South African Airways to be rescued by another emergency government loan deal
South African Airways (SAA) goes into voluntary business rescue.
South African Airways is expected to be saved from collapse through another emergency government loan deal.
The country’s flag carrier, which has failed to make a profit since 2011 and often survives on government bailouts, was brought to the brink in mid-November when staff walked out demanding higher wages.
The airline has received state bailouts totalling 57 billion rand ($3.8 billion USD) since 1994.
According to reports, the latest rescue deal is set at 4 billion rand ($272 million USD).
A leaked memo from President Cyril Ramaphosa’s cabinet secretary to ministers on Wednesday said the lifeline from the government and banks was “the only viable route open to the government to avoid an uncontrolled implosion of the airline”.
In a statement, SAA said the rescue sought to minimise the destruction of value across its subsidiaries.
SAA owns struggling budget carrier, Mango, which has refused to release financial results for the past two years.
Minister of public enterprises, Pravin Gordhan, said in a statement: “It must be clear that this is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline.”