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South African Airlines - does it have a future?

In recent times, a number of African airlines have gone out of existence, new carriers started, failed and started again. The latest is South African Airways, despite a long history. Beset by recent strike action, set to end from Saturday 23 November, SAA expect to have a fully-restored flight schedule in place by Sunday. Nevertheless with its finances not in good shape, the airline looks as though it may go the way of other air transport companies based on the continent. Reported by the South Africa Herald, SAA's financial problems are at the centre of conversations in South Africa and continue to make headlines. Finance minister Tito Mboweni on Tuesday said it would be better to close down SAA and start a new airline.

above - Airbus A340 (Arcturus)

“It unlikely that this would be sorted out, so my view is to close SAA down," he said. “Close it down and start a new airline. All together, invite [CEO of Standard Bank] Sim Tshabalala and others to come together and form a new airline."

Mboweni said the reason he thought closing down SAA would be better than continuing efforts to turn it around, is that it was unlikely the airline would find a private-sector partner. This is not the first time Mboweni has suggested that the national carrier be shut down.

SAA's Boeing 747 aircraft departed the airline some time ago in cost-cutting measures (Bob Adams)

In his medium term budget policy speech in October, Mboweni said SAA was unlikely to generate sufficient cash flow to sustain operations in its current configuration. He said an equity partner was needed to save the airline from “financial ruin”.

“It is unlikely ever to generate sufficient cash flow to sustain operations in its current configuration, which then begs the question: how long are we going to be on this flight path? Forever? I think not. Operational and governance interventions are required urgently.”

Strike action

The national carrier's employees have protesting against possible job cuts and are demanding an 8% salary inc