Route cuts intended to make South African Airways sustainable: rescue team
JOHANNESBURG (Reuters) – Plans to cut some of South African Airways’ (SAA) domestic and international routes are aimed at making the airline sustainable and free from government funding after restructuring, experts appointed to try to rescue the company said on Sunday.
State-owned SAA entered a form of bankruptcy protection in December and is fighting for its survival. [nL8N28F0D5}
The rescue specialists said on Thursday that SAA would cease flights to Durban, East London and Port Elizabeth from Feb. 29, as well as cutting some international routes, as part of efforts to conserve cash and make the airline more attractive to potential equity partners.
South African President Cyril Ramaphosa said on Friday his government did not agree with plans to cut some of SAA’s domestic routes, plunging rescue efforts for the cash-strapped carrier into uncertainty.
“We recognize the concerns raised, especially around the domestic routes. We will continue to engage with stakeholders, with a commitment to include inputs into the final business rescue plan, which is due to be published by the end of this month, “SAA business rescue practitioners Les Matuson and Siviwe Dongwana said in a statement.
Under South African company law, the business rescue team is entitled to take decisions that are deemed necessary to turn a distressed company around, independently of government. In theory it could ignore the government’s objections.
SAA is among several South African state entities including power company Eskom that are mired in financial crisis after nearly a decade of mismanagement.
Reporting by Tanisha Heiberg; Editing by Mark Potter
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