WATCH: Cash-strapped SAA forced to cancel flights
The new crisis comes as the cash-strapped airline continues to struggle to recover more than R1billion it is owed in ticket sales by some of the countries in Africa.
SAA has not been paid by Zimbabwe, Angola and other countries for some time now, and it was running against time to find R2bn this week to meet its financial obligations.
SAA, which was placed in business rescue last month, is still waiting for the government to provide it with a R2bn bailout to keep flying.
SAA spokesperson Tlali Tlali said the airline opted to cancel the flights in order to preserve its cash.
“These decisions are in line with SAA’s usual policy of reviewing flights and consolidating services with low demand,” Tlali said.
“Furthermore, during the current process of business rescue, these cancellations represent a responsible strategy to conserve cash and optimise the airline’s position ahead of any further capital investment.”
The debt-laden airline has been fingered by ratings agencies and international financiers as the biggest threat to the country’s growth prospects.
On Monday, the IMF slashed SA’s growth prospects to 0.8 percent this year from the 1.1percent it predicted in October.
The IMF cited the dysfunctional nature of key state-owned entities such as Eskom and SAA among its reasons for the downward revision of its forecast.
The National Treasury has insisted that SAA needed to constrain its costs and recover debts in order to remain viable as a business.
Last month Zimbabwe said it could afford to pay SAA only 5percent of the $60million (R870m) of ticket sales due to currency issues in that country.
Angola, another country that is indebted to SAA, has remained mum on the millions it owes to SAA.
The airline has not submitted its financials to Parliament for two years in a row, and one of the board members, Martin Kingston, resigned last Friday.
It has not made a profit since 2011 and has incurred losses of more than R28bn in the last years.
Last month, financial statements provided to Parliament’s standing committee on public accounts revealed that SAA made a loss of R10.4bn for the past two financial years.
The airline blamed high fuel costs, tough trading conditions and stiff competition as a reason for its misfortunes..
SAA said that it had decided on the cancellation of flights yesterday as a responsible strategy to conserve cash and optimise its position ahead of any further capital investment.
It said that local passengers would be placed with its sister airline Mango, while international travellers would be accommodated on flights between Frankfurt and Heathrow in London.
“Some passengers travelling to Munich, and others travelling via Munich to other destinations, will be re-accommodated for some of their journey on partner airlines in the Star Alliance to minimise delays,” SAA said.