South Africa’s beleaguered national airline, South African Airways (SAA), needs a further R4.8-billion ($386-million) to keeps its doors open.This comes a mere five months after the airline received a R10-billion ($804-million) bailout in December 2017.
Parliament’s Standing Committee on Public Accounts (SCOPA) was told on April 24 that the latest bailout was needed immediately. The December bailout was made so that the company could be regarded as a going concern on March 31st by the Auditor General. When asked if the R4.8-b was to prevent the company from coming to a halt, SAA’s CEO, Vuyani Jarana only said the money was “needed immediately”.
Currently SAA has no credit line. There is a cash ban and a gap between revenue and expenses, so there is a need for capital in order to sustain operations. Jarana said the December payout had gone towards servicing the interest on SAA’s loans. A total of R7.6b was spent on this. The remaining R2.4b was used to support working capital requirements.
SAA Group operates 64 aircraft, of which only nine are owned. The rest are leased. Long haul carriers are now being used for domestic routes, which means the flights are operating at a loss, even though the flights are full. The balance cannot support the purchase of any new aircraft.
SAA is only paying the interest on its debts and is, as yet, unable to make any payment towards the principal. According to AfricaCheck, SAA received R1.2b ($96million) in bailout money leading up to 2012. Between 2013 and 2016, SAA received bailouts of R5b ($402million), R6.5b ($522million), and R4.7b ($378million). The December 2017 bailout of R10b takes the total amount of SAA bailout money to R29.1b ($2.3billion).
Deputy Finance Minister Mondli Gungubele said the financial crisis at SAA resulted in the Finance Minister commissioning the Deputy Minister and a Treasury team to hold weekly meetings with SAA. SCOPA would be briefed on the long-term turnaround strategy, which aims for SAA to break even in 2021.