The news comes after the South African Gov turned down the National Airline’s plea to have more funding after suffering more financial difficulties as a result of the lockdown. The lockdown meant that the Airline had to ground the entire fleet except for Cargo planes and those being used to repatriate South Africans abroad.
The state-owned airline has offered severance deals to all staff from the end of this month after administrators concluded that a successful turnaround is now unlikely, according to a proposal to eight labor groups seen by Bloomberg News.
The basic value of compensation will be one-month pay per year of service and will depend on the successful disposal of assets such as real estate, according to the document.
SAA has relied on bailouts and state-guaranteed debt agreements for years, having last made a profit in 2011, and was put into a form of bankruptcy protection in December. The industry could lose $314 billion in ticket sales this year, according to the International Air Transport Association, as lockdowns and travel bans take an increasingly heavy toll on the global economy.
The team of administrators led by Les Matuson and Sizwe Dongwana will now look to sell assets and raise cash to repay creditors. Two prized nighttime operating slots at London’s Heathrow Airport could be up for grabs, people familiar with the situation said in February.
SAA is among several South African state-owned companies to have become technically insolvent without financial assistance from the government, following years of mismanagement and corruption scandals – particularly under the presidency of Jacob Zuma, which ended in 2018.