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South Africa to create a new national carrier to replace embattled South African Airways

South Africa

South Africa is seeking to create a new thriving national airline out of the ashes of its current state-owned carrier, which is technically insolvent and on the brink of being placed in liquidation by administrators.

South African Airways (SAA) has recorded no profit since 2011 and has survived through government bailouts.

An ideal replacement for South African Airways would have both public and private owners, maintain the country’s trade connections and make a profit, the department of public enterprises said in a statement on Friday.

The embattled national carrier has been in voluntary business rescue since December last year.

The rescue practitioners late last month said the of airline cannot survive beyond month end, and the choices left are either a forced liquidation or a winding down process.

All its flights have been grounded since South Africa closed its borders and went into a five-week nationwide Covid-19 lockdown in March which has made the survival of SAA, which employs 5,200 employees, even more uncertain.

The airline’s troubles were further worsened last month when the government refused to pay yet another 10 billion rand (531 million dollars) in emergency aid to the company, claiming resources had been stretched by the coronavirus pandemic.

“Stakeholders (…) have agreed on a long-term vision and strategy” with a view to “the creation of a new dynamic airline,” public enterprises minister Pravin Gordhan said.

The minister said it will not be the old SAA but the beginning of a new journey towards the constitution of a new restructured company which will be the new standard of South Africa. The new carrier is set to compete in the post Covid-19 world.

According to the statement, SAA employees will be transitioned and new leadership and equity partners will be sought.

The demise of SAA would mark an end of era for the 86-year old airline which had gone through years of financial troubles associated and high debt associated with poor management.

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