South African Airways has been struggling financially for years. Photo / Supplied
South African Airways has been struggling financially for years. Photo / Supplied
Flight Centre has stopped selling tickets on South African Airways as the airline enters a form of bankruptcy protection.
The travel agent put the ''stop-sell'' order on the airline today after a week of uncertainty about its future.
"Due to growing uncertainty around the future of South African Airways, wehave made a decision to implement proactive measures to ensure our customers and travel experts have full confidence in their bookings,'' said Flight Centre's New Zealand boss David Coombes.
''We have decided that we will not be issuing new bookings with the airline until SA reaches a point of operational security that we have full confidence in,'' he said.
Other travel agents have also been contacted by worried New Zealand-based travellers who typically pick up flights on SAA in Australia. The 45-plane airline is still flying.
Flight Centre said concern about the airline - which hasn't made a profit for eight years - had resulted in inquiries about flights from fretting customers.
Hundreds of travellers from NZ are booked on South African Airways. Photo / 123RF
Bloomberg reports the South African government's action overnight to place it under a local form of bankruptcy protection was a last-ditch measure to try and prevent its total collapse.
President Cyril Ramaphosa made the decision in order to address the dire financial situation at South African Airways, Cassius Lubisi, the secretary to the cabinet, said in a letter to ministers and deputy ministers that was circulated unofficially.
SAA, which last made a profit in 2011 and has received 57 billion rand ($NZ5.96 billion) in bailouts since 1994, has been struggling to pay its bills.
It has also been plagued by disruptive upper management changes during the past decade.
In the event of a collapse, those booked may struggle to be covered by insurance.
"While it is unlikely travel insurance will offer cover for financial collapse of an airline, we would encourage any traveller with insurance to check their policy wording regarding cancellation and general exclusions for coverage, and contact their insurer as quickly as possible," Insurance Council chief executive, Tim Grafton said today.
The president of the Travel Agents Association of NZ (Taanz) Brent Thomas said over the last few days worried clients had been contacting agents but it was hard to establish what the outlook for the airline was.
''It's hard to answer without anything definitive on it, especially for those people booked to go in several months' time,'' he said.
There could be hundreds of travellers from New Zealand booked to go over the holidays.
He said in the event of a collapse, cover by travel insurance could depend on when it was taken out.
''Third party collapse, whether it be an airline or hotel group, could be impacted.''
Flight Centre says one of its insurance packages includes a supplier insolvency refund guarantee.
Thomas said alternative flights were more popular from a New Zealand perspective, including going through Dubai on Emirates or Australia on Qantas.
''There are some airlines in the world agents wouldn't recommend because of the safety record or whatever - that's when it pays for to get the knowledge and experience,'' he said.
Other carriers, Alitalia and Hong Kong Airlines are also in trouble. The Italian airline was bailed out with a $700m European Commission loan while the Hong Kong carrier has been given until the weekend to get its finances in order or face suspension by regulators.
Alitalia Airline Airplanes parked at Leonardo da Vinci Airport. Photo / Supplied
Flight Centre's South African business stopped selling tickets on the airline over the weekend.
Bloomberg reports South Africa's Companies Act enables businesses in financial distress or trading under insolvent circumstances to file for business rescue.
If granted, a business-rescue practitioner is appointed to help the company reorganise and restructure, and assess whether it can be turned around.
Companies that are in the process of being rehabilitated are protected from liquidation and legal proceedings, enabling them to keep trading.
