South African Airways to lay off entire workforce

Perth, Australia - November 12, 2016: South African Airways Airbus A340 taxies on Perth airport in an Olympics color scheme, on November 12 2016 in Perth, Australia.

South Africa’s state-owned airline has reportedly failed to secure additional public funding, putting it at further risk of collapse.

According to a proposal to eight labour groups seen by Bloomberg News, South African Airways (SAA) has offered its 4,700 employees severance deals from the end of April, after administrators for the airline concluded a successful turnaround is “now unlikely”.

The basic value of compensation, according to the news outlet, will be one-week pay for each year of service, dependant on the successful disposal of assets, including real estate.

The South African Department of Public Enterprises said that no agreements have been concluded.

“There are discussions with the unions on alternatives to the current South African Airways business model, success of the business rescue process, and the best possible outcome for the airline’s employees,” it said in a statement.

Public Enterprises Minister Pravin Gordhan said last week that the cost of staving off the COVID-19 pandemic meant no more cash could be extended to SAA, while Finance Minister Tito Mboweni said the carrier’s closure could help shore up state finances, according to Bloomberg News.

The state-owned carrier has not turned a profit since 2011, and was in a rough place financially before COVID-19 struck and airlines around the world were forced to ground planes.

SAA suffered huge financial losses in November last year after two of its largest unions began an eight-day strike, forcing the airline to cancel hundreds of flights.

A month later, the airline announced it would be placed into business rescue, a type of protection against bankruptcy.

In February, SAA announced restructuring plans it hoped would bring it back from the brink, with several Asia-Pacific routes cut, including its Guangzhou and Hong Kong services.

Since then, the impacts of COVID-19 have ground international aviation to a screeching halt. As a result, the aviation industry could lose US$314 billion (nearly $497 billion) in ticket sales, according to the International Air Transport Association (IATA).

With the mounting threat of the novel virus, the team of administrators led by Les Matuson and Sizwe Dongwana are now looking to sell assets and raise cash to repay creditors, Bloomberg News reported.

Travel Weekly has contacted SAA for comment.

Featured image: iStock.com/jamesteohart

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