Is this finally the end for South African Airways?

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South African Airways has seen many rebirths and ‘final’ bailouts – only Alitalia can challenge it on that front.  When the plug appeared to have been pulled again a few days ago I didn’t take it too seriously as we have been down this road many times before.

This time, however, the Government appears to mean it.  Unlike the Italian Government, it seems that there was actually a point at which the South African administration would decide that it had thrown enough money at the airline with nothing to show for it.  A request for an addition R10 billion (£400 million) was rejected, as were requests for loan guarantees.

Administrators have been appointed and all 4,700 staff from the 86-year old airline have been told they will be laid off at the end of the month.

The company is offering a severence package but it will be funded entirely from asset sales.  It is not clear whether the ‘one month’s salary per year worked’ will actually be paid.

is South African Airways finally broke?

It isn’t clear what this means for the future of aviation in South Africa.  Comair, which operates budget airline Kulula and trades as a British Airways franchise, can presumably pick up some slack domestically.  It may be possible that Mango, the low-cost domestic carrier owned by South African, can be spun out and survive.  Airlink, which provides feeder services from smaller cities under SAA colours, is not in administration (it was effectively a franchise) and will continue to operate.

The Middle Eastern carriers will ensure that good long-haul connections survice, albeit with changes of aircraft required, with British Airways and Virgin Atlantic offering another option into Europe.  The bigger issue may be connectivity between South Africa and other destinations in the continent.

British Airways signed a 5-year lease on one of SAA’s Heathrow slots in 2018 when the airline dropped one of its two daily flights.  This will presumably remain with BA until 2023 at which point the administrator will look to sell it.  The second slot could be sold immediately and, given the early morning landing time, would be very attractive in normal circumstances to any American or Asian carrier.

On a personal level, South African has been a good friend of Head for Points over the years.  They were one of our five biggest airline advertisers, always came to our parties and Anika did a review of South African’s A330 business class service back in 2018.  The airline employed a lot of people in their Hammersmith office, which I’ve visited a couple of times, and they will now presumably be out of work.  It is also a broader loss for Star Alliance.  I wish Jon and his colleagues well for the future.

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Comments

  1. mark roscoe says:

    Hi Rob

    Further to your last comment,
    “Of course, you shouldn’t be buying miles now unless you have a very firm plan to use them for a booking, or just need a small top-up.
    Can you clarify when you have a Virgin Atlantic “boosted” flight that gets cancelled, are your boosted mile purchase’s rejected and your payments returned? or do you have to request those payments back. If they are not automatically returned this would be a win/win for the airline. ie buying miles for a flight that may never happen again due to insolvency.

    Many thanks

    • Other readers have been in this boat but I have forgotten what happened – hopefully one will chip in.

      If you never got the miles you have a S75 claim. If you got them but didn’t spend them, you don’t.

    • Blindman says:

      I had a VS rewards flight (well, Air NZ) flight cancelled last week.
      I rang the call centre to get the cash and miles back. Those miles appeared straight away, told 90 days for the cash.

      I had forgotten I had purchased boost miles to the max so £600 for those flights, so had to ring again and ask for a refund. Told to wait 120 days for the cash:
      Got the money back the same day!

    • The full Milesboost is paid out on or just after the date of the cancelled flight. I had one just recently, it also included the full bonus miles.

  2. Virgin award flights Were cancelled end of March.
    I got miles back immediately. Told to wait up to 120 days for the taxes/fees (circa £600)

    1. What if VA fold before I get my taxes back?
    2. I paid for taxes on a Plat- which I cancelled last week. Would I be able to raise a claim if needed?

    • mr_jetlag says:

      Raise a dispute with Amex now before any administration. You can dispute on a cancelled card but it helps to have another active card to move the credit to.

    • Michael says:

      VA or VS?

      • Virgin Atlantic flights (VS)

        I have other active Amex cards. Just cancelled the Plat. Refund has been agreed and sent for processing. I’m just nervous waiting another 3 months!

  3. I have a SA flight in June, on a Qatar booking connecting to a Qatar flight. I don’t really want to try and travel. If the SA flight is cancelled, I take it I can use this as an excuse to cancel the booking?

    2) I have another similar flight in October that I really do want to take. Can I ask Qatar do book me on an alternative flight (Comair fly the same route, and Qatar sell flights with them), or can Qatar force a cancellation?

    • I doubt Qatar will look at the two bookings together.

      Check out https://www.qatarairways.com/en/travel-with-confidence.html, so you can probably be confident of being able to cancel the first flight. You just say that the option offered (if they have one) isn’t suitable.

      For the second flight you might need to be a but more resourceful in terms of accepting a reroute (we don’t know where you’re heading).

      Good luck

    • If the SA and QR flights are on the same PNR and ticket, then yes cancellation of the SA flight should let you cancel the whole thing or let you rebook to something reasonable. If the ticket was sold in the EU/EEA/UK then EC261 applies for rerouting or refund

  4. Spaghetti Town says:

    BA will be quite happy about this, takes their main competitor out in South Africa, not just for their own direct flights but their Franchise operator will benefit too.

    • Although IAG is very EU-focussed it would be interesting to see it acquire the airline. IAG management could probably make it work.

    • You’re assuming that Comair is in a better state, which is doubtful at best. Rumours circulating for a while – BA doesn’t own them, there’s no equity link to fall back on, so if they were to support they would need business plans and the like to show it and I don’t think BA is in the mood for big foreign investments right now.

      I hope it doesn’t happen, I like Comair a lot. But don’t assume it’s a foregone conclusion that they will thrive.

      • Comair was in a better financial situation before the pandemic hit than SAA which has been on the verge of administration for several years now.

        • Heathrow Flyer says:

          I suggest you look at Comair’s latest available accounts – They had only c£20m in the bank at the end of December 2019.

          It won’t take long for them to go the way of SAA.

          @Nick BA does have some equity in Comair.

          • The South African government might be slightly more amenable to offering bridge loans to a company that hasn’t been scraping the bottom of the barrel for the past 2-3 years 🙂

  5. krys_k says:

    Demise of SA a great opportunity for Ethiopian, Africa’s best run airline, to step in when things back to normal (or whatever the new normal will be).

    • krys_k says:

      To make clear, this is for travel within Africa.

      • Heathrow Flyer says:

        Yeah I can see a situation where domestic flying was covered by FlySafair/Airlink (maybe Mango will rise from the SAA ashes) and major international connections provided by Emirates/Qatar/BA/LH/AF. Intra-africa you’d have Ethiopian for some links.

  6. I am sorry to see SAA go. They were the first airline i ever flew on when I was a youngster. They were the airline that also operated my first flight on a 747 too. Sad news as both seem destined for the airline graveyard.

    • Roger* says:

      I agree.

      The upstairs cabin on SAA’s 747 was a decent way to fly economy, and the wines were acceptable, too.

      And SAA’s ground services were great when BA and VS let me down on the trade missions I used to organise.

      • I loved that SAA upper deck economy cabin , though not as much as the BA CW upper deck 🙂 I remember a particularly turbulent flight on SAA and although it was worse than usual for the upper deck cabin I recall the flight attendant saying how much rougher it was for passengers on the main deck below.

  7. Concerto says:

    I don’t think IAG would touch SAA, it would be like offering to buy Alitalia. Both unfixable, if such a word exists!

    At anything less than 100% bonus I would never buy Flying Blue miles. Even at 100% I feel it is right on the limit of being a deal and still being a bit too expensive for what you get. I did it in 2017 and used the miles for a trip to an offbeat Russian destination, which worked out cheaper than paying for a ticket.

    • especially now that you can buy up to 25% of the miles element in a during a redemption.

    • 10+ years ago SAA was successful and profitable and had a very good reputation (before Zuma and state capture). Alitalia has been derided for as long as I can remember. I’ve enjoyed travelling with both though – South African/Italian taxpayers might not be so forgiving.

  8. mr_jetlag says:

    I have fond memories of SAA when I used to do the Jo’burg run once a month for work c.15 years ago. Sad to see them go but they haven’t been run well in decades.

  9. I bought a couple of tickets 6 months ago to travel from ORTambo to Mauritius with South African Airways. Due to this Lockdown, my flights were cancelled.

    Should I forget about my money or tickets?

    Greetings from Argentina!

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