South African Airways 'near bankruptcy'

[Melburnian1]

I read a recent article that suggested South African Airlines was close to bankruptcy and that it was cutting about 20 per cent of its operations.

The JNB - PER and return route did not rate a mention so one assumes it is unaffected.

 

[drron]

They have been near bankruptcy for years.A case of cronyism and corruption all too prevalent in South Africa.

 

[dajop]

Sounds like any one of several carriers in similarly corrupt countries, Malaysian, Thai and Sri Lankan are three such carriers that come immediately to mind.

 

[Andz]

The SA gov is selling a stake in the Telco to bail out the airline. Reports say network changes on the domestic and regional segments of its route network and no international changes yet....!

 

[ALH]

Hope they hold it together. Just booked JNB - NBO Return in J over Xmas

 

[moa999]

Was always surprised why QF didn't take SA on once the competition authorities banned the JV in 2014 for PER-JNB.

But I guess until they get the 789s they don't really have the right aircraft, and still need ETOPS330 approval on it. Maybe a route for 789 #9.

 

[UP4014]

Was always surprised why QF didn't take SA on once the competition authorities banned the JV in 2014 for PER-JNB.

But I guess until they get the 789s they don't really have the right aircraft, and still need ETOPS330 approval on it. Maybe a route for 789 #9.

I think there is just not the passengers, two 747s per day, one from Perth and one form Sydney seems about it (I didn't check if there is a flight from Melbourne), I did the QF Sydney one last year and after speaking to a number of South Africans unless you need to go to Perth only you get the QF flight and connect, all told me it was a just a better experience.

 

[mannej]

I think there is just not the passengers, two 747s per day, one from Perth and one form Sydney seems about it (I didn't check if there is a flight from Melbourne), I did the QF Sydney one last year and after speaking to a number of South Africans unless you need to go to Perth only you get the QF flight and connect, all told me it was a just a better experience.

SA fly a mix of the A343 and the A346 depending on load. No direct flight from MEL at this stage.

As for the financial state of the airline, stories such as this have been circulating for a long time.

 

[vetrade]

I think there is just not the passengers, two 747s per day, one from Perth and one form Sydney seems about it (I didn't check if there is a flight from Melbourne), I did the QF Sydney one last year and after speaking to a number of South Africans unless you need to go to Perth only you get the QF flight and connect, all told me it was a just a better experience.

We have flown both QF and SAA to JNB and I wouldn't rate either of them as better than the other in any significant way. Seats and meals on both were quite good (the disclaimer being that we have only flown in J with both airlines). The PER - JNB flight sector has the advantage of being about 3 hrs shorter than flying from SYD. Prices can also be way too high but we got around that last December by using VA points to book with SAA.

 

[Mattg]

Well apparently South African Airways is now "technically bankrupt".

SAA considers selling off assets as debt balloons
South African Airways Is Now Bankrupt, What Does This Mean For Ticketed Passengers?

 

[travelislife]

Virgin tried MEL-JNB too, but because of ETOPS on the 777 had to take a longer route. Didn’t last long.

 

[Melburnian1]

What similarities and dissimilarities does this have to the Alitalia situation?

Interesting that the author of one of the articles Mattg linked to mentioned Thai Airways, an airline that is about to reduce frequency to Australia.

Reading the articles, corruption is one standout. And no long term solution in selling off profitable parts if the rest loses bucketloads every month.

In a developing economy like South Africa that has some measure of 'white flight' (as in farmers who risk being killed so they seek to emigrate), can a national government afford to keep throwing money at an airline like this, or are there better uses for government funds (including govt borrowings?)

 

[vetrade]

Well apparently South African Airways is now "technically bankrupt".

SAA considers selling off assets as debt balloons
South African Airways Is Now Bankrupt, What Does This Mean For Ticketed Passengers?

Well, I guess SAA is too important for the government not to step in again with cash the country really can't afford, but the potential for disruptions is a bit unsettling as we're booked on SAA to JNB in 2 weeks to see see our new granddaughter for the first time. I'll take consolation in the fact that most things in SA take so long to happen that they probably couldn't even implement a bankruptcy this side of Christmas, anyway.

 

[davidj]

corruption is one standout

What makes you come to that conclusion? Because some article or blog say it so? Not doubting corruption is a cause or symptom, but it's too easy to call corruption where there are other underlying issues.

What stands out for me is:

Senior SAA staff and a confidential report, presented at the company’s board strategy session 10 days ago, reveal that the airline’s management is now looking at a number of aggressive cost-cutting measures, including selling off its catering arm, Air Chefs, and outsourcing or selling SAA Cargo.

This is just simple a incompetent management and board. This insolvent position did not happen overnight, but was in the making over many many months. The fact that someone tabled a board paper 10 days ago on strategies to address this is a joke.

The board needs to resign, or be sacked. Heads at board level need to roll.

 

[Melburnian1]

davidj, you make good points but I was alluding to how I've observed corruption operating in what the media call 'developing economies.' Central and South America, parts of southeast Asia and Africa come to mind.

A stereotype perhaps, but we have the Malaysian ex-PM (and the further news items appearing re MH370) as examples closer to home.

Incompetent boards may be one result of corruption as 'mates' are appointed who lack the necessary experience, skills or business acumen.

 

[vetrade]

This is just simple a incompetent management and board. This insolvent position did not happen overnight, but was in the making over many many months. The fact that someone tabled a board paper 10 days ago on strategies to address this is a joke.

The board needs to resign, or be sacked. Heads at board level need to roll.

Anyone familiar with SAA would know that they have been a basket case airline for many years, rather than just many months, with failures at all levels a recurring problem. SAA is just a reflection of SA more generally, where progress has been pitifully slow. At SAA financial and management incompetence leading to unserviceably high debt combined with pilfering and corrupt work practices through many levels is so endemic that "Blind Freddie" could see they are a lost cause.

Truth be known, the airline probably does need to fail and another rise from the rubble (if possible) or another airline (BA/Comair?) fill the void because the cancer that afflicts SAA is terminal. A new board will do no good because, just like the present one, they would inherit an impossible task. Besides, any new board will just be selected by the clueless economically incompetent (and corrupt) government. SAA needs a re-build, a massive injection of cash and and an experienced externally sourced board and management team given carte blanche to oversee it all. With the ANC in government that will never happen.

 

[drron]

What makes you come to that conclusion? Because some article or blog say it so? Not doubting corruption is a cause or symptom, but it's too easy to call corruption where there are other underlying issues.

What stands out for me is:


This is just simple a incompetent management and board. This insolvent position did not happen overnight, but was in the making over many many months. The fact that someone tabled a board paper 10 days ago on strategies to address this is a joke.

The board needs to resign, or be sacked. Heads at board level need to roll.

Corruption is well documented at SAA.
“Theft is institutionalised in this place” says SAA Technical Chairperson.

‘There is massive collusion & fraud at SAA’

MPs grill SAA over decision to extend Dudu Myeni’s term
A former Chairwoman was well known to be corrupt and known to be very close to President Zuma.
Dudu Myeni - Wikipedia.

 

[davidj]

A former Chairwoman was well known to be corrupt and known to be very close to President Zuma.

And the fact that the Chair has not been removed, and in fact has been extended beyond her term (allegedly by the president), even with her abysmal performance, proves that the board needs to go, and a fresh set of independent directors be appointed, independently. If they can't be independently sought, to me that has little to do with SAA, and more to do with the owners, the government of the day. If the government, and ultimately the people of SA are happy throwing Rands in the air, that is up to them.

Burning SAA to the ground and starting a new airline with the same governance problems won't help anyone.

 

[drron]

She is an Ex Chairwoman.Not the current one as Zuma is no longer around for her protection.

 

[N860CR]

The board needs to resign, or be sacked. Heads at board level need to roll.

It's not that simple. And you'd need a good grasp on South African politics to understand what's happening at SAA.

The board is appointed by the ANC. And the ANC is happy to keep putting money into SAA as it's an easy target for business corruption. There's a reason the ZA Government doesn't want the subsidiary companies sold....