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SAA Receives Emergency Bail Out From Government  
User currently offlineLAXintl From United States of America, joined May 2000, 25768 posts, RR: 50
Posted (1 year 9 months 2 weeks 6 hours ago) and read 8353 times:

Long time sick South African Airways received an emergency loan to cover fuel costs, preventing the grounding of its local and international flights.

Finance Ministry provided SAA a R550 million (USD $64 million) bank facility to help cover fuel and other short term operational commitments over the next 3-months.

Last fall SAA requested a R5 billion government bail-out, after posting another year of loses that exceeded R1.25 billion.

Story:
http://allafrica.com/stories/201301070749.html
and
http://www.ukzambians.co.uk/home/201...-r1-25-billion-lessons-for-zambia/

=


From the desert to the sea, to all of Southern California
37 replies: All unread, showing first 25:
 
User currently offlineLFutia From Netherlands, joined Dec 2002, 3345 posts, RR: 30
Reply 1, posted (1 year 9 months 2 weeks 6 hours ago) and read 8343 times:
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Is SAA bleeding money that badly? I doubt that they would go under soon or would they?

Leo/ORD



Leo/ORD -- Groetjes uit de VS! -- Heeft u laatst nog met KLM gevlogen?
User currently offlineLAXintl From United States of America, joined May 2000, 25768 posts, RR: 50
Reply 2, posted (1 year 9 months 2 weeks 6 hours ago) and read 8251 times:

SAA is sadly a classic example of how a well organized business enterprise can be turned into a government lackey under a patronage system. The last decade has seen SAA plundered and become a revolving door for inept government management while the losses pile up.

If you want a interesting (and sad) read, check out the book Jetlag by Denis Beckett. Its basically starts in the Coleman Andrews era (1998-2001) when SAA began to be stripped of its assets (and much-trumpeted fake profit were generated). Terrible wastage and financial discrepancies started to become the norm at this once proud and solid 70-year old institution.



From the desert to the sea, to all of Southern California
User currently offlineRWA380 From United States of America, joined Feb 2005, 3372 posts, RR: 5
Reply 3, posted (1 year 9 months 2 weeks 4 hours ago) and read 8020 times:

I am by no means an expert in African economics, but wouldn't the reduction/demise of SA not only be a hard hit for S. Africa but also the entire Continent of Africa? With SA being the largest carrier operating on the Continent, a void like that would not easily be filled, therefore isn't South Africa to some point, obligated to keep SA afloat, even if not legally? The financial ripple affect across Africa would take already struggling countries over the brink, paying other carriers to provide cargo lift alone, let alone passenger service, IMHO.


AA AC AQ AS BD BN CO CS DL EA EZ HA HP KL KN MP MW NK NW OO OZ PA PS QX RC RH RW SA TG TW UA US VS WA WC WN
User currently offlineBA0197 From United Kingdom, joined Jul 2011, 315 posts, RR: 1
Reply 4, posted (1 year 9 months 2 weeks 4 hours ago) and read 7966 times:

Quoting RWA380 (Reply 3):
With SA being the largest carrier operating on the Continent, a void like that would not easily be filled, therefore isn't South Africa to some point, obligated to keep SA afloat, even if not legally? The financial ripple affect across Africa would take already struggling countries over the brink, paying other carriers to provide cargo lift alone, let alone passenger service, IMHO.

That my friend is the real world. Capitalism at its best. Put up or shut up. SA obviously did not put up. They have become a very weak brand, weak financially, and their maintenance record has run into several spots of bother very recently.

Comair could fill in some of the gap using BA.

Although, I do have to say that the SA air market has not been very good lately. Look at the carriers servicing CPT; it has drastically reduces. To my knowledge BA is the only airline to announce an increase in service recently.


User currently offlineAR385 From Mexico, joined Nov 2003, 6359 posts, RR: 31
Reply 5, posted (1 year 9 months 2 weeks 4 hours ago) and read 7943 times:
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How are the airlines from countries that compete with SA going to react to this bail-out, specially since the ones from the EU can´t get government bailouts, or am I wrong?

User currently offlineBA0197 From United Kingdom, joined Jul 2011, 315 posts, RR: 1
Reply 6, posted (1 year 9 months 2 weeks 4 hours ago) and read 7908 times:

Quoting AR385 (Reply 5):
How are the airlines from countries that compete with SA going to react to this bail-out, specially since the ones from the EU can´t get government bailouts, or am I wrong?

Well most EU airlines cannot get government aid (BA, LH, IB etc) due to anti-competitiveness laws. However some airlines like, AF and TAP are in fact still nationalized, giving them access of cash funds if necessary.

The reaction will not be find, but what can they do? And they risk upsetting the SA government if they make too much of a fuss, thereby putting the bilateral agreements under shaky circumstances.


User currently offlineblueflyer From United States of America, joined Jan 2006, 4072 posts, RR: 2
Reply 7, posted (1 year 9 months 2 weeks 3 hours ago) and read 7810 times:
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Quoting AR385 (Reply 5):
How are the airlines from countries that compete with SA going to react to this bail-out, specially since the ones from the EU can´t get government bailouts, or am I wrong?

They won't like it, but there's nothing they can do, short of suing in South Africa if they find some reason to. SAA doesn't have enough of a significant presence in any EU country to make a difference in the marketplace overall, so EU regulators will not intervene.

Quoting BA0197 (Reply 6):
However some airlines like, AF and TAP are in fact still nationalized, giving them access of cash funds if necessary.

Almost entirely wrong!

81% of AirfranceKLM's shares (and voting rights) are in private hands.

The EU's ban on unauthorized state-aid applies to all EU-based carriers, irrespective of their ownership. Just ask Malev. Its collapse came about in 2012 after the EU ordered the return to the Hungarian government of illegal subsidies. Hungary tried to make the case that the airline was a "national asset" and couldn't be forced to return the subsidies, but the EU didn't flinch. The carrier shut down almost immediately because it didn't have enough cash to both repay the subsidies and fund its operations.

TAP, on the other hand, is indeed state-owned, one of two among the 20 largest European airlines.



I've got $h*t to do
User currently offlineSpeedbird128 From Pitcairn Islands, joined Oct 2003, 1648 posts, RR: 2
Reply 8, posted (1 year 9 months 1 week 6 days 21 hours ago) and read 7439 times:

Let them die.

They can enjoy the medicine that One Time, Flitestar, and many others enjoyed, while SAA operate with no need, or desire, to make a single cent profit, knowing that standing with their begging bowls out garners (regularly, too) billions of rand in bailouts.

All this whilst wasting money on re-fleeting and new A320, when they actually had them and so forth and so on.

I will never fly SAA. I fund them through my income tax. Why should I pay double for a flight? I'd rather give Comair my money - and have some cabin crew that smile at me occasionally.



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User currently offlineAquila3 From Italy, joined Nov 2010, 275 posts, RR: 0
Reply 9, posted (1 year 9 months 1 week 6 days 20 hours ago) and read 7292 times:

Quoting blueflyer (Reply 7):
Hungary tried to make the case that the airline was a "national asset" and couldn't be forced to return the subsidies, but the EU didn't flinch

Well, knowing how the things go in EU, in the case of France they WILL finch. At least.



chi vola vale chi vale vola chi non vola è un vile
User currently offlinethegreatRDU From United States of America, joined Mar 2006, 2310 posts, RR: 4
Reply 10, posted (1 year 9 months 1 week 6 days 19 hours ago) and read 7047 times:

This actually an issues for all the major African airlines, the majority are state-owned

Look at Kenya Airways, they were spun off with an IPO, they tried to make cuts to labor redundancies because they are losing money too and were hit with court injunctions and union strife left and right, eventually they were forced to back down and rehire the employees.

The point I'm making is this , even if SAA or others are privatized their respective governments will probably prevent them for doing anything drastic to restructure themselves to profitability.

Quoting BA0197 (Reply 4):
That my friend is the real world. Capitalism at its best.

No it's not, because it's government owned. It's not a private institution.



Our Returning Champion
User currently offlineairbazar From United States of America, joined Sep 2003, 8487 posts, RR: 10
Reply 11, posted (1 year 9 months 1 week 6 days 17 hours ago) and read 6896 times:

Quoting BA0197 (Reply 6):
Well most EU airlines cannot get government aid (BA, LH, IB etc) due to anti-competitiveness laws. However some airlines like, AF and TAP are in fact still nationalized, giving them access of cash funds if necessary.

That's incorrect. Being nationalized does not "give them access to cash funds if necessary". No EU airlines can get state funding no matter who their owner is. In fact in the EU it's bad to be state owned which is why TP is trying to be privatized. That's because unlike government owned airlines, in the EU and everywhere else, private companies can get cash injections from their investors if such is necessary.

[Edited 2013-01-14 08:09:47]

User currently offlinedabpit From United States of America, joined May 2012, 124 posts, RR: 0
Reply 12, posted (1 year 9 months 1 week 6 days 17 hours ago) and read 6882 times:
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Yes they received a bail out. However all governments tend to bailout their respective companies


Carpe Diem
User currently offlineSpeedbird128 From Pitcairn Islands, joined Oct 2003, 1648 posts, RR: 2
Reply 13, posted (1 year 9 months 1 week 6 days 15 hours ago) and read 6713 times:

Quoting dabpit (Reply 12):
Yes they received a bail out.

Hardly just "a bailout"... this has been going on for decades. They have received between R16 and R18 *BILLION* of taxpayers money....

SAA are incapable of producing a cent. They have money printing routes, yet, amazingly, are unable to make money. Instead they managed to lose R1 billion in the last year alone.



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User currently offlineLAXintl From United States of America, joined May 2000, 25768 posts, RR: 50
Reply 14, posted (1 year 9 months 1 week 6 days 15 hours ago) and read 6680 times:

Quoting RWA380 (Reply 3):
I am by no means an expert in African economics, but wouldn't the reduction/demise of SA not only be a hard hit for S. Africa but also the entire Continent of Africa? With SA being the largest carrier operating on the Continent, a void like that would not easily be filled,

There are 54 African states, and SAA serves 18 of them.

But due to geography at the Southern cone the airline is not much use as a connecting hub as most routes require a major back track.
So SAA is really an O&D player in most of these markets flying people to / from SA, not some irreplaceable continental business enterprise.



From the desert to the sea, to all of Southern California
User currently offlinesweair From Sweden, joined Nov 2011, 1827 posts, RR: 0
Reply 15, posted (1 year 9 months 1 week 6 days 15 hours ago) and read 6652 times:

No one bitches about private banks getting bailed out, I just dont get this whine everywhere, greed and whine.

User currently offlinemigair54 From Spain, joined Jun 2007, 1781 posts, RR: 0
Reply 16, posted (1 year 9 months 1 week 6 days 15 hours ago) and read 6581 times:

Quoting sweair (Reply 15):
No one bitches about private banks getting bailed out, I just dont get this whine everywhere, greed and whine.

That´s absolutly true and I agree with you, but here we talk about airlines not politics and banks.

Quoting LAXintl (Reply 14):
There are 54 African states, and SAA serves 18 of them.

What are the worse performing routes?? I know Nairobi must be in the list because they keep downgrading and I think now they don´t even fly, I haven´t seen them in a long time, and right now KQ is 3x day.

Quoting LAXintl (Reply 14):
But due to geography at the Southern cone the airline is not much use as a connecting hub as most routes require a major back track.
So SAA is really an O&D player in most of these markets flying people to / from SA, not some irreplaceable continental business enterprise.

exaclty and the few traffic they can attract from Brazil or Australia to connect now they can use QR, EK and soon even ET and KQ to connect to Asia or middle east.


What´s not fair in this kind of situations is that government didn´t do this for 1time for example or other airlines but they do for SAA, I know they can give us many excuses, but it´s not fair with the competence at all...


User currently offlineSpeedbird128 From Pitcairn Islands, joined Oct 2003, 1648 posts, RR: 2
Reply 17, posted (1 year 9 months 1 week 6 days 14 hours ago) and read 6555 times:

Quoting migair54 (Reply 16):
I know they can give us many excuses

Legitimately, they cannot give many excuses. All it boils down to is incompetence. Simple as that.



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User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 18, posted (1 year 9 months 1 week 6 days 14 hours ago) and read 6505 times:

Now covered in a U.S. publication

South African Airways Receives Emergency Bail-Out from Government


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25653 posts, RR: 22
Reply 19, posted (1 year 9 months 1 week 6 days 14 hours ago) and read 6418 times:

Quoting BA0197 (Reply 6):
However some airlines like, AF and TAP are in fact still nationalized, giving them access of cash funds if necessary.

AF isn't nationlized. The French government only owns about 15% of AF-KL, but that doesn't give them any more rights to state aid than any other EU carrier. That would be true even if they were 100% state owned.


User currently onlinelightsaber From United States of America, joined Jan 2005, 13263 posts, RR: 100
Reply 20, posted (1 year 9 months 1 week 6 days 13 hours ago) and read 6299 times:
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This is sad. SAA has so much potential, if only it were run as a company instead of a government service.

Maybe they can hock their recent 'airline of the year' award:
http://www.skyclub.com/news/2012/12/...irline-of-the-year%E2%80%99-award/

Quoting RWA380 (Reply 3):
I am by no means an expert in African economics, but wouldn't the reduction/demise of SA not only be a hard hit for S. Africa but also the entire Continent of Africa?

What time frame? Eventually the market would replace the service. There is no reason SAA couldn't be wound down over two years. Put out a schedule and watch private industry fill the gaps... There would be pain at first, but then service would resume. Much of it by foreign airlines... Cest la vie.

Quoting RWA380 (Reply 3):
With SA being the largest carrier operating on the Continent, a void like that would not easily be filled,

A fleet of 30 narrowbodies and 24 widebodies could be displaced pretty quickly. Now the service would shift and non-profitable routes/frequencies would be cut.

Replace short haul with a LCC. U2 South Africa or FR South Africa... It would surprise me if DH wouldn't be willing to set up a South African branch.   

And fastjet will soon enter South Africa (if they buy 1time):
http://www.howwemadeitinafrica.com/2...ost-carrier-fastjet-does-it/23313/

Things will get worse, not better, for SAA when a LCC enters their market.

Quoting blueflyer (Reply 7):
Quoting AR385 (Reply 5):
How are the airlines from countries that compete with SA going to react to this bail-out, specially since the ones from the EU can´t get government bailouts, or am I wrong?

They won't like it, but there's nothing they can do, short of suing in South Africa if they find some reason to.

Some, such as the mid-east will have no choice but to take it. I wonder about the largest European nations though... I don't think they'll do a thing, but writing a protest letter would be wise.

Quoting sweair (Reply 15):
No one bitches about private banks getting bailed out,

Oh yes they do!

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlinedabpit From United States of America, joined May 2012, 124 posts, RR: 0
Reply 21, posted (1 year 9 months 1 week 6 days 12 hours ago) and read 5725 times:
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Yes SAA needs to change how they do business but like a lot of state owned companies that does not come easy. This happens in a lot of industries not just the airline industry.


Carpe Diem
User currently offlineLH7478i From Germany, joined Jan 2012, 56 posts, RR: 0
Reply 22, posted (1 year 9 months 1 week 6 days 12 hours ago) and read 5446 times:

Quoting sweair (Reply 15):
No one bitches about private banks getting bailed out

I don't want to carry this thread off topic, but I think there wouldn't be much left if there were no bank bailouts during the 2008 financial crisis.

In case of SAA, would it really hurt that much if it would go belly up ? Connections to other continents probably wouldn't affected at all as the big boys from Europe and EK,QR, etc.. will fulfill the travelers wishes. In regard of the intra african services, routes which can sustain a service will be served by Comair or some even a start-up sooner or later.



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User currently offlineSpeedbird128 From Pitcairn Islands, joined Oct 2003, 1648 posts, RR: 2
Reply 23, posted (1 year 9 months 1 week 6 days 11 hours ago) and read 5150 times:

Quoting RWA380 (Reply 3):
With SA being the largest carrier operating on the Continent

Although on the other end of it, it is still africa though - I believe MS Egyptair to be a touch larger.

SAA would not be missed that much. Life would carry on for the better.



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User currently offlinedcann40 From United States of America, joined Sep 2012, 303 posts, RR: 0
Reply 24, posted (1 year 9 months 1 week 6 days 10 hours ago) and read 4571 times:

Quoting Speedbird128 (Reply 23):
SAA would not be missed that much. Life would carry on for the better.

Yes life would go on, but I think it has a great brand and it would be missed.


25 idlewildchild : Oh boy... I'm scheduled JFK-JNB-CPT-JNB-JFK (side trip to MSU) in J class come mid February. I was excited and now this thread's made me anxious. I ju
26 qf340500 : Speedbird128, is there a special reason why you hate SAA much? Sounds like you really have not one sinle good or decent word, not even a letter for th
27 Tardis : Mr. Andrews, airline destroyer, rather than airline fixer.
28 boeingrulz : WIth their huge fuel surcharges one would think that they had fuel covered.
29 Speedbird128 : Having been involved in the aviation sector in SA for quite some time, its a bitter pill to swallow when every other competitor is slaughtered at the
30 boeingrulz : Very sad to hear about SAA problems. I flew them in the olden days (1970's) and they were a world class airline. Service was one of their points of pr
31 ClassicLover : I wouldn't worry, if they just got a bailout, they're gonna be fine for next month!
32 dcann40 : Has SAA aways been state subsidized however? Or is this just a one-off?
33 thegreatRDU : SAA has always been owned by the government
34 LAXintl : Short history. Formed in 1930s when SA government acquired a private operator and renamed it South African Airways. For much of its life SAA (then kn
35 koruman : OP, It's monumentally offensive to call SAA a formerly proud and solid institution. Especially when it operated under Apartheid for 46 of those years.
36 LAXintl : Apartheid had nothing to do with the airline. It would be like connecting Delta with being a deep southern airline and US segregation, or Aeroflot for
37 RWA380 : My trip in 1970 on SAL/SAA JFK-GIG-JNB-GIG-JFK on a 707 was way nicer in Y, than domestic F is today. Superior service and amazing flight crews on al
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