SAA secures R3.5bn to stay afloat
State-owned airline SA Airways (SAA) has secured the R3.5bn it requires to continue financing working capital requirements until June, acting CFO Deon Fredericks said on Monday.
Negotiations are also under way with banks to extend the payment terms of R9.2bn bank debt due at the end of March.
The cash-strapped airline requested funding of R21.7bn from the government in 2018 to recapitalise its balance sheet and provide working capital to help implement its three-year turnaround plan.
Of this, R5bn was provided by the government in the medium-term budget in 2018.
A further R4bn is required for working capital in the 2019/2020 financial year.
All SAA’s debt of R12.7bn is currently guaranteed by the government.
CEO Vuyani Jarana said the airline had made significant progress in implementing its turnaround strategy, which sees the airline reaching breakeven by the 2021 financial year.
In the six months to September 2018, it beat its budgeted targets on revenue, operating costs and reported a significantly smaller net loss than expected. However, various challenges remain. Suppliers have cut down on payment terms for SAA, while its precarious cash position has also limited the airline’s ability to take out hedges on foreign exchange transactions and fuel purchases, a major cost driver.
Jarana also announced on Monday the airline would be reorganised into three business units as part of a revamp plan.
The domestic, regional and international business units will have their own management, in a bid to make the airline more agile and increase accountability.