South African government calls for review of SAA route cuts

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JOHANNESBURG (Reuters) – South African President Cyril Ramaphosa said on Friday that his government did not agree with plans to cut some of struggling South African Airways’ (SAA) domestic routes, plunging rescue efforts for the cash-strapped carrier into uncertainty.

South African President Cyril Ramaphosa speaks during a news conference after a meeting with his Nigerian counterpart Muhammadu Buhari, in Pretoria, South Africa, October 3, 2019. REUTERS/Siphiwe Sibeko/File Photo

State-owned SAA entered a form of bankruptcy protection in December and is fighting for its survival.

Specialists appointed to try to rescue SAA said on Thursday that SAA would cease flights to Durban, East London and Port Elizabeth from Feb. 29, as well as cutting some international routes, as part of efforts to conserve cash and make the airline more attractive to potential equity partners.

SAA flights to Cape Town will continue on a reduced basis, the specialists said.

The public enterprises ministry, which oversees SAA, said it wanted the route changes reviewed.

“Government will be making representations to the Business Rescue Practitioners in order to balance the necessity for trimming unprofitable routes with the need to ensure the future sustainability of both the airline and South Africa’s aviation industry,” the ministry said in a statement.

Ramaphosa said in comments broadcast on state television channel SABC: “We are not in agreement with what the rescue practitioners have come up with.”

“SAA is not only a great symbol for the country, but it is also an economic enabler.”

Under South African company law, the business rescue team is entitled to take decisions that are deemed necessary to turn a distressed company around, independently of government. In theory it could ignore the government’s objections.

SAA is among several South African state entities including power company Eskom that are mired in financial crisis after nearly a decade of mismanagement.

SAA hasn’t made a profit since 2011 and has received more than 20 billion rand ($1.3 billion) in bailouts over the last three years.

($1 = 15.0810 rand)

Reporting by Alexander Winning; Editing by Tim Cocks and Susan Fenton

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