South Africa Airways last made a profit back in 2011 and has ever since 1994 been racking up unsustainable levels of debt topping 57 billion rand ($3.9billion). It used to be recognized as Africa’s leading airline by World Travel Awards every year from 1994 to 2015 when Ethiopian Airlines began dominating the awards.
The airline has been in turbulence which came to a climax last month after its staff went on strike over unpaid wages and allowances leading to grounding of a number of flights and caused bookings to be cancelled.
This week, Pravin Gordha, South Africa’s public enterprises minister said the airline would undergo a radical restructuring as part of the voluntary business rescue process announced by the South African president Cyril Ramaphosa, after he decided that as the best way forward for the state-owned airline to resolve its financial problems while continuing to operate.
According to the minister, the process is the optimal mechanism to restore confidence in the airline and hopefully reposition it for growth. The process, he said will involve the appointment of a rescue practitioner to take full control of the company’s finances.
The airline will receive a total of 4 billion rand ($274 million) from existing lenders and the government, with existing lenders providing 4 billion rand now and the government providing another 4 billion rand at a later date. The minister stressed that this fund was not a bailout.
The board on Thursday, appointed Les Matuson, an experienced business rescue practitioner to run the airline along with the management.