SAA said it would discontinue the routes and cut a number of jobs in a bid to turn itself into a sustainable and profitable business. Photo: Rogan Ward/Reuters
SAA said it would discontinue the routes and cut a number of jobs in a bid to turn itself into a sustainable and profitable business. Photo: Rogan Ward/Reuters

SAA whittles down domestic routes to Johannesburg-Cape Town only

By Siphelele Dludla Time of article published Feb 7, 2020

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JOHANNESBURG – Troubled SAA on Thursday announced the closure of more domestic and international routes, saying it would fly only between Johannesburg and Cape Town to curtail operational costs.

The airline said it would discontinue the routes and cut a number of jobs in a bid to turn itself into a sustainable and profitable business.

SAA’s joint business rescue practitioners On Thursday disclosed details of their restructuring plan that includes the sale of selected assets to improve the airline’s liquidity.

The business rescue practitioners, Les Matuson and Siviwe Dongwana, said a comprehensive restructuring programme would culminate in a business rescue plan to be published later this month and subsequently presented to SAA’s creditors for approval.

The measures to rescue SAA include targeted changes to the route network, deployment of more fuel-efficient aircraft, optimisation of organisational structures and renegotiation of key contracts with suppliers.

In a statement, they said the initiatives would strengthen SAA’s business. 

“We believe that this should provide reassurance to our loyal customers that SAA is moving in the right direction,” the rescuers said.

“We are focused on our mandate to restore SAA’s commercial health and create an airline that South Africans will be proud of.”

Last month, SAA scrapped close to 100 domestic and international flights to reduce costs.

On Thursday, the rescuers said SAA would no longer service Johannesburg to Abidjan via Accra, Entebbe, Guangzhou, Hong Kong, Livingston, Luanda, Munich, Ndola, and São Paulo flights from the end of this month.

It said domestic destinations – including Durban, East London and Port Elizabeth – would also cease to be operated by SAA.

The rescuers said all customers booked on any cancelled international and regional routes would receive a full refund. Those booked on cancelled domestic flights would be accommodated on services operated by Mango.

SAA received R3.5 billion from the Development Bank of Southern Africa to fund its operations last month.

In December, the airline was placed in business rescue following a shortage of funding for its operational expenses.

Earlier this week, the rescuers confirmed talks with the Unemployment Insurance Fund (UIF) to discuss the possibility of using the R100bn surplus that the UIF controls to fund retrenchments.

The rescuers said job losses were inevitable at SAA and its subsidiaries.

They said they would engage labour, both organised and non-organised, to reach a solution necessary for a sustainable airline going forward. SAA employs 5 146 workers. 

“It is our intention to restructure the business in a manner that we can retain as many jobs as possible,” they said. “This will help provide a platform to a viable and sustainable future. However, a reduction in the number of employees will, unfortunately, be necessary.”

The rescuers said rationalisation programmes were under consideration for SAA’s subsidiaries, as well as the sale of selected assets, in order to improve the airline’s liquidity.

They said they would continue to explore viable investment opportunities with potential investors in respect of SAA.

Meanwhile, SAA subsidiary SA Express said yesterday it would appeal against a South Gauteng High Court ruling that it must be placed in business rescue.

BUSINESS REPORT

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