debt.



South Africa’s major opposition party, the Democratic Alliance, said SAA should be liquidated as government couldn’t afford to keep it afloat.