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Just over a month ago, the administrators at South African Airways (SAA) were told by the government not expect additional funding and to seek financial resources elsewhere.
South Africa’s Finance Minister had long advocated cutting the airline off financially, and cited the carrier’s closure as a way to save funds as the country dealt with the global pandemic.
In other words, reallocating the “bailout money” to sustain the country was far more important than saving the jobs of the employees at SAA.
Understandably, this message was frightening because the airline had received so many bailouts from the government in the past.
In fact, in early 2019, SAA received a huge cash boost of R5.5 billion (~$3.7 billion USD ) from the government, adding to numerous bailouts over the past several years. And yes, that was billion with a B!
But it appeared the airlines financial past was finally catching up with them as the South African government had, essentially, said it has bigger problems to deal with (i.e. COVID-19) when asked for another bailout from the airline.
THE NEW BAILOUT
This week it was announced that South African Airways would receive a 3.8 billion ZAR (~$211 million USD) bailout, however, strategic plans have not been finalized as to how the money will be spent.
South African Airways (SAA) has been in a terrible financial situation for nearly a decade.
While South Africa should be a big aviation market, South African Airways has an inefficient route network and there are many reports of corruption and mismanagement. In fact, the airline has gone through five CEO’s in the past 8 years. In other words, they’re a hot mess.
What makes this situation worse is that $200 million USD is not enough to make any changes at the airline so SAA is going to find themselves in the same situation a week from now, a month from now, and a year from now.
Meanwhile, Delta is moving in.
What do you make of this situation?