Pravin Gordhan: ‘Airline tickets are going to be pretty expensive.’
Government predicts it will take close to three years for the aviation industry to recover from the Covid-19 impact.
It will take close to three years for the aviation industry to recover from the Covid-19 lockdowns which has led to the grounding of planes across the globe.
This according to the Public Enterprises Minister Pravin Gordhan as he virtually briefed Parliament’s standing committee on public accounts (Scopa) and the public enterprises portfolio committee on the latest developments at SAA, on Friday.
First in line to feel the impact has been the employees, as the industry turned to cutting jobs in trying to keep the companies afloat.
Gordhan said airlines around the world are battling with the impact of Covid-19.
“The impact globally has been a devastating one.
“The best prediction is that it will take about three years for the aviation industry – globally – to recover in any way shape or form,” he said.
“The re-start of aviation is going to be slow.”
Gordhan said over the past 16 years the government injected about R31,2-billion into South African Airways (SAA), however, the state owned-entity finances has failed to pick-up.
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This as SAA tabled its finances to parliament after failing to do so last year.
Gordhan said the pandemic has hit the aviation industry hard as lockdown restrictions clapped the wings of planes.
A new reality awaits.
“Airline tickets are going to be pretty expensive.
“We are not going to be saved from the impact of the pandemic.”
He said although this response was vital in flattening the curve it will result in massive changes in the industry due to the the economic downfall.
Pravin predicted massive economic challenges in the aviation post-Covid-19 lockdowns, he said the pandemic will force businesses to operate in a new way.
He said people will resort to digital business meet-ups, which, will pose a further weakening of the aviation industry.
He said government hired an aviation expert to assist SA’s aviation response to the lockdown impact.
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“Anticipated low levels in tourism will further put the industry in distress,” he said.
When China was experiencing Covid-19 outbreak, before it hit the country’s boarders, SAA already had serious financial issues.
Late last year it was placed under management of business rescue practitioner Les Mutton, and its former CEO Siviwe Dongwana later joined the team.
“This was to ensure the companies are less dependent on states’ fiscus,” Pravin said.
The business rescue practitioner presented their plan earlier this month, which was supposed to be in by early January, Pravin said.
Dongwana said the process of business rescuing SAA has been compromised by the lack of funding.
Despite R9.9-billion already spent since December on the SAA rescue project, Dongwana said SAA needed R7-billion to pay debts, salaries and revive the airline.
Government indicated that it was not in a position to lend SAA the money due to Covid-19 initiatives.
Dongwana said the practitoners proposed a winding-down process (sale of assets) of the business in the absence of funding.
Questions of whether the state of SAA’s finances would lead to liquidation were raised by parliament members.
Gordhan answered that government was not considering liquidating SAA.
One of the plans the practitioners presented in saving the airline was job cuts.
Currently, the practitioners have appealed the labour court’s judgement that prohibits them from enforcing retrenchments.
Last month embattled SAA Express was placed under provisional liquidation.
As SAA battles to keep up, talks of a new airline have already started.
It is not yet clear when flights will be allowed. Domestic commercial flights are only expected to start in level 2 of the lockdown.
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