Chamber responds to query on SAA’s possible grounding

Chamber responds to query on SAA’s possible grounding

Nobody hides good news so when we finally get to see the figures on SAA’s performance no one is expecting any pleasant surprises.

Most people in the airline business understand this only too well and it is a safe bet that they are already preparing contingency plans to step into the breach if SAA is grounded or unable to resume normal service. They have plenty of options. They can increase the number of flights to SAA or use larger aircraft and this should certainly limit the damage to our tourism industry.

Even the local competition would be able to respond quickly as Comair and were linked to British Airways so they would also have the resources to increase flights or use bigger aircraft.

A further factor was the terrorism in Europe which was making people reluctant to fly to some destinations so airlines would be eager to find uses for their spare capacity.

If SAA was out of operation for any time at all it would lose market share and under its present management there was no chance of regaining this market.

What we have to remember is that one of the reasons why SAA is in its present fix is because it was caught cheating by the Competition authorities and it can expect no mercy from its victims.

SAA has already been ordered by the courts to pay more than R100m to Nationwide and this creates something of a precedent for an even bigger victim, Comair, who could very well be in line for an award in the region of R1 billion. SAA does not have that kind of money. In these circumstances liquidation must be a possibility.

Liquidation follows a court decision and not a political decision. Any of SAA’s unpaid service providers or the liquidators of Nationwide could approach the courts for a liquidation order. If that happens, the Government has a huge problem because it has guaranteed billions of rands worth of SAA debt.

The writing has been on a wall for a long time and all attempts to turn the airline around have failed. The alternative would have been to privatise the airline. If that had happened SAA would be flying and paying taxes to the government rather than consuming billions of rands of taxpayers money that could be used, say, to subsidise our universities and students.

Janine Myburgh
President of the Cape Chamber