South African Airways says it’s struggling to get over R1 billion out of Zimbabwe
South African Airways (SAA) has confirmed that its still struggling to retrieve approximately US$50 million (R1 billion) from Zimbabwe, primarily generated from ticket sales.
· Nehanda RadioThe prolonged issue was discussed at Parliament’s Standing Committee on Public Accounts (SCOPA).
Zimbabwe’s ongoing foreign exchange crisis, persisting since 2016, has affected multiple airlines.
According to Airspace Africa, SAA board chairperson Derek Hanekom cited the significance of recovering this trapped capital for future expansion.
“We’ve been in serious contact with the Zimbabwean government. R1.1 billion is not a small amount of money and it’s not been easy,” Hanekom told SCOPA.
SAA chief financial officer Lindsay Olitzki disclosed a partial settlement with Zimbabwe.
SAA is supposed to keep US$9 million for local Zimbabwean operations. Zimbabwe committed to repaying US$50 million in quarterly US$1 million increments, deemed excessively protracted by Olitzki. However, to date, no payments have been received.
“The remaining US$50 million they indicated a payment plan at an amount of US$1 million per quarter. Now that is a very long payment plan, that to date, we have not yet received funds,” Olitzki indicated.
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Transport Minister Barbara Creecy pledged consideration of diplomatic intervention upon receiving SAA’s comprehensive report.
Zimbabwe’s worsening foreign exchange shortage, persistent since 2016, had severely affected airlines operating locally. Stringent controls hinder repatriation of ticket sale revenues, converting local currency earnings into foreign currencies.
The International Air Transport Association has reported hundreds of millions owed to airlines. Carriers like Emirates, Qatar Airways, Ethiopian Airlines and South African Airways face trapped funds.
Consequently, airlines reduce operations or consider raising ticket prices, increasing costs for Zimbabwean passengers. Regional air transport links suffer.
The prolonged crisis exacerbates Zimbabwe’s economic challenges.
Airspace Africa stated that: “The issue of blocked funds is not unique to Zimbabwe, as several other countries have experienced similar situations in recent years. According to IATA, airlines globally had over $2 billion in blocked funds in various countries as of 2023.
“Nigeria, Venezuela, and Lebanon are among other nations with significant amounts of airline revenues trapped due to foreign exchange restrictions.
“IATA Director General Willie Walsh has consistently called on governments to respect their international obligations and release the funds.
“In some cases, airlines have reduced flight frequencies, suspended services, or even exited markets altogether when they are unable to repatriate earnings.
“For airlines like SAA, which have already faced their share of financial difficulties, the inability to recover trapped funds adds another layer of complexity to their recovery and growth strategies.
“While SAA has stabilized after a prolonged restructuring process, the lack of access to critical funds hampers its ability to fully recover and expand its operations.”