SAA to scrap all domestic routes apart from Joburg, Cape Town

SAA is cancelling all of its domestic routes apart from Johannesburg to Cape Town, the joint Business Rescue Practitioners (BRPs) of South African Airways (SAA) announced on Thursday.

According to the BRPS Les Matuson and Siviwe Dongwana the latest initiatives are aimed at supporting SAA's transformation into a sustainable and profitable business and in line with the urgent action required to conserve cash.

The BRPs also announced that they are exploring the sale of some of the embattled airline's assets, and confirmed that staff cuts would have to be made.

On Wednesday the National Union of Metalworkers of South Africa (Numsa) warned that SAA intends to accelerate plans to reduce its wage bill. Just recently the state-owned Development Bank of Southern Africa had to come to the rescue of SAA with a R3.5 billion funding lifeline to avert its total collapse.

In November last year, before SAA went into business rescue, the airline announced the intention of implementing restructuring which could have included more than 944 job cuts. Numsa expects it could now end up being even more than that.

According to the latest announcement, all domestic destinations, including Durban, East London and Port Elizabeth, will cease to be operated by SAA on February 29, 2020. Domestic routes operated by Mango will, however, not be affected by the changes.

"On the domestic route network, SAA will continue to serve Cape Town on a reduced basis."

On February 29, 2020, SAA will also close the regional and international services from Johannesburg to Abidjan via Accra, Entebbe, Guangzhou, Hong Kong, Luanda, Munich, Ndola, and Sao Paulo.

SAA will continue to operate all international services between Johannesburg and Frankfurt, London Heathrow, New York, Perth and Washington via Accra.

Regional services to be retained include from Johannesburg to Blantyre, Dar es Salaam, Harare, Kinshasa, Lagos, Lilongwe, Lusaka, Maputo, Mauritius, Nairobi, Victoria Falls and Windhoek.

"Following a careful analysis of SAA’s liquidity challenges and after consultations with all relevant stakeholders, the BRPs have identified which routes will be retained to drive the restructured national carrier towards profitability," according to a statement released on Thursday afternoon.

"To improve the airline's liquidity, rationalisation programmes are under consideration for SAA’s subsidiaries, as well as the sale of selected assets. The BRPs will continue to explore viable investment opportunities with potential investors in respect of SAA."

The BRPs indicated that they want to retain as many jobs as possible, but that "a reduction in the number of employees will unfortunately be necessary”.

Cancelled flights

All customers booked on any cancelled international and regional routes will receive a full refund. Customers booked on cancelled domestic flights will be re-accommodated on services operated by Mango.

"SAA does not intend to make any further significant network changes. Passengers and travel agents can therefore feel confident about booking future travel with South African Airways," the BRPs said.

The flight schedule for February remains unchanged. 

Matuson and Dongwana said they have worked closely with key stakeholders including industry specialists, government, creditors and executive management to develop a comprehensive restructuring programme. A final business rescue plan will be published in late February and subsequently presented to creditors for approval.

Measures could include targeted changes to the route network, deployment of more fuel-efficient aircraft, optimisation of organisational structures and renegotiation of key contracts with suppliers.

"The initiatives we are taking now will strengthen SAA’s business. We believe that this should provide reassurance to our loyal customers that SAA is moving in the right direction. We are focused on our mandate to restore SAA’s commercial health and create an airline that South Africans will be proud of," commented the BRPs.

UPDATE: The premier of KwaZulu-Natal has said in a statement in reaction to SAA's latest announcement that he wants to meet urgently with government about the decision to cut flights to Durban, reports TimesLive.

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