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South African Airways Suspends Operations Amid Huge Debt

South African Airways Suspends Operations Amid Huge Debt

JOHANNESBURG:

South Africas state-owned airline has suspended all its operations as it struggles to raise a bailout of more than 10 billion rands ($591 million).

South African Airways, one of the countrys state-owned enterprises face allegations of corruption and mismanagement, filed for liquidation and bankruptcy protection in December last year.

The business rescue team assigned to manage the company has announced it has failed to raise the money needed to implement a rescue plan for the airline. The suspension of operations may be lifted if the government comes through funds it has promised.

All scheduled cargo and repatriation flights will be undertaken but no new ones will be accepted during the suspension, said the company.

The move will also affect at least three of the airline’s subsidiaries, including the low-cost airline Mango.

South Africas tourism industry has been very hard hit industries by the countrys COVID-19 lockdown, but South African Airways’ financial problems existed well before the outbreak of the coronavirus. The suspension comes just as South Africa is to reopen the country to international flights on Thursday.

Workers unions have warned that the failure to rescue the airline will result in significant job losses in an economy that is expected to shrink by more than 7.2% this year. South Africa’s economy was already in recession before COVID-19 and the country’s strict lockdown in April and May caused further contraction of the economy. Unemployment has risen dramatically to 42%, according to statistics released this week.

The airline is currently the subject of a state investigation into wide-ranging allegations of corruption, fraud and mismanagement during former President Jacob Zumas time in office.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor


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