HILARY JOFFE: Salvage, maybe, but at least we won't all go down with SAA
Airlines are a bit like banks. Once they lose public confidence they go down very fast, bleeding cash as customers pull their deposits. It's the confidence factor that's often caused even solvent banks to fail. In SA Airways' case, the airline was already insolvent and bleeding about R500m a month before workers went on strike for a week, grounding flights. Losses are estimated to have risen to R1bn as passengers take flight, as it were, with insurers no longer willing to provide cover against flights that won't take off if the airline goes under, and travel agents refusing to book flights on it because of the risk it might happen.
The strike may not have been the cause of SAA's descent into business rescue but it was certainly the trigger in the end, coming as it did on top of the airline's already dire financial position and its struggle to secure the R4bn more of government guarantees it needed just to get through the next six months...
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