“New SAA” – What will be different

The South African government is considering a business model which would see South African Airways (SAA) winded down and replaced with a new state-owned airline.

Speaking to the City Press, public enterprises spokesperson Richard Mantu said the department was looking at how this new national carrier could remain competitive and offer safe and high-quality service.

He said the new airline would have a different structure to SAA, and would be focused on staff efficiency and strong leadership.

Mantu added the new airline should be a catalyst for investment, job creation, and economic growth – and that the government must continue to play a role in its operations.

“Airlines around the world are failing, but with the correct vision, leadership, business, and operating model, as well as funding and implementations, the new national carrier will be well positioned to take to the skies again and contribute to the South African and African economy,” Mantu said.

Mantu said the creation of this new airline would require the implementation of an effective corporate structure, as well as strong and experienced management.

It would have to be staffed at competitive rates to allow it to compete in the post-COVID-19 environment, he added.

“It is essential to build a strong leadership coalition which is robust and strong enough to find solutions, and establish the foundations of a new airline, with a growth path in this uncertain environment, that is in the best interest of our nation and all of its citizens,” Mantu said.

Old SAA is dead

SAA’s business rescue practitioners began the process of liquidating the airline last month after the government declined to provide another bailout package, and have asked all employees to agree to severance packages.

On 2 May, Public Enterprises Minister Pravin Gordhan stated that “the old SAA is dead, there is no doubt about that”, adding that it may be replaced by a new national carrier or other airlines.

Gordhan did not elaborate at the time on how this new SAA could be created, calling it a “complex issue”.

The national COVID-19 lockdown has had a significant effect on South Africa’s airline industry, as it has stopped all international and domestic air travel.

Following the implementation of the lockdown, SAA applied to the government for another bailout.

This application was denied and resulted in the airline asking all employees to agree to severance packages.

The business rescue practitioners said the company did not have funds to continue trading or to pay salaries beyond the end of April, following years of making a loss and using taxpayers’ money to stay alive.

Labour unions have opposed the plan to retrench all staff at the airline, but are engaging with the government regarding the formation of a new state-owned airline to replace SAA.

A number of unions have also taken the issue to the labour court to attempt to block the mass retrenchment of workers at SAA, with the court yet to make a judgement regarding the planned staff cuts.

Now read: SAA turnaround plans – We’ve heard it all before

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“New SAA” – What will be different