Huge SAA flight cancellations

www.fin24.com

Santam, Hollard confirm withdrawal of insolvency benefit cover on SAA tickets | Business

Both Hollard and Santam's travel insurance divisions have withdrawn insolvency cover benefit on South African Airways tickets.
www.fin24.com www.fin24.com

Santam's travel insurance division has withdrawn its insolvency cover benefit on South African Airways tickets.

The short-term insurance company confirmed to Fin24 via an emailed statement on Friday that the withdrawal was effective from Thursday, November 28, 2019.

Fin24 previously reported that travel group Flight Centre South Africa had stopped selling SAA's tickets due to ongoing concerns regarding the financial stability of the national carrier.

In a letter to its customers, Flight Centre said that it was informed by its preferred travel insurance provider – Travel Insurance Consultants (TIC), which is a division of Santam – and their underwriters that they were "no longer willing to cover SAA" under their travel supplier insolvency benefit. Flight Centre said it had been advised other global insurers had taken a similar approach.
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I think we can start the countdown to closure of this company.
 
tin4444 said:
Monopoly hasn’t helped Eskom into profit. Do think ACSA is making profit though.
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The last stats showed they were. To explain it, you have to consider the clients who don't burn down stuff demanding stuff for free ;)
 
Gaz{M} said:
Let's not get caught up in the sunk cost fallacy.

It is pointless to keep spending billions each year for losses, to try to recoup R21bn in debt. Suck it up and just take the hit one year. It's only 2% of the national budget, once.
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Absolutely, it is actually disgraceful that they have wasted so much of our money on SAA and they are still in such a terrible position.
 
maumau said:
They're not dead yet - hopefully in their death throws.
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Walking dead, but yeah. They last published their financials in 2017, and then they were already technically insolvent, it is just the government keeping them going. If they publish the last 2 years financials now they will be closed down.
 
IzZzy said:
Once the insurers pull the plug.. it’s over
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Why?

As far as I know it is only protection and coverage against insolvency that has been cancelled. No reason why government will not step in and offer guarantees to SAA for this. Whether people will get their money back from government though is a total different story altogether. Life insurance and all other insurance protection for the SAA are still in place.
 
The_Librarian said:
Why don't they want to publish financials from 2017 and 2018???? What is in there that they want to hide? Oinkage?
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Because those results will show that SAA should be liquidated and wound up and once they are public, nobody will loan SAA any more money.

Ironically, not being able to show your financials also scares lenders away. But maybe a financial person could confirm that withholding them is the better of both evils?!
 
The_Librarian said:
Why don't they want to publish financials from 2017 and 2018???? What is in there that they want to hide? Oinkage?
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Its very simple, though a technical explanation. Audited financial statements are prepared on the basis that a company is a 'going concern'. In the case of SAA this is impossible, since they are in debt and the government refuses to offer a blanket guarantee. If they are insolvent, then by law they must shut down, or the directors would be held liable for reckless trading.

Its a form of 'brinkmanship', give us the money or else...

Edit: Not a full accounting perspective, but does mention that issue and many others:
www.dailymaverick.co.za

The Nuclear Option: What does business rescue mean for SAA?

While business rescue is a useful strategy, and possibly the only one capable of forcing the government to make difficult political decisions regarding job cuts and the loss of patronage, it needs to …
www.dailymaverick.co.za www.dailymaverick.co.za
SAA is properly bankrupt. At the time of writing it has still not submitted its 2018 and 2019 financial results due to it being unable to certify it is a going concern. Further, the airline fails almost every solvency and going-concern test: SAA’s liabilities are in the order of R100-billion, while realisable assets are less than R10-billion. It also fails basic liquidity and corporate governance requirements. Losses have increased from an average of R1-billion a year to R5-billion a year. Yet we the taxpayers are expected to continue to bale it out.

Any privately owned business in a similar state would be liquidated and those owed money when it shuttered its windows would enjoy what are wryly called the “cold comforts of concurrent creditors”. But SAA staggers along, being drip-fed just enough taxpayer money to keep it going. Meanwhile, the mountain of debt grows. It is not sustainable.
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