Ramaphosa urged to intervene in efforts to stabilize South African Airways

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South African Airways
By :

AT Reporter

CAPE TOWN – South Africa’s Parliament on Friday urged President Cyril Ramaphosa to intervene in efforts to stabilize the embattled South African Airways (SAA), the country’s national carrier.

“As the peak Christmas season approaches, a speedy response is needed to assure the country and the world that South Africa is still a destination of choice and its national carrier can and will continue to provide services,” Parliament’s Portfolio Committee on Tourism said in a statement.

Africa Tembelea (AT) has learnt that this came after Flight Centre, the country’s largest travel agency, discontinued selling airline tickets or packages for SAA.

Flight Centre say they took this decision due to the airline’s financial instability and the risks involved, since their preferred travel insurance provider had decided not to cover SAA under its insolvency benefit, due to the reported doubts over SAA’s long-term viability.

There are also claims that the government is sending “mixed signals” about the possibility of a bailout to the cash-strapped airline.

Supra Mahumapelo, chairperson of the committee said that flight Centre’s decision has raised concern, as the airline is still recovering from a week-long strike that took place earlier, which has cost the country millions of dollars and has had an impact on tourism.

Minister of Tourism Mmamoloko Kubayi-Ngubane should lead the efforts and take the responsibility to ensure that the president gets involved, Mahumapelo said.

SAA, once Africa’s largest has been embroiled in financial trouble for long due to poor management. The airline may have to file for liquidation if it cannot secure R2bn ($135m) of working capital in the next few days, people familiar with the matter said.

AT also understands that the airline’s request for a further bailout was dealt a heavy blow recently after the government said it would not extend further support to state-owned entities.

Finance Minister Tito Mboweni announced last month that any further bailout will be in the form of loans that will have to be repaid with interest.

Solidarity, a South African trade union, has applied to place SAA in business rescue, a liquidation alternative. But bankers say that this would be impractical as business rescue requires financial resources SAA does not have.

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