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South Africa: Economists welcome gov't decision to place South African Airways under business rescue

06.12.2019

Economists of South Africa on Thursday welcomed the government's decision to place debt-ridden South African Airways (SAA) under business rescue.

The state-owned airline was placed under business rescue following a financial crippling seven-day strike which forced SAA to cancel local and international flights last month.

The last time SAA made profits was in 2011, and over the years the airline relied on billions of government's bailouts to run its business.

Jannie Rossouw, a professor of economics at the University of the Witwatersrand in Johannesburg, said the business rescue decision must be welcomed and it will shield the company against liquidation.

"I'm very happy about SAA. This is the best decision the government has taken about SAA ... it has been a drain on taxpayers for many years," he told Xinhua.

Dawie Roodt, an economist at the financial services company Efficient Group, told Xinhua that the business decision was great for the ailing airline.

Even though the decision will lead to thousands of workers being retrenched and certain routes and some departments being shut down, it is still "an excellent decision," Roodt added.

SAA failed to release its financial statements or results for the last two years. SAA board of directors said placing the company under business rescue was to find a solution "to our company's well-documented financial challenges."

While the decision may be challenging for employees and other stakeholders, SAA will soon release details about the appointment of business practitioners set to be part of the process.

Xinhua

 

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