South African Airways Prepares To Fire All Staff, Liquidate

Filed Under: South African Airways

It would appear that the end is finally here for South African Airways (unless the government backtracks), with discussions taking place for how to lay off all 4,700 staff at the airline. This follows the airline entering business rescue in late 2019.

South African Airways firing employees

As I wrote about a couple of days ago, South African Airways has been cut off by the government, as the country is refusing to provide additional funding to the national airline.

Bloomberg is reporting that South African Airways is currently working on creating severance packages for employees, who will be laid off starting at the end of April. This comes after the turnaround plan for the airline has failed.

Employees will be getting one month of pay, plus one week of pay for every year of service. In other words, an employee that has been at the airline for 30 years would get about eight months worth of pay. The ability of the airline to pay this is dependent upon successful sale of assets.

The administrators behind South African Airways’ business rescue are now tasked with selling assets, including planes, valuable landing slots (especially at Heathrow Airport), etc.

South African Airways A340-600 business class

Will South Africa get a new national airline?

In many ways the current situation at South African Airways was inevitable. The airline has been losing money since 2011, and the government has provided just enough funding to keep the airline operating, but not enough funding or direction for anything to materially change. Obviously the COVID-19 pandemic has exacerbated the problems at the airline.

South African Airways had an inefficient fleet, route network, and workforce. Seeing the airline liquidate is sad for a variety of reasons:

  • Thousands of people will be losing their jobs
  • While not the world’s greatest airline, there’s something nice about having a national long haul airline
  • South Africa is one of the biggest markets in Africa, so you’d think there would be merit to having a major international airline based there

I’ll be curious to see what the future of aviation in South Africa looks like. I think the biggest thing South Africa needs as a market is domestic and regional connectivity, since that’s not covered well by that many airlines. However, there are already some competitors, like Comair.

British Airways Comair plane in South Africa

Personally I feel like South Africa might not actually get a new long haul airline, because the country is pretty well covered in that regard:

  • The Gulf carriers all fly to South Africa, offering connectivity to all parts of the globe
  • Most major European airlines fly to South Africa, also offering good connectivity
  • Ethiopian Airlines is a powerhouse in Africa, so we could see them increase connectivity to South Africa, so you can get to most points in the world in one stop

Could we see Ethiopian increase service to South Africa?

Even prior to this pandemic there was talk about how SAA should become a regional airline, and possibly create some sort of a joint venture with a Gulf carrier, so that they could funnel their traffic through a major global hub.

The reality is that most of SAA’s long haul routes were also served by other airlines, in most cases at better prices, with a better product, and with more schedule flexibility.

Bottom line

It sounds like South African Airways is headed for liquidation, with employees being laid off in the coming days. Short of the government changing their mind and once again funding SAA, it seems like this is the end of the road…

I feel bad for all the employees at SAA, since I know a lot of people have worked at the airline for decades. It’s absolutely awful for them to be losing their jobs. Other than that, though…

(Tip of the hat to @xJonNYC)

Comments
  1. So sad. I feel deeply for the employees. FYI, apparently it’s one month pay plus one week for every year of service

  2. I know we generally roll our eyes when American carriers complain about foreign (and especially Gulf) competition. But this seems like a situation when the Gulf carriers were a real problem for the local airline…

  3. Logistical question. Some of us bought the LATAM fares from Miami to Cape Town you pointed out recently. That flight is MIA-GRU-JNB on LATAM then connecting to JNB-CPT on SAA. If SAA goes out of business do you think LATAM cancels the itinerary or finds an alternate flight to get you to CPT?

    Thanks and sorry if the question is heartless— yes, it is awful people are losing their jobs, but seemed like SAA was a relic bound to go at some point.

  4. @ TravelingNewYorker — Whoops you’re right, thanks. Looks like the Bloomberg story was wrong. Updated the post to reflect the correct info.

  5. @ Former UA1K — It sure sounds like it, though Star Alliance is still arguably the strongest in Africa, between Ethiopian Airlines and EgyptAir.

  6. It’s not really the Gulf carriers that were the problem, it was endless political interference, in terms of management, route network and fleet. Pretty well every choice commanded by the country’s leaders was disastrous.

    But still sad as I love traveling to SA and flying SAA was an integral part of that.

  7. @ Anthony — The Gulf carriers have certainly provided a lot of airlines around the globe with competition. In the case of SAA, I really think they’ve faced just as much competition from traditional European network carriers. But between downward pressure on yields and an inefficient business model, SAA definitely couldn’t compete with the Gulf carriers either.

  8. @ Michael — Did you book through LATAM/was the ticket issued on LATAM ticket stock? If so, they might just offer a refund or to let you terminate in JNB. I wouldn’t necessarily count on them getting you another way to JNB.

  9. SAA has faced one major problem:
    1.) As described in nice words above ‘political interference’. During the last years anti-white racism is rising in South Africa. This is especially visible on all government levels and in all state-owned companies such as SAA. Other businesses that have been bankrupted by this hate on white people include the water and electricity suppliers.

    The second problem which is minor in comparison to the first one:
    2.) People prefer to have redeye flights between Europe and South Africa. This means SAA’s airplanes have to sit on the ground both in Europe & South Africa for more than 12h between flights. So effectively their fleet utilization is abysmal. And their are geographically no further interesting connections available via Sout Africa.

  10. Tell me any national carrier that makes money except for probably SQ which make very little money anyway thanks to asian market but again losing to LCC?
    What was Etihad or Qatar losses again last year?
    Shouldn’t we expect national carrier to lose money? National carrier is not a for profit company but brand and image of the nation. For example, temasek holding and Sing govt will do whatever it takes to maintain changi and SQ so that it can stay afloat and be the projection of the country around the world.

  11. Lucky- Bloomberg is the same news channel that confirmed and . I really stopped using Bloomberg for News Reports after these allegations. And there haven’t been any individual news reports about South African‘s end. Well there are some but they all refer to Bloomberg.

  12. The only slightly corrupt government in South Africa will need a new vehicle for shady deals, so yes, of course, there will be a new airline. No doubt about it.

  13. @jkjkjk: Air China, China Eastern, China Southern are all state-owned and they all make money. China Airlines of Taiwan, too. Ethiopian, even. Being state-owned isn’t as much a problem as inefficient strategies, really

  14. Send a bill to China for 10 billion dollars and re-open the airline. Furthermore ban all flights from China until they pay the bill.

  15. @Srihari – I have had poor experiences with Bloomberg’s reporting on African aviation in the past as well. However, in this case they do seem to have the basic facts correct – namely that the BR practitioners are preparing for mass layoffs.

  16. Will be interesting if they split Mango from South African Airways, as they seem to be the only at least halfway profitable part of SAA.

  17. @jkjkjk: Finnair, Air New Zealand and Ethiopian airlines are all state owned and are pretty healthy financially.

  18. Yep, pretty minor but I was looking to get a refund from Airlink for travel next month that won’t happen. For some reason despite being “independent” they ran all of my inquiries through SAA. My assumption is that my refund (or credit: Eyeroll) is still applicable but who knows.

    I’m also on a Mango Flight. Only 82 USD one way, booked through Expedia, so my guess is I should ask them if I have any chance of getting that money back.

  19. @Ray, china legacy carriers make money due to domestic market but have been losing money left and right in dumping capacity especially with $2k TP flights. Let’s put it this way. If they stop international flights and partner with foreign airlines, they will make more money.

    @Alan, the question is, flight in china is already open, why isn’t it open in your country? Sure started in china, but your government could’ve slowed it down. And by the way your people are not staying home and not wearing mask cause more problem. Be an obedient citizen and listen to what the government is saying. Stop being primitives by fighting over toilet paper and use bidet instead.

    Western world needs to be ruled with Asians born there. Look at all the great airport and airlines ran by many asians nations. Need proof? Look at how they handle covid19 and look at this blog to look for great airport and airlines.

  20. @Alan sometimes I am amazed by the keyboard warrior’s naiveness. LOL.

    No politician will ever do that. If you were in that position, you wouldn’t do that either. It’s not like you can make that kind of decision by yourself. So stop being so naive. What you can do is first cutting off any Made In China stuff or things with parts from China.

    Even our president hasn’t done that despite repeatedly claiming he is not happy with China.

  21. I wonder who will step in and do the Perth-Johannesburg flight? I bet Singapore Airlines offering a 1 stop option will be a popular alternative. I don’t see Qantas stepping in however due to its dispute with Perth Airport.

  22. Last October I booked two tickets for my wife and I direct with South African Air on their partner SA AirLink from CPT-SZK and SZK-JNB. I paid for the tickets with my Chase Sapphire Reserve card and the total was around $850. The flights were scheduled to occur in May and I’ve had to cancel our entire South Africa trip due to the COVID pandemic. I requested a cancellation and refund from SAA over two weeks ago and have not received any refund to my CSR as of now. Any ideas on what I can do to get my money back?? CSR trip insurance says “Financial insolvency by the cardholder’s travel supplier” is NOT covered.

  23. I have posted before this is a real shame for us that travel in and out of southern Africa especially for safari’s. We always had good experiences on SAA whether it was Airlink or regular service from JNB to CPT. Regionally they provided excellent service, clean planes and great staff.

    As for ME3 or China causing this please it’s been a well know fact for years politicians have caused the demise of their national flag carrier, too bad they didn’t get proper experienced international managers to come in and run SAA training future mangers to manage the airline. Now it looks like Ethiopian Airlines will become by default the largest airline in Africa with Kenyan a very distant second. Sad very sad as another person said what happens to Airlink?

  24. Are staff being fired (fault of the employee) or laid off/made redundant (fault of the employer)? Headline seems misleading because there *is* a difference.

  25. @Ghostrider – Ethiopian has been the largest airline in Africa for some years now, and easily triple the size of SAA. Both Egyptair and Royal Air Maroc are also larger than KQ.

  26. I find it horrible that SAA collapsed in such a manner , they could have downgraded to like 10 aircrafts and work on definitely successful routes like JNB & CPT to London , Harare , Lusaka , Lagos , Nairobi , Perth & Washington and then gradually build more routes based on profitability

  27. @michael if it’s an LATAM ticket they have to reroute you to the final destination The problem is if it’s SA ticket , as if they cease operations then other airlines won’t accept the ticket

  28. This is very sad. South Africa has been out of the horrors of Apartheid for 3 decades now and their economy has been much better after it. So it’s odd they can’t get an airline going.

  29. Albeit decades ago, best breakfast flight of my like in 1975 on a South African 707 from Mahe in the Seychelles to JNB. The food in first class was simply non-stop, never ending! Will never forget!

  30. SAA was never an airline with great service. Staff tended to be arrogant with no right to be. Comair is not much better but maybe they’ll pick up the baton a bit more if BA see its warranted.
    @ben your Bottom Line section should be in point form, its a synopsis

  31. Our family has booked a flight in May to visit South Africa. With the pandemic, travel was canceled. Do we still get a credit or refund? Which carrier will buy out SAA and honor those flights that were booked?

  32. Argh. Had travel booked for this Summer on SAA. Figured it’d be canceled or postponed due to COVID but no chance I’m getting that money back at this point, right?

  33. @Stefan – Airlink and SAA have officially completed their “divorce” now and Airlink flights will only be sold under the 4Z code going forward.

  34. Aaron, stop saying everything pro china is 50 cents warrior ignorant…
    It is a fact that China is open for business while the west is struggling. China and south east asia have been starting wearing mask for common cold due to boom in kpop. Where’s in the west? Even now some people think wearing masks is useless… tell you what, which airlines give out mask? JAL? Asiana? ANA? Common theme? Asians!
    You avgeek dearly loved SQ and Changi. Do you know that our government PAP is also authoritarian single party system? LKY even more ruthless than xi. We still do public caning and death penalty for drug trafficking… guess what, y’all love singapore? No freedom of speech, no freedom of press. If you like singapore and hate China You must be brainwashed by western media. They’re much more alike than you think. But guess what, people are happy. The government works for the people unlike constant fighting in us congress.

  35. @Aaron: Thank you for noting the difference between “fired” and “laid-off” here. The connotation of being fired is misleading in these circumstances, and it’s odd the term was chosen for the headline. It’s not an appropriate way to refer to the unfortunate employees losing their jobs through the liquidation of the airline. Best of luck to those folks. I’ve always enjoyed my fights on SAA.

  36. The Zuma government of South Africa was a complete disaster. Look at how long it took to get him out of his office. The corruption was incredible and probably a major factor in the demise of SAA.

    For the last number of years it was my favourite way to fly to Cape Town. Quite handy with the *A alliance as well.

    Will definitely be missed and sad that so many people will suffer because of political corruption.

  37. So sad for SAA I have flown them many times between Sydney a Jo’burg. Glad to see the world are seeking to sue China for trillions of dollars and so it should be

  38. A corrupt government pouring taxpayers money to cover airline losses , which country are we talking about here?

  39. @Omar: Great analysis! I agreed with your comment completely. In addition, being a Star Alliance member, they can always codeshare, JV… with others if seeing the needs for the new routes.

  40. Is there any way to get refunds on tickets purchased for travel in June? I’m assuming that with SAA out of business that they will not be able to provide the flights I paid for.

  41. So sad for the employees. It breaks my heart. I remember flying them many, many years ago as a youngster on a 747SP I think but maybe it was just a 747. The excitement, the people were so nice.

    And so sad for the country. The pride of a national airline.

    I love South Africa of today, the people especially and the land.

    And of course that gorgeous livery. Going to miss it.

    But my heart breaks for all those hurt by this but especially the employees. I always found them to be wonderful.

  42. “While not the world’s best airline….: Understatement of the year!! For such a marvelous country with incredible people and culture and geography, what a cluster fuck SAA have always been, the staff needed to be more flexible and the Unions had to stop throwing its very substantial weight around and be more pragmatic in dealings with management. The Union bosses are voted for by the staff and the workers. They have no one to blame but their lazy-arse selves. Goodbye SAA. Have a nice retirement, LOL.

  43. Joseph
    The number 1 reason of the collapse is corruption.
    As long as politicians continue to be corrupt and no arrest and prosecutions, We are in the same direction with Zimbabwe.
    There should be a clear line between business and politics.

  44. I think I first fell in love with the Airbus A340-600 with this advertisement featuring the South African Airways A340-600. So many years later it still gives me goosebumps. Such a beautiful aircraft.

    https://youtu.be/XnKU4GecNFc

    Have to get on board an A340-600 for the first time before they are gone forever

  45. @Max- you are 100% correct . It is not so much the competition of gulf airlines that affected SAA but the mismanagement by inexperienced local SAA managers , the unwillingness to hire quality international managers with up to date experience in the airline industry , combined with corruption and poor service . Sad but many other South African state companies have similar problems and if management/government do not improve , there will be more state companies in financial trouble .

  46. Agree with others here, Ben. I think you should update the title. These employees are not being “fired”, which implies due to a fault of their own. That is not what is happening here.

  47. Sorry for their employees, many of them dedicating their lives to SAA. Other than that, no loss. Over the last 25 years they became more and more awful.

  48. I am not sure why everyone here is so sorry for their employees. Recently they demanded shocking wage increases and no retrenchments! In Q1 2020 they were supposed to get 5.9% salary increase back pay from April 2019!!!! I get that everyone wants a raise but look what it got them. Yes companies are greedy but really – to have no sense of the situation and keep relying on bailouts…So in this light it’s stupid to suggest that they could have downsized. All the sob stories were crazy. Yes and then there’s the government corruption and inefficiency. Have you tried looking up flight prices in Africa? 1 hr return flight for 400-500 usd in a continent with fraction of GDP of US? Really?! The inefficiency and greed is astounding! Lastly BBEE probably did not help (one of those where it’s great in theory practice is an issue) basically meaning that race was more important in hiring than competency. Just my 2c. Happy they will be gone. Hope Eskom and the likes follow.

  49. I expect South Africa to establish a new state owned national airline by 2022. RSA is still a middle income country and the most powerful nation in Africa. I hope they shall retain the same beautiful Logo !

  50. This is the tip of the iceberg known as the Republic of South Africa. With the state treasury literally robbed blind, their debt rated as junk, business people and smart citizens leaving the country, they are one recession away from total collapse.

  51. What would your suggestion be as to what to do with my SAA voyager miles (as I have hundreds of thousands of points at the moment)? I assume when the airlines completely shuts down, my points will go down with it?

  52. I have a SA ticket for flight operate by Interlink from JNB to St Helena this month. I am wondering if interlink will honor the ticket still ?

  53. Hope this will not have an impact on Airlink, that is now the only lifeline for St. Helena as all passenger sea routes have been suppressed

  54. @Benjamin

    I’d immediately book a pile of *A flights on a different airline? Or maybe convert them into hotel points at a huge loss? Can you buy stuff from their shopping channel (if they have one)?

  55. Marco,

    I too love the A340-600, GORGEOUS plane! Wish I could have flown that one and the A350.

    Gemini Jets has some great 1:200 scale models of the A340-600 in the livery and J C Wings has it in the Star Alliance. They look amazing.

    And someone has the A350 1:200 scale on pre order. Gemini Jets or maybe Inflight. I ordered it a while ago but is not shipped yet.

    Enjoy.

  56. Jimmy, my heart breaks to know I may never get to fly this beauty especially how quickly they are being retired

    Yes obtaining any 1:200 Gemini Jets model will be great of the South Africa A340-600s or even Lufthansa. However, I was eyeing the 1:200 Phoenix or JC Wings Etihad Formula 1 Grand Prix A340-600s. A6-EHJ.

  57. Other airlines offer a cheaper alternative? Just wait till they have no competition on the routes. SAA kept the prices down. When only a single airline offers services, see how expensive your flights become. Why must SAA get the cut when it is govt. that forced them to buy everything through a middle man? When the airline was forced to buy the most expensive fuel, most expensive catering and most ovely ponderous work staff of any airline? I also note no one is pointing fingers at the endless stream of non-aviation managers and executive officers foisted on the national carrier over the last 15 years or so. The rescue practitioners couldn’t tell the difference between an Airbus and a Cessna, while Myeni’s credentials are best left in the garbage with her failed reasoning. Buying aircraft through a middle man is cheaper? Please, don’t insult us.

  58. @Jimmy
    @Marco

    Do you have any A340-500 ones. It’s really a beauty. Operationally it sucks, but aesthetically its among the best. Right along with 747-400 and MD-11. My next favorites are CS100 and A350-900. Airbus has a bit of an design edge maybe? Boeing makes up for aesthetic with performance I guess.

  59. This Pandemic has caused financial loss not only to South Africa but also to those with prepaid tickets. I guess these severance packages are being paid with other peoples money. There are no comments on how we will be reimbursed?

  60. @Eskimo

    Please don’t give ANY CREDIT to Airbus for the Bombardier CS100. The only sniff of Airbus in the design is that Quebec was once a French colony.

    Unfortunately the Canadian government under Trudeau refused the extra funds necessary for the C series to withstand the attack of Boeing and their puppet Trump. So airbus now puts its logo on a Canadian airliner.

    It, and the 747-9, are still wonderful airplanes.

    Too bad SAA bought inefficient A340. More corruption.

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