The South African government cannot provide additional funds to rescue South African Airways (SA, Johannesburg O.R. Tambo), it has told the two business rescue practitioners appointed to try to save the carrier under bankruptcy protection.

Public enterprises minister Pravin Gordhan said in a leaked letter to Les Matuson and Siviwe Dongwana, on April 14, that further government funding in the rescue process of the state-owned airline would not be forthcoming.

He said that the “government is unable to provide additional funding to sustain the business rescue process beyond the funding that has already been provided to the airline in the form of post-commencement finance.”

The Covid-19 pandemic has “further stretched national resources” in the cash-strapped government's efforts to mitigate its impact on people's health and on economic activity, the minister added.

Gordhan was replying to a letter from Matuson and Dongwana requesting a further ZAR10 billion rand (USD537 million) in funding. The business rescue practitioners “must consider their options within the available resources,” Gordhan directed.

In response, in a “necessary and critical update to all affected parties”, the rescue team acknowledged the rejection and summarised the situation, repeating the phrase that “the practitioners must consider their options within the available resources.”

“On 14 April 2020, the business rescue practitioners received a response from the government [...] that the government is unable to provide additional funding to sustain the business rescue process,” their statement confirmed. “Neither will lending guarantees be provided in respect of the business rescue process.”

As they “assess the impact of this development”, the company continues to conduct “charter operations for the repatriation of foreign nationals to their various countries and return home South Africans stranded in foreign countries,” the statement said. The cargo division has “increased its activity” including bringing into the country critical medical supplies.

South African Airways has not yielded a profit since 2011 and has received more than ZAR20 billion (USD1.08 billion) in bailouts over the last three years. According to Reuters, a copy of Finance Minister Tito Mboweni’s speaking notes that circulated during a meeting on April 14 said that the government’s fiscal response to the Covid-19 crisis included shutting down the airline.