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With embattled airline, South Africa moves to save rail company

South Africa

South African Airways has applied to enter ‘business rescue’, a form of bankruptcy protection it hopes will save the cash-strapped state carrier from collapse.

The airline has been making losses since 2011, is deeply in debt and has received more than $1.36 billion in government bailouts over the past three years all of which have achieved little more than keeping it barely afloat.

President Cyril Ramaphosa had ordered SAA to seek the business rescue in which a specialist takes control of the company with the aim of rehabilitating it, or at least securing a better return for creditors than liquidation would bring.

Ramaphosa’s handling of SAA’s restructuring in the face of fierce opposition from unions is seen as a real test in dealing with the issues of Eskom.

Years of corruption and mismanagement have put several state owned enterprises in serious financial crisis including power utility Eskom, whose financial problems have left it struggling to keep the lights on.

South Africa’s state-owned rail company has been put into administration. Transport Minister Fikile Mbalula has dissolved the interim board, saying it had done nothing to improve services.

The Passenger Rail Agency has been accused of irregular expenditure amounting to hundreds of millions of dollars.

The company has been beset by other problems, including ordering trains that were not suited for South African rail lines. The country’s transport sector has been struggling in recent months.

The state-owned airline company, South African Airways, is close to financial collapse, with flights grounded in November due to strike action.

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