The reports of my death are greatly exaggerated. – South African Airways
Details are still emerging, but it appears that South African Airways may not be dead after all, though it is anyone’s guess as to what will emerge from the rubble.
Reuters reports that the South African government and trade unions will work together to a create a “new financially viable and competitive airline.”
At the same time, the government reiterated that it was “not in a position” to extend a further financial lifeline to to the beleaguered flag carrier.
What does this mean? The short answer is that we do not know. But talk of creating a new flag carrier is a step further than just letting SAA die.
A major problem for SAA is its crippling legacy costs. A bloated labor force and unions unwilling to bend is simply unworkable. But what if South African sheds it labor costs, rehires a more limited cadre of workers at lower wages, renegotiates other structural debt (tough since the South African government has guaranteed it), and emerges under the same name?
It is possible. For now, though, we have to wait on the sidelines and watch the political wrangling…and inevitable industrial action that would result from such a move.
South African Airways is dead. Long live South African Airways 2.0?