South African Airways CEO Gets to Work on Debt Rollover Plan
(Bloomberg) -- South African Airways is looking at ways to roll over 9.2 billion rand ($640 million) of debt by March as the loss-making state-owned carrier works to make more routes profitable, Chief Executive Officer Vuyani Jarana said.
The airline has emerged as a major headache for President Cyril Ramaphosa’s government as it battles to ease the burden of state-owned companies on public finances. The National Treasury allocated 5 billion rand to SAA in last month’s mid-term budget to help repay debt, but told the carrier that it’s responsible for talks with creditors to restructure the full amount.
- Jarana has come under renewed pressure since the latest bailout, with Finance Minster Tito Mboweni using an appearance at a New York investment conference to question whether it might be better to simply shut the airline down.
- That statement has had negative consequences, with some passengers canceling trips, the CEO said in an interview on Johannesburg-based Talk Radio 702 on Monday. “It’s important that we get our messaging right.”
- Defending his record since taking the top job a year ago, Jarana said previously unprofitable domestic and regional routes are now making money -- except for Entebbe in Uganda. That said, the airline will take three years to break even. “There are no miracles or silver bullet.”
- Public Enterprises Minister Pravin Gordhan also weighed in on Monday, telling SAA staff that while he believes the carrier can survive, “some radical things need to be done.” If nothing changes, “you’ll be carrying empty seats, not passengers,” he told them.
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