South African Airways (SAA) will survive…at least for now…thanks to another government infusion. But will the government finally force the carrier to change?
Let’s zoom right into the text of statement from South Africa’s Department of Public Enterprises, as shared by Flight Global:
“SAA therefore, cannot continue in its current form…The airline group will now go through a radical restructuring process which will ensure its financial and operational sustainability. There is no other way forward…We are committed to a viable, sustainable, profitable national airline. It is our collective responsibility as South Africans to support SAA in its efforts to restore sales confidence among its customer base and rebuild revenues in the shortest possible time.”
A lot to unpack, but I’d summarize it in this way:
- South Africa is unwilling to let its flag carrier fail.
- South Africa views its roll to inspire public confidence in SAA.
- Thus, South Africa will continue to offer a financial lifeline to SAA.
- SAA will now enter a “radical restructuring process” targeting sustainability and profitability.
- No details have been provided on how it will accomplish that or what this process will entail.
The last point is key. It’s not a surprise that South Africa considers is flag carrier a national asset worth protecting. It is not even surprising (or even necessarily “wrong”) that it is willing to run the carrier at a loss. After all, the economic ripple effect of SAA is momentous. Even if that money could be better used for other purposes, keeping South Africa open to the outside world is at least a reasonable policy goal.
But the big problem is what to do now. Ok, so SAA gets another bailout. What now? Unions just fought for a pay raise…and won. What will happen when they are told they’ll need to take a large paycut as part of the “restructure”? Will people start buying tickets on SAA? Will insurers start insuring SAA flights again?
Because thus far, we’ve only been promised “bold initiatives” that will increase market share for SAA. That, tragically, sounds like more of the same.
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CONCLUSION
South African Airways lives to see another day. But, what happens next is the bigger question. What can the government realistically do, noting that it is virtually impossible to cut your way to growth? With competition fierce, what can the government actually cut?
Looks like my spring trip to South Africa is safe…for now.
What a bunch of idiots. If there is demand another one will rise in its place. This is what is wrong with all these third world countries with politicians that only care about vote banks or personal gains like SAA in south africa, alitalia in italy, GM in USA, trump hotels in USA through subsidies of massive tax cuts.
You sad little kid. Does Trump torment you in your dreams every night? Are you able to process a single inane thought of yours without including Trump? TDS is real, seek help.
Sadly Trumpettes like yourself are happy to ignore his blatant corruption and his disregard for the constitution.
So it’s business as usual at SAA and for me it remains an airline to avoid whenever possible.
Not that different than the situation at Alitalia
Unfortunately I think labor is a big reason for their struggles. I’ve never seen so many employees with any other airline, it’s like there are 3-4 people working for every 1 at another airline.
Realistically they would probably be best focusing on flights within South Africa (& neighboring countries), and only long hauls where they can offer a non stop others can’t, and have a high revenue business potential. I.e. JFK – JNB.
As soon as one stop comes into play, they will never win that battle. If I’m Atlanta based I’m seriously considering stopping in Europe vs. a hop to JFK or DC and then connecting to South African
IIRC DL or UA fly NS to CPT or JNB.
Part of the problem with Joxie is same as Mexico city and Denver altitude for TO/Landings.
We fly to CPT in a few days from PDX its still 22 hrs in the air with a stop in the EU. I would rat1her do two 11 hour flights and a layover than a 5hr to ATL/JFK/DC then a ~15hr+/- NS to ZA.
SFO-ZHR and ZRH-JNB on LX are both red-eye – make the trip a little easier. Being able to get off the plane for a few hours in ZRH and shower, stretch, relax before another redeye flight. 16 hours on a plane -and i literally get cabin fever.
Too bad SAA is Star Alliance – DL could buy a share – but sadly ZA is not really a huge transit point on the global scale or population.
Well I will continue to fly SAA. The financial stability depends on my tickets to fly flysaa.com #mySAA
That’s an immoral stance as you are participating in theft from the SA taxpayer to prop up a failing SOE. One whose employees are militantly helping to drive it further into debt.
You cannot seriously tell me you believe the restructuring talk: it hasn’t worked before and won’t work now. Only a boycott of SAA will force real change and privatisation.
This is a repeat of several government bailouts SAA has already received over the years.
The problem is that corruption in South Africa is beyond comprehension or understanding . It is reported that there has been roughly 700 billion Rand in theft,corruption and looting. When in reality the true number is closer to 2 Trillion Rand .
So SAA will be bailed out yet again. This is criminal dereliction of duty by the SA government. It is theft from the SA taxpayer. An undemocratic, morally reprehensible transfer of wealth to support a vanity project for SA’s corrupt and venal politicians. Who love the perks, loyalty air miles and fuss made over them when flying SAA.
The ‘restructuring’ talk is baloney: been said before and nothing changed. The staff are militant, endlessly duplicated and ridiculously unionised, with no insight that running at a loss is unsustainable.
Moral duty of all of us to boycott SAA and force the inevitable: privatisation with no guarantees to any existing employee.
I look forward to flying on SAA for the first time in May 2020 and glad it will still be around. My flights are from Victoria Falls to Jozi with a 24 layover to do some sightseeing, then down to Cape Town. I fly from the USA to Africa and back on Qatar Airways using reward miles. I like the idea of flying on a nation’s flagship carrier and try to when I am able to travel internationally. It’s part of the travel experience. They won’t lose money on me – I am booked in Business and it was not cheap!