SAA’s most-pressing issue is borrowing money to pay December salaries
While the turnaround strategy initially envisaged SAA being on a sustainable path by 2020, CEO Vuyani Jarana says the date has now been pushed back by a year
SA Airways (SAA), which has already racked up losses of about R18bn over the past decade, needs about R17bn in government bailouts, or refinancing from banks, in the next three months to continue operations, executives told MPs on Tuesday.
An immediate priority is to persuade banks to lend it R3.5bn by December to ensure it has working capital. Otherwise, it could find itself unable to pay suppliers and staff.
It will need to raise a further R4bn in March, as well as refinance or pay back R9.2bn in maturing loans.
Together with the R5bn that was allocated to the airline in the medium-term budget in October, this will bring SAA’s total funding costs for its turnaround plan to R21.7bn.
The airline has been a drain on government finances for the past decade and has received R60bn in government bailouts over the last 23 years, according to calculations by the Financial Mail. State-owned enterprises (SOEs), mismanaged and looted during Jacob Zuma’s scandal-plagued presidency, have been described by ratings agencies as posing the biggest threat to the sustainability of SA’s finances.