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Way Forward for South African State Airline

After months of wrangling and internal disputes, cash-strapped South African Airways (SAA) finally has a business rescue plan, but it’s going to cost the state nearly $600m for the plan to work. The funds will cover creditors along with voluntary severance packages. Under the terms of the plan, which government and creditors are yet to approve, only a quarter of the airline’s more than 4000 staff will be retained. Administrators hope that a leaner, smaller SAA will return the company to profitability. The success of the plan also hinges on a full domestic network starting in January 2021. South Africa is currently on lockdown while it continues to battle the biggest Covid-19 outbreak on the continent and only a few domestic flights are allowed. It’s not yet clear when flights will return to normal. The proposed restructuring plan is the fifth since the beleaguered national carrier went into bankruptcy protection in December 2019. The government says it is still studying the proposed plan, but has voiced concern over the effectiveness of the administrators given the amount of time and resources provided to them. The airline has consistently under-performed for the best part of the decade – it last turned a profit in 2011.