South African Airways Cancels Flights Last Minute To Conserve Cash

South Africa’s national carrier began suspending flights, after a delay to a critical state bailout the company needs to avoid liquidation. South African Airways flights from Johannesburg to Munich and Cape Town were among those cancelled this week to save funds, the airline said in a statement on Tuesday. “These cancellations represent a responsible strategy to conserve cash and optimise the airline’s position ahead of any further capital investment,” SAA said. 

Johannesburg to Cape Town is the busiest route in Africa and a moneymaker for low-cost carriers that have become SAA rivals. SAA owns one budget airline, Mango. SAA once carried the flag for South Africa’s post-apartheid democracy, but it was forced into a local form of bankruptcy protection in December after years of mounting losses. 

President Cyril Ramaphosa’s government approved the rescue to prevent a chaotic default on the airline’s debts but it has since hesitated over giving more public funds to SAA, which last turned a profit in 2011. 

South Africa’s Treasury pledged R2bn ($138m) in funds for the airline as it entered administration but the money is overdue. Banks, who provided R2bn at the same time, are increasingly reluctant to back the airline. The state bailout has been held back because of legal concerns about room in South Africa’s budget for the funding, according to people familiar with the matter. The South African Treasury did not immediately respond to a request for comment. 

Tito Mboweni, the finance minister, has also been outspoken against further bailouts as he battles to avoid South Africa losing its last remaining investment-grade credit rating. Moody’s has warned that it could cut South Africa’s government debt to junk as soon as March due to the unsustainable finances of several state companies, including SAA and Eskom, the blackout-prone power utility. 

On Sunday Pravin Gordhan, the minister overseeing state companies, said his department was in talks with the treasury on releasing funds for the airline. “We are determined to contribute to the business rescue process so that we could minimise job losses and give birth to a rejuvenated SAA that all South Africans could be proud of,” Mr Gordhan’s department said. As well as routes from South Africa’s economic centre to its second city several flights to Durban will be cut, SAA said.

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