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29.11.2019 South Africa

Top S.African travel agent, insurance ditch troubled SAA

Troubles continue to mount for South African Airways.  By Michele Spatari (AFP/File)
Troubles continue to mount for South African Airways. By Michele Spatari (AFP/File)

Beleaguered national airline South African Airways -- still smarting from a recent strike -- was dealt another blow Friday when two major travel industry players stopped issuing its tickets and withdrew insurance cover.

One of the country's largest travel agency, Flight Centre Travel Group, said it will no longer sell SAA tickets while travel insurance business Travel Insurance Consultants (TIC) stopped providing supplier insolvency benefits to the airline's passengers.

Flight Centre said in an announcement to its customers that its preferred travel insurance provider, TIC and its underwriter, Santam, were no longer willing to cover SAA due to "doubts concerning the long-term viability of the airline".

Flight Centre added that it had been advised that a number of other global insurers had taken a similar approach.

In a statement TIC said "the risk associated with SAA's going-concern status has been an issue for many years, however in light of recent events, the risk is now considered to be too significant by re-insurers to continue cover for new ticket sales."

The announcements come just before the year-end peak holiday tourism season.

SAA has been plagued by massive financial problems in recent years, despite numerous government bailouts running into millions of dollars.

A recent week-long labour strike forced the airline to cancel hundreds of flights after cabin crew, check-in and ticket personnel, technical and ground staff walked out over higher wages and jobs.

The airline has been unable to pay employees their full salaries this month and it requires a two billion rand ($136 million) loan to stay afloat until March next year.

Debt-ridden, SAA has failed to make a profit since 2011 and survives on government bailouts,

The airline, which employs more than 5,000 workers, is Africa's second largest airline after Ethiopian Airlines.

With a fleet of more than 50 aircraft, it flies to more than more 35 domestic and international destinations.