Flight International - 10Dec2019

AIR TRANSPORT

12 | Flight International | 10-16 December 2019 flightglobal.com

A

n extensive restructuring of
South African Airways
(SAA) is to be undertaken by the
country’s government, which
insists that it has run out of alter-
native strategies for the troubled
flag carrier.
The country’s department of
public enterprises says the loss-
making airline has been through
“difficult challenges” in the past
few years and particularly during
the past few weeks – which have
included industrial action from
two unions.
These strikes caused “im-
mense damage” to the carrier’s
reputation and operations, and

T

rade union representatives
at  Alitalia are urging Italy’s
economic development ministry
to  put forward a nationalisation
plan for the carrier to end uncer-
tainty over its future.
Transport union FILT-CGIL
leader Fabrizio Cuscito claims
that minister Stefano Patuanelli
has proposed nationalisation as
a possible scenario.
Cuscito says state participation
would be “positive”, given that
certain other European carriers
have government involvement,
and the strategy of looking to
the  market for a solution has
“not yielded results” for Alitalia.

contributed to a deterioration in

its financial position, the depart-

ment adds.

“SAA, therefore, cannot con-

tinue in its current form,” it

states. “The airline group will

now go through a radical restruc-

turing process, which will ensure

its financial and operational sus-

tainability. There is no other way

forward.”

The department says that, in

late November, there were “in-

tense discussions” with the air-

line’s lenders to secure funds nec-

essary to cover an operational

and structural transition over the

coming months.

“The [government] is commit-

ted to a viable, sustainable, profit-

able national airline,” adds the

department. “It is our collective

responsibility as South Africans

to support SAA in its efforts to

restore confidence among its cus-

tomer base and rebuild revenues

in the shortest possible time.”

On 5 December, the carrier was

placed into formal rescue, and a

R4 billion ($273 million) funding

package announced.

SAA has been attempting to im-

plement a long-term turn around

plan, and has received several

packages of government financial

support to help with liquidity.

C

athay Pacific will in 2020

institute a 1.4% year-on-year

seat capacity cut in response to

Hong Kong’s political troubles

and trade tensions, which have

forced the airline to revise its

plans for the next 12 months.

In a letter to staff, chief exec-

utive Augustus Tang states that

the airline’s situation has “deteri-

orated” in recent weeks, which

requires adjusting its budget for

2020. The move reverses a plan
      announced in September, which
      called for capacity to grow 3.3%
      next year.
      “This means further reduc-
      tions in capacity will take place,”
      Tang says. These will fall across
      the airline’s network, but no
      routes will be cut.
      “Rather than growing our
      airlines in 2020, for the first time

in a long time our airlines will

reduce in size,” he adds.

Tang cites a number of chal-

lenges, including the pro-democ-

racy protests that have roiled

Hong Kong in recent months,

which caused the state’s econo-

my to shrink by 3.2% in the third

quarter of 2019. Traffic from key

markets has fallen, notably from

mainland China.

Tang assumed the role of chief

executive in August, after the

abrupt departure of predecessor

Rupert Hogg.

Despite the capacity reduction,

Cathay will continue to take

delivery of new aircraft in 2020.

However, Cathay has recently

delayed the delivery of four

Airbus A320neo-family aircraft

set for delivery to its HK Express

and Cathay Dragon units. ■

But the carrier has continued

to turn in substantial losses and

it  has been hampered further

by turmoil in its senior manage-

ment, with multiple changes of

chief executive over the past

decade.

“SAA is determined to remain

open for business,” says the

department. “Management is also

committed to ensuring financial

sustainability going forward.”

It adds that the board intends

to take “bold initiatives” to

increase SAA’s market share and

“intensify” marketing campaigns

in an effort to rebuild confidence

in the ailing carrier. ■

He is challenging Patuanelli

to explain to the Italian airline’s

workers how a nationalisation

initiative would be conducted.

“There are almost three years

of unfulfilled promises,” says

Cuscito, adding that the govern-

ment needs to give “certainty” to

the company’s 11,000 personnel.

Another transport union, FIT-

CISL, is dismissing as “not feasi-

ble” any restructuring of the car-

rier that involves outsourcing of

hand ling and maintenance.

Italy’s government on 2 De-

cember approved a €400 million

($443 million) loan to the carrier,

as a stop-gap funding measure. ■

STRATEGY DAVID KAMINSKI-MORROW LONDON

SAA poised for ‘radical’ restructuring

South African government is committed to creating viable national airline, but says that financial position is deteriorating

OPERATIONS GREG WALDRON SINGAPORE

Cathay specific on capacity cut

AirTeamImages

Airbus

Advance bookings are lower

than previously forecast

Rome approved new €

million loan on 2 December

FINANCES DAVID KAMINSKI-MORROW LONDON

Alitalia unions support a

nationalisation proposal