After months of financial problems, debt-ridden South African Airways is now technically bankrupt. But the good news is that the airline continues to operate all scheduled flights… and probably will for the foreseeable future.
According to South Africa’s News24, South African Airways is operating at a significant loss. In March this year, the South African flag carrier’s debt was double its assets. The debt has already since increased by a further $2 billion while assets have remained the same. With banks now refusing to loan more money, the airline is seeking even more bailouts from the South African government. The board is also considering selling off valuable airline assets and other extreme cost-cutting measures to bring the debt down.
The South African Airways bankruptcy is a bizarre situation considering that South Africa’s other major airline, Comair, has remained profitable for more than 70 consecutive years. Sadly, there are many reports of widespread theft and corruption within South African Airways which, along with high operating costs, appear to be contributing to the carrier’s disastrous financial situation.
Even though South African Airways is on the verge bankruptcy, passengers should not be alarmed. It is unlikely that the South African government will allow its flag carrier to fail, and there is currently no indication that the airline will cease operations or stop honouring tickets. Nonetheless, it would be advisable to pay for any new South African Airways tickets with a credit card. That way, you’ll have the option of a credit card chargeback in case the airline does go belly up.
South African Airways is a Star Alliance member and a Virgin Australia partner.
Virgin Australia has had an unlucky run with partner airlines lately. Last year Airberlin went bankrupt and ceased operations. Partners Alitalia and Etihad Airways also have well-documented financial problems.
South African Airways operates one route to Australia. It flies daily between Perth and Johannesburg. There is often plenty of award availability on the Perth-Johannesburg route – including in Business class!
Join the discussion on the Australian Frequent Flyer forum: South African Airways ‘near bankruptcy’