South African Airways, Africa’s second-largest airline, is on the verge of collapse. The state-owned carrier lost 2.3 billion rand ($161 million) in fiscal 2014 and a still undisclosed amount in fiscal 2015. What’s the problem here? Exactly that the airline is state-owned. As Airways explains:
The challenges that face South African Airways are the same that face almost any state owned airline in poorer countries with a more populist economic bent. Whenever governments own airlines, the temptation to step in and overrule potentially unpopular but necessary business decisions is simply too great.
The revolving door between the Zuma administration and SAA’s senior leadership continues to hold back a restructuring process, including maintaining loss making routes, and perhaps more damaging, holding back a decision on the Airbus A350 or the Boeing 787 for the future of the widebody fleet.