South African Airways in Talks with Banks for Cash Needs
The South African Airways talking with its banker, new lenders and the government. But the talking won’t pay off the 12.7 billion rands about $842 million of imminently maturing debt. South African Airways is the main carrier of South Africa with Its headquarters in Airways Park on the grounds of O. R. Tambo International Airport in Kempton Park, Ekurhuleni, Gauteng. The airline is in partnership with SA Express, SA Airlink and its low-cost carrier, Mango, the airline flies to 56 destinations in South Africa, continental Africa and around the world from its Johannesburg hub, using a fleet of 47 aircraft.
Vuyani Jarana has been CEO since November 2017. South African Airlines has also been subject to scrutiny in the media due to past allegations of corruption, mismanagement and pilots flying without valid licences. The stricken state-owned carrier called a media briefing today to “give assurances to its stakeholders about the airline currently and into the future” following the surprise departure of Chief Executive Officer Vuyani Jarana last week. In his four-page resignation letter, Jarana raised grave concerns about the airline’s finances, most notably that a 3.5 billion-rand bridge facility will run out this month.
The aftermath of the perfunctory opening in which the airlines veteran Zuks Ramasia was named the ninth person to be appointed permanent or acting CEO since 2010, non-executive director and Rothschild & Co. banker Martin Kingston laid out the extent of the company’s financial needs. As well as the repayment of the 3.5 billion-rand loan, 9.2 billion rands is set to mature later this year. Oh, and South African Airways also needs 4 billion rands to keep running into 2020.
South African Airways is in discussions with both local and international lenders
If everything the CEO, Jarana said is correct, then the South African government needs to give an explicit show of support before any further debt will be extended. And there’s little sign of that, with Finance Minister Tito Mboweni saying as recently as April that the airline should be closed down. He also left SAA out of his budget speech in February in favour of a massive bailout for power utility Eskom Holdings SOC Ltd.
South African Airways remains confident that it can break even in the 2020-21 financial year, Kingston said, which would be about a decade after the airline last made a profit. But it needs the shareholder namely, the government — to address the debt problem, he added.
Culled from Bloomberg | South African Airways Lays Out Its Cash Needs