A financial crisis at South African Airways deepened Tuesday as a funding squeeze forced the national carrier to cancel several domestic and international flights.
Eight flights between Johannesburg and Cape Town will be cut this week, and 20 between Johannesburg and Durban, the carrier said in an emailed statement. It also canceled 10 flights between Johannesburg and Munich.
The move is “in line with SAA’s usual policy of reviewing flights and consolidating services with low demand,” and is aimed at saving money, the carrier said. “SAA will be reviewing further possible flight schedule amendments over the coming days.”
The airline, which was placed into bankruptcy protection last month, is waiting for the government to fulfil a pledge to provide it with a R2-billion lifeline that will enable it to keep flying. The Ministry of Public Enterprises, which oversees SAA, said work is still under way to raise the money.
The crisis at SAA has been a key test for President Cyril Ramaphosa’s administration, which needs to rein in spending and stabiliae beleaguered state-owned companies as it faces losing the country’s sole remaining investment-grade rating. The rand extended a decline after Flight Centre South Africa Pty Ltd. revealed earlier Tuesday that SAA would cut flights, weakening as much as 0.6% to 14.5965 per dollar — the lowest level in more than a month.
“SAA is working closely with its sister airline, Mango, to re-accommodate passengers on alternative services operated by both airlines to minimise disruption,” the carrier said. Passengers who were booked on canceled flights to and from Munich would be rerouted via other destinations on planes operated by SAA and its partners in the Star Alliance, it said.
SAA offers flights to more than 30 domestic and international destinations. It has posted losses since 2012 as it grapples with the high operating costs of an ageing, inefficient jet fleet and a bloated workforce — as well as high taxes, political interference and corruption scandals.
While SAA’s Johannesburg base is a major international destination, its position at the southern end of the continent means it lacks the potential to become a major hub. The scope for profitable regional flights is limited by the relative poverty of neighbouring nations.
Efforts to establish a wider African business have had limited success as global giants including Dubai-based Emirates Airline and Turkish Airlines add dozens of sub-Saharan destinations and Ethiopian Airlines, the continent’s biggest carrier, turns Addis Ababa into a major hub.