SAA needs $540 million from next month to fund day-to-day operations

PUBLISHED: Tue, 27 Nov 2018 17:53:10 GMT
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CAPE TOWN (Reuters) – South Africa’s cash-strapped state airline will need a total of 7.5 billion rand ($540 million) from next month to fund day-to-day operations into 2019, a presentation to a parliamentary committee by the airline showed on Tuesday.

SAA, which has not generated a profit since 2011, survives on state guarantees and is regularly cited by credit ratings agencies as a drain on the government purse.

It has drawn up an austere turnaround plan that includes cutting jobs and routes in effort to turn a profit by 2021 and convince lenders to restore credit lines.

The airline said lenders have refused to lend the company 3.5 billion rand to plug a liquidity hole from December unless they received additional commitments from the government, the presentation showed.

In addition, the national carrier will need 4 billion rand ($288 million) from March next year, the presentation showed.

“Currently we don’t have an optimal capital structure and as a result of that we are dependent on debt which is not good… the banks are pushing now for much more better support from the shareholder to put in place for us,” said Deon Fredericks, SAA’s interim chief financial officer.

SAA is expected to make a 5.2 billion rand loss in the 2019 financial year and another 1.9 billion in 2020 before swinging into profit a year later, the presentation showed.

($1 = 13.8763 rand)

Reporting by Wendell Roelf; Editing by James Macharia

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