Business rescue is unlikely to cure SAA of its real maladies

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The same operational and corporate governance issues that grounded the airline in the first place could still stand in the way

Finance minister Tito Mboweni indicated in his second budget speech last month that SAA would be a radically restructured airline after the business rescue process. But what a radically restructured airline looks like remains a mystery to most of us.

The signs have always been there; perhaps we were just oblivious to the horrific reality. SAA’s survival has over the years been guaranteed by the government through its debt-guarantee programme and this has given management and the board less incentive to perform. Our government kept extending guarantees to the airline even though it was generating negative returns.

To illustrate how inefficient SAA’s operating business models have been, the airline’s debt has grown steadily on its balance sheet as borrowings were used to fund operations because its operating costs were growing faster than revenue. The average revenue growth realised from 2008 to 2017 was 4%, compared with the average growth in operating costs of 5% in the same period.

 

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Thousands of jobs on the line as SAA business rescuers issue retrenchment noticeUnions have already indicated that they may oppose the process if they are not happy with the turnaround strategy. All unions affiliated to anc should take responsibility of this mess, unrealistic and out of touch policies.
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