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SAA aims to relaunch operations in first half of 2021

South African Airways (SAA) is expected to restart its operations in the first half of 2021, announced the government of South Africa. The airline is supposed to operate as a joint venture of the public and private sectors.

The Department of Public Enterprises (DPE) stated that the government bailout of 10.5 billion rand ($650 million) secured for state-owned SAA should ensure the successful development of the airline‘s restructuring plan. The relaunch of SAA in the first half of 2021 would support key economic sectors of South Africa, announced the authority in a statement released on October 29, 2020.

“The Business Rescue Plan for SAA is fundamental and will create a solid base for the emergence of a competitive, viable, and sustainable national airline,” stated DPE.

“The cumulative effect of these actions is that the government will be partnering with the private sector in the launch and management of the new airline and relieving the financial burden from the fiscus,” added the authority.

SAA’s restructuring plan would contemplate an initial airline’s working capital financial injection of 2.8 billion rand ($172 million) of which 800 rand ($49 million) would be used for the payment of SAA’s post-commencement creditors. Also, the plan would include a provision of unflown airline tickets worth 3 billion rand ($184 million), pointed DPE in a statement .

The announcement of SAA’s relaunch follows the government’s decision to provide the ailing air carrier a 10.5 billion rand ($650 million) financial injection necessary to implement SAA’s restructuring plan. Earlier in October 2020, the National Treasury of South Africa presented to Parliament the medium-term budget policy statement (MTBPS). Following the document, Tito Mboweni, the Finance Minister, approved a 10.5 billion rand ($650 million) bailout to SAA.

The MTBPS also set an additional financial injection of 6.5 billion rand ($394 million) to settle SAA’s debts and interests. The Finance Minister took into account that the ailing airline was the state-owned lag carrier therefore the funding should come from the government’s budget.

All operations of the state-owned SAA were suspended on September 29, 2020, after previous attempts to restructure the carrier had been met with opposition from both the government and trade unions.

The SAA filed for liquidation and bankruptcy protection in December 2019, after 8 years of continuous losses since 2011. 

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