South African Airways will be replaced by a new "financially viable and competitive" airline, potentially with both public and private owners, the country's Department of Public Enterprises said in a statement on Friday.
"It will not be the old SAA but the beginning of a new journey to a new restructured airline which will be a proud flagship for South Africa," the DPE promised.
The plan has the backing of SAA’s near 5,000-strong workforce, the ministry said, without mentioning the business-rescue team that has been running the airline since December.
"Unions and the Department are working together on a business model that deals with what a new national carrier of the future will be, but also crucially how this can be achieved to ensure a competitive edge in safety, quality and costs in the sectors which SAA competes."
South African Airways, which began operations in 1934, is technically insolvent and on the brink of being placed in liquidation by administrators, who will 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’s administrators, led by Les Matuson and Siviwe Dongwana, were working on a recovery plan for the perennially loss-making carrier before the COVID-19 crisis forced the grounding of all aircraft. They began the process of liquidating the airline last month after the government refused to provide a bailout package, and have asked all employees to agree to severance packages.
That offer remains on the table, a spokeswoman for the administrators said when asked to comment on the DPE’s statement.
"The old SAA is dead, there is no doubt about that," Public Enterprises Minister Pravin Gordhan said by phone from Pretoria, the capital. "But what will take its place may be some or all of the old SAA and maybe some other airlines too."
The coronavirus has proved the final nail in the coffin for SAA, which last made a profit in 2011 and has since racked up US$1.4 billion in losses over the last six years and has relied on bailouts and state-guaranteed debt agreements to keep flying.
Gordhan didn’t give details on how a new SAA could be created, calling it a “complex issue.” He praised the current version’s efforts transporting medical supplies and repatriating citizens stranded by the coronavirus, saying South Africa needs “a national flag carrier that is a source of pride.”
South Africa’s whole aviation industry has been plunged into crisis by the coronavirus pandemic. SA Express, part of the wider SAA group, has been placed in provisional liquidation, while Comair said on Thursday it’s selling assets and in talks with lenders to shore up a precarious financial position.
Additional reporting by David Flynn