SAA Restructuring plan announced, but taxpayer set to foot the bill

After months of wrangling and internal disputes, South Africa’s embattled national carrier SAA finally has a business rescue plan, but it’s going to cost the state nearly $600 million for the plan to work. The funds will cover creditors along with voluntary severance packages for thousands of staff who are set to be retrenched. The proposed restructuring plan is the fifth since the beleaguered airline went into bankruptcy protection in December last year.

Under the terms of the plan, which government, creditors and labour unions are yet to approve, only 1000 of the airline’s over 4000 staff will be retained. Administrators hope that a leaner, smaller SAA will return the company to profitability. 

The success of the plan also hinges on the commencement of a full domestic network starting in January next year. South Africa is currently on lockdown while it continues to battle the biggest Covid-19 outbreak on the continent and only a few domestic flights allowed. So it’s not yet clear when flights will return to normal.

Government says it is still studying the proposed plan, but has voiced concern over the effectiveness of the administrators given the amount of time and resources provided to them.

The airline has consistently underperformed for the best part of a decade, it last turned a profit in 2011 and has relied on successive government bailouts to stay afloat.

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