South African govt wants national airline to fly by H1 2021
South Africa’s government said that it wanted its national airline flying again in the first half of next year.
October 30, 2020: South Africaâ€™s government said that it wanted its national airline flying again in the first half of next year, after giving it a 10.5 billion rand ($650 million) bailout in the mid-term budget, as per a Reuters report.
The department of public enterprises (DPE) said the latest cash injection meant a restructuring plan for South African Airways (SAA), which has been in a form of bankruptcy protection since December, can now go forward.
â€œThe business rescue plan for SAA is fundamental and will create a solid base for the emergence of a competitive, viable and sustainable national airline,â€ it said in a statement.
But aviation experts said the bulk of the new money is earmarked for repaying SAAâ€™s creditors and the roughly 2 billion rand left over for restart costs would be quickly exhausted.
The airline could require around 18 billion rand in capital over the next five years.
SAA has not made a profit since 2011, draining scant public resources at a time of weak economic growth.
It is also unclear where funding for SAA subsidiaries like low-cost airline Mango, maintenance division SAAT or catering arm Air Chefs will come from, as they are not covered by the 10.5 billion rand bailout.
SAAâ€™s restructuring plan has been on hold awaiting financing since July, when it was approved by creditors. The DPE has said it is in discussions with potential investors and partners for SAA but has disclosed few details. Ethiopian Airlines is among those that have held talks with DPE.