The future of South African Airways (SAA) appears secure following an agreement between the South African government, banks and the airline’s business rescue practitioners.
In a statement on Tuesday, SAA confirmed: “Discussions with financial institutions have been fruitful with the Development Bank of Southern Africa offering to provide the next tranche of funding for a total amount of R3.5 billion [£185 million], with an immediate draw-down of R2 billion.”
The airline declared: “The rescue process is [now] on a significantly sounder footing.
“Passengers, travel agencies and airline partners may continue to book air travel on SAA with confidence.”
SAA said additional funding “is being considered” and noted the government remains committed to finding “a strategic equity partner” for the airline.
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South African Airways cancels 38 flights amid cash crunch
The state-owned carrier has been in trouble for months and the government had made a turnaround a priority.
The airline had been due to receive R2 billion ($138 million) in emergency government funding at the start of last week, with R2 billion more due to come from private lenders.
However, South African media reported the Treasury refused to provide the funds without certain guarantees.
That left the airline to consolidate services on domestic routes between Johannesburg, Cape Town and Durban, as well as between Johannesburg and Munich.
However, SAA announced on Tuesday: “The business rescue practitioners of South African Airways, supported by the Departments of Public Enterprises and National Treasury have been successful in obtaining the balance of the post-commencement funding required to meet the short-term liquidity requirements of the airline until the business rescue plan (the Plan) is published and adopted.
“The advancement of the funds comes on the back of the business rescue process which began on December 5, with local commercial banks providing initial funding of R2 billion.
“Funding for the restructuring phase after the Plan is adopted is being considered by potential funders.”
It noted: “The restructuring of SAA will provide an opportunity to develop a sustainable, competitive and efficient airline with a strategic equity partner remaining the objective of government.
“SAA is a key strategic asset which needs to be positioned to provide reliable connectivity to markets within South Africa, the African continent as well as servicing selected international routes.”