South African Airways is the flag carrier of South Africa, and the region’s largest carrier. The airline has been trying to update its fleet over the past years. They currently fly a mix of A330s and A340s. The A340s are heavy gas guzzlers, but are one of the few aircraft that can fly the long distances that SAA needs tp cover. Besides that, the economic crisis in South Africa has made the carrier suffer. Well, the suffering might be ending soon, but not for the better. There are reports that SAA is on the verge of bankruptcy. They have asked the South African Parliament for about 13 billion South African Rand (ZAR). This equates to about $792 million.
How did They get Here?
South African Airways was blacklisted for a very long time during the years of Apartheid. After the policy was overturned, and South Africa became democratic, tides began to turn favorably for the airline. They updated their fleet to (at the time) modern A340s, and then purchased A330s. They joined Star Alliance, and have extensive codeshares with their partners. Since the Great Recession (which hit developing countries especially hard), SAA has been plagued with losses. They have taken out various loans, and now are unable to pay them. The airline has multiple loans that they need to pay this year. They were already bailed out in July. By September, another set of loans will be due, and again in December.
Will the Government Step In?
The government of South Africa already bailed them out for their July dues. The country is still tight with money (as are many economies in the world). The government has said that they will decide whether or not to bail them out once again by October. The airline’s debt are mounting, but they forecast to turn a profit in 2019. The question is will they be able to survive by then?
I don’t really know what to expect here. I understand the importance of keeping SAA alive, but the government may not be able to provide that amount of capital. If they don’t, the airline may be forced into bankruptcy. In this scenario, I see three possibilities.The first is that it liquidates to pay off creditors and the airline flies off into the sunset. Second possibility it is bought by a local or regional airline. I don’t know the finances of Comair, but they could be a suitor. Comair is another South African airline, which provides feeder traffic for British Airways. I don’t think there are any other regional airlines that can take over SAA. Third scenario is the airline is bailed out by a larger, foreign airline. Think Lufthansa Group, Delta or IAG. If this is the case, the airline would be downsized, and depend on the carrier of choice for long haul flights.
Out of the Ashes?
If the airline does liquidate, there could still be a silver lining. The airline could be re-invented as a separate carrier, with similar name and branding. This has happened with Alitalia various times. Alitalia is another carrier on the verge of bankruptcy. In this case, the airline that inherits the assets that remain would fly a limited network, at first. When the airline matures, then it may take up the routes that SAA flies today.
I am heartbroken to hear how close to bankruptcy SAA is. They are a glimmering light in the southern cone of Africa. The airline’s fleet is one of my favorite to see at airports, given that it carries the flag on its livery. If the airline does go bankrupt, a huge void would be left in South Africa, and it will be difficult to say who will take over. For now, we can only hope for the best for the beleaguered carrier.
What do you think? What will happen to South African Airways? Who will bail them out?
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All images from Wikipedia.