South African Airways to Get $239 Million From State Bank
South African Airways May Receive Emergency Funding From State Bank
South African Airways’s business-rescue team said it’s been given access to 3.5 billion rand ($239 million) from the state-owned Development Bank of Southern Africa to avert the airline’s collapse.
The team will immediately draw down 2 billion rand from the facility, they said in a statement on Tuesday. SAA has already canceled some flights this month to save cash after the government missed a deadline to provide the money as part of the terms of its bankruptcy protection. Bloomberg News earlier reported that the bank was considering providing funding.
SAA has been loss-making since 2011 and has survived on government bailouts and state-backed guarantees on external loans. Its business-rescue experts have until the end of next month to provide a turnaround plan, but the National Treasury has been reluctant to commit further state funds as part of that strategy.
Options for funding needed for a restructuring after the plan is adopted are under consideration, according to the business rescue team. Finding an equity partner and preserving jobs remain key priorities, it said.
The DBSA’s mandate is to invest in infrastructure projects in South Africa and the rest of the continent that will help with economic development. The financier can back state-owned enterprises as part of its remit, according to the company’s website.
“In our view it would be no better than taking money straight out of the national revenue fund,” said Alf Lees, a lawmaker for the opposition Democratic Alliance. “The DBSA is a wholly state-owned entity.”
At stake is an airline with more than 5,000 employees, as well as thousands more at suppliers and associated companies, in a country with an unemployment rate of 29%. SAA also flies routes to 21 destinations around Africa and cities further afield, including New York and London.
--With assistance from Paul Vecchiatto.
To contact the reporters on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net;Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net
To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, John Bowker, Tara Patel
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