Aviation

The two major airlines on death’s door

Ali Coulton

Ali Coulton

Things aren’t looking good for South African Airways and Hong Kong Airlines.

AFTA announced on Tuesday that South Africa’s national carrier had made the list of suppliers excluded from its Chargeback Scheme, and two major South African travel insurance companies have stopped covering tickets issued by the airline against insolvency.

Analysts have speculated that while the move won’t push the airline into liquidation it will affect ticket sales for the airline that struggled to pay salaries on time this month, Reuters reported.

South African Airways has failed to make a profit since 2011 and suffered a huge financial fall out after two of its largest unions began an eight-day strike on 15 November, forcing the airline to cancel hundreds of flights.

The country’s finance minister, Tito Mboweni, has refused to sign off on guarantees so the airline can get the 2 billion rand ($199.5 million) it needs to stay afloat and according to Reuters, a board member of the airline admitted last week there is a possibility the airline could shut down.

However, in a statement, the airline said the South African government is supporting South African Airways in its efforts to restore sales confidence among its customer base.

The airline said it has faced challenges around strikes initiated by the National Union of Metalworkers of South Africa (NUMSA) and South African Airways Cabin Crew Association (SACCA), however, it restored flight services in late November.

Tim Clyde-Smith, South African Airlines’s Asia-Pacific general manager, said the airline is determined to remain open for business.

“The seven-day strike that ended 21 November has put SAA into a serious financial position. Pravin Gordhan, the Minister for Department of Public Enterprises in South Africa said in his media release on Sunday that SAA will only survive after the radical restructure,” Clyde-Smith said.

“We are determined to survive and equally determined to continue our partnerships with our travel partners and deliver the service that our customers have been ticketed for.”

Meanwhile, Hong Kong Airways has been given until Saturday to get its financial affairs in order or have its flying licence suspended.

Hong Kong’s Air Transport Licensing Authority (ATLA) released a statement on Monday saying after meeting with Hong Kong Airways senior management team, the organisation was of the opinion the airline’s financial position “has deteriorated rapidly” to the extent that there is doubt it will be able to pay salaries and provide a satisfactory service.

“After careful consideration of the financial position of HKA at present, ATLA must take immediate and resolute action to prevent further deterioration of HKA’s situation in order to protect public interests,” a spokesperson for ALTA said.

“In accordance with the two new licence conditions attached by ATLA, HKA must, by a deadline set, ensure cash injection at a level determined by ATLA (or provide an alternative to the satisfaction of ATLA), and raise and maintain its cash and cash equivalent level as stipulated by ATLA.”

ALTA said it would revoke or suspend the airline’s operating licence if it did not get its affairs in order by 7 December.

Hong Kong Airlines released a statement shortly after to reassure its customers it remains committed to flying its passengers to their destinations safely.

The airline said it regularly updates ATLA on its operation and financial improvement plan.

“We have addressed our financial situation by implementing cost-saving measures while adjusting our operation from time to time to respond to changing market demand,” the statement said.

“As weak travel demand resulting from the social unrest in Hong Kong has continued to affect our business and revenue, Hong Kong Airlines has reduced its capacity and flights in the coming months as well as further consolidated its network under the challenging business environment.”

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