Dividends and South Africa implements rescue plan, puts flag carrier SAA into control of specialist to avoid liquidation

Airlines are an important national infrastructure for any country, it is understandable that countries will ensure the airlines continue to function with government taxpayer money. In the case of the South African Airlines, for many years the airline was the biggest airline in Africa and a valuable asset to the country. The airline is now the second largest airline after Ethiopian Airlines which has 120 aircraft, twice as many as the South African airline.

In an article Geoffrey York of the Globe and Mail, South African airlines is losing $35 million a month and the management of the airline is in the hands of an independent business rescue practitioner. For many years, under the former President, the airline was used to do more than move passengers, it was mismanaged and corruption in the practices was routine.

The airline carries about 7 million people annually and has over 5,000 employees will likely have fewer than 3,000 in a few months. The airline has crippling debts which meant the airline was only able to pay half of its workers on time, delaying the others for several days.

Every existing politician talks about the cost, but the cost of not having the airline, even though it will be a smaller airline is unthinkable.

Linking to dividend paying stocks, just because the company is the largest and the best, does not mean it will stay there forever. Companies need good management and people who can say no to plans and yes to ensuring the company makes a profit and can pay dividends no matter what the political masters are suggesting. If your company, is “helping” the government, ensure that when governments change, the revenues still come in.

There are more questions than answers, till the next time – to raising questions.

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