South African Airways has said that it needs additional funding by the end of the this new week. The financial support will be used to continue its business rescue. The South African government has shown support for the plan. However, it has not said where it will get the money from.
The news that South African Airways needs more funding will not come as a surprise. The airline seems to continually be on the hunt for additional cash to rectify its poor financial situation.
Last week, the airline said that it was hoping for additional short term funding to complete its business rescue. The South African carrier was rescued by administrators in December to revive the airline. Its Business Rescue Practitioners are now looking to the government for funding by Friday, 18th September.
According to a statement obtained earlier, South African Airways said,
“The existing funds which are available for operational expenditure…are near depletion.”
It is unclear just how much money the airline needs this time around.
Despite the request, the South African government is not yet sure where it will get the money from. However, it has assured that it will have the funds ready. It is expected to make a statement on 17th September to clarify.
The government of South Africa has been supportive of the restructuring of the airline and is unlikely going to let the issue of short-term funding get in the way. That said, it still holds the view that it will not give bailouts to the struggling carrier. It is thought that private financial backers will provide the money.
Recently, Ethiopian Airlines had expressed interest in helping the airline. The airline said, “The fact of the matter is that we are capable [of buying it], and we are desirous…African cooperation is always good. It’s good for SAATM and for the Continental Free Trade Agreement and Single African Skies, so it’s in line with that. So, if there is a vacancy appearing, then [we] definitely will be part of it.”
South African Airways Business Rescue Practitioners set out a plan of action in June. The focus was on restructuring, which required R10bn ($598m) and the termination of aircraft leases.
Since the plan has been in place, 33 aircraft leases have been ended. That leaves an additional seven lease, which practitioners expect to be completed by the end of the month. With a reduced fleet and a reduced workforce, South African Airways will be able to extend its network in the future.
With the current travel climate, that might be a bit difficult when the airline is so desperate for cash.
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