South African Airways (SA, Johannesburg O.R. Tambo) told members of the country's parliament in a presentation this week that an approved government cash injection of ZAR5.5 billion rand (USD375 million) for the 2019-20 financial year would arrive by the end of the month but that it still needs more money, Reuters has reported.
Shouldering a debt of around ZAR12.7 billion (USD865 million), consisting of ZAR9.2 billion (USD627 million) of legacy debt and ZAR3.5 billion (USD238 million) in working capital financing provided by banks, the state-owned flag carrier needs ZAR2 billion (USD136 million) by December to fund working capital to see out its current financial year, the presentation said.
South African Airways previously received a government bailout, announced in October 2018, of ZAR5 billion (USD343 million at the time) for its 2018-19 financial year. But repeated efforts to turn the airline around have been marred by mismanagement and growing competition.
Its long-term strategy requires an equity injection of almost ZAR22 billion (USD1.5 billion), Reuters said, but the government wants to see more cost reductions first. A commercial partner for the airline is also being sought by the government. Meanwhile, lenders have told the airline that they can provide the ZAR2 billion (USD136 million) for the working capital but first want a reduction and payment plan put in place for the legacy debt.
Meanwhile, a plan to merge the country’s three state-owned airlines, SAA, Mango Airlines, and South African Express, are reportedly at an advanced stage and could be approved by the Cabinet as early as next week, a senior official at the Department of Public Enterprises, Edwin Besa, has told the parliamentary select committee on public enterprises. Besa told South Africa’s Eyewitness News that approval would depend on whether the economy, finance, and transport ministers agreed with the plan or sent it back for further changes.
