The airline business model has always been complicated and several major airlines around the world have needed government bailouts to survive. Traditionally, because airlines are essential services, that money has been there both in the United States and around the world.
In the United States, around $54 billion was given to airlines to help them survive the Covid pandemic. If that had not happened, it is very possible that a major airline would have gone bankrupt. More importantly, each carrier would have had to go into survival mode.
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That would have meant laying off pilots and other key personnel who could not be replaced quickly. If the United States had not rescued its airline industry, air ticket prices would likely be very high and overall capacity would be greatly reduced.
It's a situation that's not unique to the U.S. The former Air Italia closed in 2021, but then began flying again as ITA Airways after a government bailout. In addition, Germany's Lufthansa and Sweden's SAS have received bailout packages (although they are being challenged in court).
Now with Spirit Airlines (SAVE) Faced with an uncertain future and rumors of bankruptcy in the United States, another major airline has seen a major deal fail, putting its future in doubt.
Image source: Shutterstock/La Calle
South African Airways faces survival risk
While many Americans may not be too familiar with South African Airlines (SAA). It is part of the global “Star Alliance”, meaning it is connected to many of the world's largest airlines.
“The Star Alliance network was formed in 1997 by Air Canada, Lufthansa, Scandinavian Airlines, Thai and United Airlines. For the first time, these airlines began working together to offer our customers global reach and an enhanced travel experience,” he shared SAA. on her website.
The Alliance has grown much larger since its inception.
“Since then, the Alliance has grown to 26 member airlines, including South African Airways, which joined the Alliance in 2006. Star Alliance airlines are among the most respected in the world. To become a member, a airline must offer and meet the “highest industry standards in customer service, safety and technical infrastructure. The 26 member airlines together operate more than 18,500 flights a day, reaching 1,330 airports in 192 countries,” SAA added.
Now, after a failed deal to sell a majority stake in SAA, the airline faces a threat to its survival.
SAA has between 12 and 18 months left
For three years, the South African government has been negotiating the sale of a majority stake in SAA to the Takatso Consortium. This is a controversial decision that the South African government intends to investigate.
“The Public Enterprises Portfolio Committee has taken the decision to refer the matter of the Takatso Consortium's purchase of a 51% stake in South African Airways (SAA) to the Special Investigation Unit (SIU) for further investigation “, according to a press release. of the South African Parliament.
The failed sale puts SAA's future in a very precarious situation.
“The government estimates that SAA will be able to sustain itself financially for the next 12 to 18 months. Furthermore, the government has come to the conclusion that the national airline will no longer receive bailout money. SAA will have to survive alone or find a new merger. couple,” World airline news reported.
SAA's problems actually predate the Covid pandemic, as it was nearly liquidated in 2019 before filing for bankruptcy, allowing it to continue operating.
However, the pandemic accelerated its collapse and greatly contributed to its current dire situation.
Takatso Consortium withdrew because it did not believe the asking price was good.
“At the end of the day, it wasn't about the political pressure, the noise that you hear. It was about, from a business standpoint, as an investor, does this make sense for your stakeholders? Can you continue to drag this process along?” ?” said consortium spokesperson Thulasizwe Simelane DW.com.
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