JOHANNESBURG – International travel agency Flight Centre Travel Group has stopped selling tickets on South African Airways (SAA) flights after a travel insurance firm said it would no longer cover SAA tickets against insolvency.
State-owned SAA failed to pay staff full salaries this month and has said it has almost no cash left after a week-long strike.
Flight Centre said in a letter to clients dated Nov. 28 that its preferred travel insurance provider and their underwriters were no longer willing to cover SAA under their Travel Supplier Insolvency benefit “due to doubts concerning to long-term viability of the airline.”
“In light of the above developments and continuing concerns regarding SAA, Flight Centre Travel Group South Africa has made a decision to no longer sell SAA, until such time as we have obtained certainty in the market,” the letter read.
Travel Insurance Consultants said in a statement on its website that its re-insurers had instructed the company to exclude SAA from its insolvency coverage.
South African President Cyril Ramaphosa’s government has taken a harder line on SAA recently, saying that repeated government bailouts must come to an end.
SAA has not made a profit since 2011.
A board member told Reuters last week that the board could have to recommend that the airline be liquidated if the government didn’t allow SAA to access more state guarantees to unlock lending from commercial banks.
Finance Minister Tito Mboweni is yet to authorise the use of more state guarantees, although the public enterprises ministry said on Wednesday that it was working on “immediate actions” to ensure SAA’s survival.
In a flexible date search for a Johannesburg to London flight on the Travel Centre website, SAA did not come up, despite it being one of only three direct flights on the route.
(Reporting by Alexander Winning and Tim Cocks; editing by Jason Neely)