South African Airways cancels more flights as funds run dry

By Alexander Winning

JOHANNESBURG (Reuters) – South African Airways (SAA) said on Friday it would suspend intercontinental and African regional flights until the end of May because of the coronavirus, as administrators trying to save the airline said it could run out of funds in just over a week.

State-owned SAA has been on the brink of collapse for months and entered a form of bankruptcy protection in December.

It has not made a profit since 2011 and has received more than 20 billion rand ($1.2 billion) in bailouts in the past three years.

On Friday it said it would suspend flights on its routes to the United States, Britain, Germany, Australia and Brazil until May 31 in response to a government travel ban aimed at stopping the spread of coronavirus.

SAA said in a later statement that it would suspend flights to African cities including Accra in Ghana, Lusaka in Zambia, Harare in Zimbabwe, Windhoek in Namibia, Lagos in Nigeria and Entebbe in Uganda until the end of May. It said it would continue domestic services to Cape Town.

This is the second wave of mass cancellations this week, after SAA said it would cancel 162 intercontinental and African flights in March and another struggling state-owned airline, SA Express, suspended operations until further notice from Wednesday.

President Cyril Ramaphosa on Sunday announced bans on travel to countries considered “high-risk” as regards the coronavirus, including ones to where SAA flies like the United States, Britain and Germany.

South Africa has recorded more than 200 confirmed coronavirus cases but no deaths so far.[J8N2AI025]

SAA’s business rescue team said in a letter to trade unions that measures taken by governments to control the spread of the virus had hurt bookings.

“Unless some urgent and drastic measures are implemented without delay, the situation will deteriorate to such an extent that it will threaten the very likelihood of the company being rescued,” rescue experts Les Matuson and Siviwe Dongwana wrote in the letter dated March 19.

Matuson and Dongwana said funds secured to sustain rescue efforts could run out by March 31, and asked unions to consider cash-conserving measures like a rotational layoff scheme and short-time arrangement starting within days.

But one of SAA’s largest unions, the National Transport Movement (NTM), said talks on Friday on the proposals had failed to reach an agreement. More talks are planned for next week.

NTM president Mashudu Raphetha said the union wanted the government to agree to another bailout and that SAA could save money by eradicating bloated tenders and rooting out corruption.

On Friday, Matuson and Dongwana also asked creditors for a two-month extension for their rescue plan until May 29.