South African Airways Is Now Bankrupt

The struggling flag carrier of South Africa —  South African Airways, is now technically bankrupt after its debt increased to $1.48 billion USD, more than its assets. The airline is now considering selling off assets after banks have refused to lend it any more money.

South African Airways is a state-owned airline and has received multiple cash injections, while the government have desperately searched for a new investor into the debt-ridden carrier. All potential investors, including UAE’s Emirates, declined investment proposals.

In terms of assets, South African Airways has a fleet of 46 active aircraft, including 11 Airbus A330s — (some of which were only delivered last year), and 16 Airbus A340s.

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To add to the complexities of determining just how much trouble the carrier is in, it was announced earlier this year that the South African government had failed to properly record financial information and the value of assets.

Furthermore, while the talk of privatisation has always been on the table for South African Airways, it appears that such an eventuality is now off the cards, given SAA are now technically insolvent.

How did South African Airways end up in this dire state?

South African Airways, a member of Star Alliance, has been tarnished by the politics at the airline, endless corruption, and a huge amount of mismanagement. While there is a global increase in costs and heavy competition from airlines such as the Gulf carriers — South African Airways’ woes are at home. A report on a turnaround strategy for the airline concluded that it could be salvageable, but ‘requires drastic action.’

The report also placed much of the blame for SAA’s situation previous board members – and former chair, Dudu Myeni.

Final Thought

What if you’re booked to fly South African Airways? Don’t panic, yet.

South African, like Italy’s Alitalia, are the bankrupt airline that keeps going, and going, and going, etc. While there will inevitably come a time where it proves to be impossible for the airline to continue its day-to-day operations, given the state of its cash flow, and the seemingly upcoming ultimatum from lessors and airports, if history tells us anything… it’s almost a certainty that the airline will receive another temporary bailout from the South African government, despite ministers insisting otherwise.

3 thoughts on “South African Airways Is Now Bankrupt

  1. Don’t think there is any concern about SAA. As you concluded, the state will step in with finances, pump in some cash, and try and sell some planes and jettison some routes.

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