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Monday airline updates: South Africa eyes new national carrier

written by Dylan Nicholson | May 4, 2020
South African Airways funded the cabin crew study. (Arcturus/Wikimedia Commons)
South African Airways funded the cabin crew study. (Arcturus/Wikimedia Commons)

The South African government will attempt to create a new national flag carrier out of the remains of struggling South African Airways, which is on the brink of liquidation.

The decision was made on 1 May, with the goal to have a financially viable and competitive airline for the country, post-COVID-19.

Ideally, the state wants a replacement consisting of both private and public sector participation to allow it to remain profitable and provide vital airlift capacity and trade connections.

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South African Airways began flying in 1934 but has lost money for seven years, and was recently refused a bailout from its government. The recovery plan by SAA’s administrators, led by Les Matuson and Siviwe Dongwana before the COVID-19 crisis, was to get the company back on track.

When the government refused to provide a substantial bailout package, they started the process of liquidating the airline. Additionally, all employees were asked to agree to severance packages.

The airline has been building a loss o $1.4 billion over the last six years and has been relying on assistance from the government during this time to keep flying.

In other airline news:

  • Despite declining to tip money into Virgin Australia before it collapsed, part-owner Etihad continues to be interested in the airline. As consortiums and joint ventures run their rulers over Virgin Australia’s books, today there is a report Etihad has teamed up with American global asset management firm Oaktree Capital Management to launch a bid for Virgin Australia.
  • As of 1 May, LATAM Airlines has departed the Oneworld alliance. This leaves Oneworld without a South American member.
  • A United Airlines memo to employees is hinting at a possible relaunch of passenger service to several Chinese cities. The news came out in a recent Forbes report, which indicates that the airline wants to resume service to the Chinese cities of Beijing, Chengdu and Shanghai.
  • Air Serbia, in which Etihad has a 49 per cent share, might soon be fully nationalised. Serbia’s Minister for Construction, Transport and Infrastructure, Zorana Mihajlović, announced this week that the government is prepared for the possibility of Serbia purchasing all of Etihad’s share in Air Serbia.
  • Korean Air is planning to sell its air loyalty program. Over the last week, it has been studying the sale of core aspects of the business to raise crucial funds.
  • India has extended its suspension of domestic and international flights until 11:59pm (local time) on Sunday, 17 May, due to the continuing COVID-19 pandemic. During this time, all bans on passenger flights and interstate train travel will remain in place, with the only exception being cargo flights and those approved by the Directorate General of Civil Aviation (DGCA).
  • Singapore Airlines is examining its option to sell and lease back some aircraft in a bid to raise some cash. A recent report in Forbes indicates that the airline is seeking some flexibility with its fleet. With most of its aircraft owned outright, this move would give Singapore Airlines much needed cash without adding too much to overall long-term costs.
  • United Airlines shared additional route cuts for the summer. The air carrier’s schedule shows that the airline will drop a further 20 routes on top of those that were announced over the previous few weeks.
  • On Thursday, WestJet announced that it was able to reach an agreement with the international pilots union known as ALPA (Air Line Pilots Association). This agreement will save more than 1,000 pilot positions at the airline, as well as at subsidiaries WestJet Encore and Swoop.
  • Lufthansa’s pilots offered to sacrifice up to 45 per cent of their salaries over the next two years. In return, the staff members are seeking the securement of their positions as the carrier fights for its own survival during the global health crisis.
  • In a 1 May schedule update, Delta Air Lines has announced it will not reinstate 10 routes to Latin America next month. This unexpected move comes just days after the airline announced it would resume some international flights from May.
  • Irish full-service carrier Aer Lingus is reported to be in talks with workers unions regarding job cuts. Around 20 per cent of its 4,500 strong workforce could be facing the axe, amounting to as many as 900 jobs.
  • Ryanair has today announced that up to 3,000 jobs will have to be cut as part of its restructuring program in the aftermath of the coronavirus crisis. The program will also result in pay cuts for staff and the closure of some of its European aircraft bases until air traffic recovers.

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