Debt payments are squeezing South Africa's public spending. President Ramaphosa will try to shrink bloated state firms, but may trigger ugly showdowns with unions. Failure to face them down would douse reform hopes and hurt even more, says edwardcropley:
South African travel agency Flight Centre has stopped selling tickets for national carrier South African Airways and a top travel insurer has withdrawn insolvency cover for bookings on the cash-strapped airline, Reuters reported on Nov. 29.
SAA signed a wage deal with trade unions on Nov. 22 to end an eight-day strike that brought it to the brink of collapse. The industrial action, which was also in protest at restructuring plans, caused the cancellation of nearly all domestic and international flights on Nov. 15 and Nov. 16. The state-owned airline, which has not made a profit since 2011, said on Nov. 12 it could axe nearly 900 jobs, or nearly 20% of the workforce, as part of efforts by President Cyril Ramaphosa to turn around struggling public-sector companies.
Finance Minister Tito Mboweni said on Oct. 30 that SAA was unlikely to generate sufficient cash flow to sustain its operations and the government would have to assume its 9.2 billion rand of state-guaranteed debt.
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