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ITSTours
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South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 5:37 am

https://www.bloomberg.com/news/articles ... ium=social

"South Africa’s government will place the national airline under a local form of bankruptcy protection"
"Two ministers, who spoke on condition of anonymity because the decision hasn’t been made public, confirmed its authenticity."

Not yet public, but no surprises here.
 
Blerg
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 5:43 am

So what does this mean for them? What is South African bankruptcy protection like? Is it similar to Chapter 11?
 
ITSTours
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 5:47 am

Seems like the news article has changed, and like it is official now.
 
andz
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 9:29 am

The business rescue prevents any government interference which can only be good for the airline, if only if it means that no more political cronies are placed in top management positions to line their own pockets. It does mean though that the government has washed its hands of the restructuring that is coming, dodging a bullet.
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readytotaxi
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 10:04 am

South Africa version of Alitalia. There is a need to get rid of the cronies already there or they will never turn the corner.
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AirBoat
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 1:32 pm

The business rescue will probably point out that the airline is heavily overstaffed.
The strike a few weeks ago was in part due to a proposed 20% staff cut.
If you look at the check in counters at jhb airport. Comair(british airways) will typically have 2 staff at counters. SAA will have up to 7. This must cost money.
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.
The state capture inquiry is looking at what went wrong over the past 10 years.
 
seansasLCY
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 1:41 pm

AirBoat wrote:
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.


It's not quite that simple. Fuel, airplanes and salaries are negotiated and a price then fixed. These can all be adjusted with time and effort. It depends if the will to do it is there.
 
MIflyer12
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 4:15 pm

seansasLCY wrote:
AirBoat wrote:
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.


It's not quite that simple. Fuel, airplanes and salaries are negotiated and a price then fixed. These can all be adjusted with time and effort. It depends if the will to do it is there.


Fuel has worldwide market price, with generally modest variations in local taxation. The idea that restructuring or new management is going to change that is risible. Planes have market prices set by a duopoly and a concentrated leasing market. Big savings will not be found. Restructuring of SAA can only come from:

- walking away from debt
- improving labor productivity (which means terminating staff)
- right-sizing plane count
 
seansasLCY
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 5:26 pm

MIflyer12 wrote:
seansasLCY wrote:
AirBoat wrote:
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.


It's not quite that simple. Fuel, airplanes and salaries are negotiated and a price then fixed. These can all be adjusted with time and effort. It depends if the will to do it is there.


Fuel has worldwide market price, with generally modest variations in local taxation. The idea that restructuring or new management is going to change that is risible. Planes have market prices set by a duopoly and a concentrated leasing market. Big savings will not be found. Restructuring of SAA can only come from:

- walking away from debt
- improving labor productivity (which means terminating staff)
- right-sizing plane count


While that is true, changes can be made - fuel hedging. It has a noticeable impact. Planes can also be fixed - like Flybe has done - get rid of expensive leases, maybe swap for older planes or shrinking. The idea that savings can only be made by either not honouring debt or cutting staff is wrong. I'd also imagine that a lot of contracts for SAA are higher than market rates because of the widespread corruption which is well known to exist among state businesses in SA.
 
berari
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 5:43 pm

This should have happened years ago rather than having a new leader come in every year to see if something changes.

Now we see if it's an exit similar to what US/Canadian airlines have done, or a vortex a la Alitalia.
 
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lightsaber
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 6:05 pm

berari wrote:
This should have happened years ago rather than having a new leader come in every year to see if something changes.

Now we see if it's an exit similar to what US/Canadian airlines have done, or a vortex a la Alitalia.

I agree with this. Either a fast reorg, rapid downsizing, and rapid fleet rationalization.

Lightsaber
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9252fly
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Re: South African Airways to enter bankruptcy protection

Thu Dec 05, 2019 7:13 pm

SAA can never be what it once was years ago, times have changed. They find themselves geographically challenged with stiff competition with a limited ability to capture international connection traffic outside of neighbouring countries, whereas they do well on point-to-point routes within Africa. South is a large point of origin and destination market. A significant rationalizing of the business is required to focus on what they do best and leave the rest of the money losing markets to others. This not to say they don't have potential to be a successful business, not all is lost if the changes that needed to be made a long time ago finally occur. I imagine a further fleet rationalization will occur with the removal of quads in favour of A350s, the issue of staffing will get resolved with some pain along the way.
 
berari
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 1:12 am

9252fly wrote:
SAA can never be what it once was years ago, times have changed. They find themselves geographically challenged with stiff competition with a limited ability to capture international connection traffic outside of neighbouring countries, whereas they do well on point-to-point routes within Africa. South is a large point of origin and destination market. A significant rationalizing of the business is required to focus on what they do best and leave the rest of the money losing markets to others. This not to say they don't have potential to be a successful business, not all is lost if the changes that needed to be made a long time ago finally occur. I imagine a further fleet rationalization will occur with the removal of quads in favour of A350s, the issue of staffing will get resolved with some pain along the way.


None of that is any different than years ago. It has always been an airline with point to point type of operations, and it's not even doing that right. It has ceded control (and even partnered) with the likes of EK. The geography never changed, the technology and abilities have improved however but none of the rest has changed.
 
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aemoreira1981
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 3:09 am

seansasLCY wrote:
AirBoat wrote:
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.


It's not quite that simple. Fuel, airplanes and salaries are negotiated and a price then fixed. These can all be adjusted with time and effort. It depends if the will to do it is there.


What about aircraft lease rates? IINM, the only planes SA owns are 6 of their 7 A343s (the 7th leased from Airbus, ex-IB) 6 of their 9 A346s (2 owned frames stored - remaining 3 leased from AerCap), their 8 CRJ2s (5 stored), and 2 CRJ7s. Of the leased planes, 9 of the 10 DH8D frames are owned by a South African bank (Rand Merchant Bank), but everything else is leased from non-South African companies.

SA is in the process of inducting 4 A359s (2 leased from Avolon after HU. parked them and put them up for lease, and 2 leased from MK). Other questions I have:

Are the A332s at SA 233t or 238t frames? (That is, could they do HKG nonstop given the elevation of JNB?)
Could the 242t A333 replace the A343 full-time on JNB-PER? (This is currently a mix of A332 and A343 equipment.)

Also, as for the A359s, will they only be for JNB-JFK, which requires 3 frames? Where would the 4th frame go?
 
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kitplane01
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 4:35 am

I see that people have reasonable hope about a SAA restructuring.

What sort of history would it take to make you not have reasonable hope? Is there any history that would make you think there is no reasonable hope of a significant transformation? And if so, which part of the history of SAA and the SA government gives you that hope?
 
FSDan
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 5:20 am

aemoreira1981 wrote:
Also, as for the A359s, will they only be for JNB-JFK, which requires 3 frames? Where would the 4th frame go?


JFK-JNB should only take 2 frames, I believe... DL only needs two for ATL-JNB. Perhaps the other two will be used on LHR or FRA?
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GRJGeorge
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 6:24 am

aemoreira1981 wrote:
seansasLCY wrote:
AirBoat wrote:
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.


It's not quite that simple. Fuel, airplanes and salaries are negotiated and a price then fixed. These can all be adjusted with time and effort. It depends if the will to do it is there.


What about aircraft lease rates? IINM, the only planes SA owns are 6 of their 7 A343s (the 7th leased from Airbus, ex-IB) 6 of their 9 A346s (2 owned frames stored - remaining 3 leased from AerCap), their 8 CRJ2s (5 stored), and 2 CRJ7s. Of the leased planes, 9 of the 10 DH8D frames are owned by a South African bank (Rand Merchant Bank), but everything else is leased from non-South African companies.

SA is in the process of inducting 4 A359s (2 leased from Avolon after HU. parked them and put them up for lease, and 2 leased from MK). Other questions I have:

Are the A332s at SA 233t or 238t frames? (That is, could they do HKG nonstop given the elevation of JNB?)
Could the 242t A333 replace the A343 full-time on JNB-PER? (This is currently a mix of A332 and A343 equipment.)

Also, as for the A359s, will they only be for JNB-JFK, which requires 3 frames? Where would the 4th frame go?


Keep in mind that SA Express is a different company, also state owned and with its own (same, maybe worse) problems...the CRJs and DH8s is operated by them. But they are not part of this process currently.

Similarly Airlink, which uses SA code, as domestic and regional feeder/commuter airline, operating the 50+ Embraer fleet is a private airline operating as a franchise, with SAA owning very small shares. They are profitable and operating very efficient and continues business as usual. I believe eventually they might be even stronger through this and might pick up some more responsibility.
 
trees
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 6:24 am

FSDan wrote:
aemoreira1981 wrote:
Also, as for the A359s, will they only be for JNB-JFK, which requires 3 frames? Where would the 4th frame go?


JFK-JNB should only take 2 frames, I believe... DL only needs two for ATL-JNB. Perhaps the other two will be used on LHR or FRA?


HKG (when it resumes)
 
eamondzhang
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Re: South African Airways to enter bankruptcy protection

Fri Dec 06, 2019 6:26 am

aemoreira1981 wrote:
SA is in the process of inducting 4 A359s (2 leased from Avolon after HU. parked them and put them up for lease, and 2 leased from MK). Other questions I have:

Are the A332s at SA 233t or 238t frames? (That is, could they do HKG nonstop given the elevation of JNB?)
Could the 242t A333 replace the A343 full-time on JNB-PER? (This is currently a mix of A332 and A343 equipment.)

Also, as for the A359s, will they only be for JNB-JFK, which requires 3 frames? Where would the 4th frame go?

The HU birds weren't parked - they flew revenue services with HU right until they were ferried to SIN for repaint.

Also, I do believe once they got more A350s they'll replace more A340s on longer routes, e.g. FRA or MUC getting the swap to utilise the 4 aircraft they have.

Michael
 
praunda
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Re: South African Airways to enter bankruptcy protection

Wed Dec 11, 2019 3:34 pm

With regards to the new A/C, the A359s and the younger A330s SAA has had for a few years, I'm curious to know how a company that has publicly been in such a precarious financial position is still able to upgrade its fleet? Presuming the lease terms are strongly protective of the lessor that it can repossess? Still...
 
usflyer msp
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Re: South African Airways to enter bankruptcy protection

Wed Dec 11, 2019 4:02 pm

praunda wrote:
With regards to the new A/C, the A359s and the younger A330s SAA has had for a few years, I'm curious to know how a company that has publicly been in such a precarious financial position is still able to upgrade its fleet? Presuming the lease terms are strongly protective of the lessor that it can repossess? Still...


Technically, the South African treasury is buying/leasing the aircraft on behalf of SAA so the financial health of SAA does not matter since the treasury is on the hook no matter what. Another example of why SAA' s governance structure is so problematic.
 
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enzo011
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Re: South African Airways to enter bankruptcy protection

Wed Feb 05, 2020 8:50 pm

Not sure where to post this, but there is a case going on at the moment to have Dudu Myeni removed as a delinquent director at SAA. Seems like she stopped the airline signing a comprehensive partnership with Emirates and used her close relationship with the President to get it axed. When the presidency were questioned they didn't even know about the deal.

Dudu Myeni often used Zuma's name to get things done at SAA, court hears

A partnership between South African Airways (SAA) and Emirates would have been a "game changer" for the struggling national airline, which had for years been battling to make profit, according to evidence by a former executive who was involved in the plan which collapsed in 2015.

Sylvain Bosc, a former chief commercial officer at SAA, said by failing to sign an expanded code-sharing partnership with Emirates in 2015, SAA lost out on an opportunity to generate income and caused a great embarrassment as the deal faltered at the last minute.

Bosc, who is now senior vice president for Europe at Qatar Airways, is in the country to give evidence in a case against former SAA board chairperson Dudu Myeni, who is facing legal proceedings to have her declared a delinquent director.

....

he signing of the MoU was going to take place during the Paris Airshow.

The court heard that Myeni instructed then interim CEO Nico Bezuidenhout, shortly before the signing, not to go ahead and sign the MoU on June 16, 2015, in what was alleged to have been an instruction from former president Jacob Zuma.

Bosc said he was not surprised as "it was not uncommon for the chair to invoke the name of the president" to get things done.
 
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flyingturtle
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Re: South African Airways to enter bankruptcy protection

Mon Apr 20, 2020 11:24 pm

South AFrican Airways lays off all employees, entering bankruptcy:

https://www.bloomberg.com/news/articles ... -workforce
Reading accident reports is what calms me down
 
toltommy
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Re: South African Airways to enter bankruptcy protection

Tue Apr 21, 2020 12:48 am

AirBoat wrote:
The business rescue will probably point out that the airline is heavily overstaffed.
The strike a few weeks ago was in part due to a proposed 20% staff cut.
If you look at the check in counters at jhb airport. Comair(british airways) will typically have 2 staff at counters. SAA will have up to 7. This must cost money.
Fuel, airplanes and flight crew are fixed, so the only possible saving area is ground staff.
The state capture inquiry is looking at what went wrong over the past 10 years.


Not necessarily. There's a correct number of pilots and flight attendants per aircraft. The regional I worked for used a ratio of 10 pilots per plane, for example. I'm not saying I know what the ratio is at SAA, but I bet those employee groups are more than needed.
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