Fly SAA suspends operations amid debt

South Africa’s state-owned airline has suspended all its operations as it struggles to raise a bailout of more than 10 billion rands ($591 million).

South African Airways, one of many nation’s state-owned enterprises face allegations of corruption and mismanagement, filed for liquidation and bankruptcy protection in December last year.

The business rescue team assigned to handle the corporate has announced it has failed to raise the money wanted to implement a rescue plan for the airline. The suspension of operations may be lifted if the government comes through funds it has promised.

Scheduled cargo and repatriation flights will be undertaken but no new ones will be accepted during the suspension, mentioned the corporate.

The move will also affect at least three of the airline’s subsidiaries, including the low-cost airline Mango.

South Africa’s tourism trade has been very hard hit industries by the country’s COVID-19 lockdown, however South African Airways’ monetary problems existed effectively earlier than the outbreak of the coronavirus. The suspension comes just as South Africa is to reopen the country to international flights on Thursday.

Workers’ unions have warned that the failure to rescue the airline will result in significant job losses in an economy that’s expected to shrink by more than 7.2% this year. South Africa’s financial system was already in recession earlier than COVID-19 and the nation’s strict lockdown in April and May caused further contraction of the financial system. Unemployment has risen dramatically to 42%, according to statistics released this week.

The airline is currently the subject of a state investigation into wide-ranging allegations of corruption, fraud and mismanagement during former President Jacob Zuma’s time in office.

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