South African Airways receives $239 mn rescue fund from DBSA
South African Airways has been the centre of attraction since it has undergone a business rescue programme.
January 30, 2020: South African Airways (SAA) has been the centre of attraction since it has undergone a business rescue programme. This time, the state-owned Development Bank of Southern Africa (DBSA) has prevented the collapse of the carrier by providing it 3.5 billion rand ($239 million), according to the South African Airways business rescue team.
“The advancement of the funds comes on the back of the business rescue process which began on December 5, 2019, with the local commercial banks providing the initial amount of Rs 2 billion in addition to the existing exposures to SAA.
In a statement issued, the team looking to keep the airline still flying said they would immediately use two billion rand of the facility to keep the airline afloat.
Earlier in the month, South African Airways cancelled several flights in an effort to save money. This followed the government’s failure to meet a promised cash injection that was agreed upon as a part of its bankruptcy protection terms. The state-backed airline has repeatedly failed to make a profit since 2011 and has only kept operating thanks to government bailouts and state-backed guarantees on loans.
A team of business rescue experts have to present the plan by the end of next month.
The Development Bank of Southern Africa is mandated to invest in South African infrastructure projects to help promote economic development. As a part of its sphere of activities, the financier can back state-owned enterprises.
With so many things conspiring to bring South African Airways down it is difficult to see how the airline can continue to operate in its present state.
Firstly, like so many state-funded airlines, SAA suffered financial mismanagement and corruption.