South African Airways (SAA) “cannot continue in its current form” and will need a “radical restructuring,” the country’s minister of public enterprises, Pravin Gordhan, said Dec. 2.

The state-owned airline has been losing money for years and has only been kept afloat by a series of cash infusions from the government. It last made an annual profit in 2011.

Gordhan made clear recently that the government could spare no further funds for the carrier, which has been wracked by accusations of mismanagement and corruption, and has had a series of short-lived CEOs.

A mid-November strike by the South African Cabin Crew Association (SACCA) and the National Union of Metalworkers of South Africa (NUMSA), which halted hundreds of SAA flights, seems to have been the final straw for Gordhan.

“SAA has been through difficult challenges over the years, and more particularly in past few weeks,” the Department of Public Enterprises (DPE) said in a statement. “The strike initiated by NUMSA and SACCA caused immense damage to the reputation, operations and the deterioration of the finances of SAA. SAA, therefore, cannot continue in its current form.”

The government remains “committed to a viable, sustainable, profitable national airline,” the department said, but drastic changes will be required.

“The airline group will now go through a radical restructuring process, which will ensure its financial and operational sustainability. There is no other way forward,” the DPE said, without providing details of the restructuring.

“Over the past few days there has been intense discussions with lenders to secure the necessary funds to cover the operational and structural transition over the next few months,” the department said, adding that “SAA is determined to remain open for business. Management is also committed to ensure financial sustainability going forward. SAA board and management will intensify its marketing campaigns to rebuild confidence in the airline and will take bold initiatives to increase its market share.”

Immediately prior to the strike, the airline’s management announced plans to cut around 940 of the airline’s 5,149 jobs, saying it had been overstaffed for decades. The layoffs were deferred until the end of January 2020 as part of the settlement to end the strike.

The company also warned that a planned 5.9% pay increase would only be paid if SAA had sufficient funds available.

“We have noted comments by the shareholder department in relation to the state of the airline,” SAA said in a statement. “We will take our cue from the Department of Public Enterprises on the implementation of any measures or initiatives.” 

Alan Dron, alandron@adepteditorial.com