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South African Airlines cancel flights while waiting for bailout funds

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( 2 minutes read)

·        South African Airways (SAA) seems to be caught in a bind; the
debt ridden airline company   has  cancelled  several  domestic and
international flights.

·        The affected passengers would be accommodated in other
flights or their ticket rescheduled

South African Airways (SAA) seems to be caught in a bind. The debt
ridden airline company   has  cancelled  several  domestic and
international flights. The airline authorities say that eight more
flights between Johannesburg and Cape Town will be cut this week and
twenty flights between Johannesburg and Durban will be axed. Among the
international flights cancelled include ten flights between
Johannesburg and Munich. However, the SAA said that the affected
passengers would be accommodated in other flights or their ticket
rescheduled.

It appears that the airline will be amending its flight schedule in
the coming weeks also after reviewing the operations on a day- to -day
basis . The steps are being taken to cut the cost amidst its
bankruptcy.  In the meantime, the SAA is waiting for the government to
fulfill  the pledge to provide it with US$138 million life line from
the National Treasury to enable it to keep flying. Recently, the
Ministry of Public Enterprises said it was working to raise the money.

Earlier, the decision taken by the airlines to retrench more than 900
employees as a cost saving measure was reversed on account of the
severe trade union pressure. The government that time had promised to
bail out the airlines by releasing funds from the National Treasury.
Burdened with several problems of similar nature, such as bail out of
the public power utility Eskom, the government is hamstrung to find
new resources. In the meantime, multilateral organizations like IMF
and World Bank have  cautioned the country of deteriorating fiscal
prudence. That also has led to the downgrade of the country by the
rating agencies like Moody and Standard & Poor. One silver lining is
that the economy in the current quarter has marginally improved its
performance by 0.8% on a year- on -year basis.

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