South Africa Airways in need of 5 Billion Rand

In recent times many have likened South African Airways to a rich son who knocks at his father’s door asking for more money after wasting away his fair share in the night.

The airlines woes have continued to mount despite government bailouts to the national carrier. Since 2011, over 20 billion rand has been injected into the airline yet this has still not brought a profit margin to the airline.

In a statement from the Chief Executive Vuyani Jarana, the airline needs up to 5 billion rand this year to be received in the next 6 months to pay off debts and manage the costs of operation. The 5 billion rand he further revealed was needed to support the airline’s working capital.

Since August 2017, the airline hasn’t had access to credit facilities from banks as lenders continue to question the airline’s ability to repay its debt. By 2019, the airline is expected to pay up to a tune of 9.2 billion rand. This figure, it is believed, will further grow.

According to Vuyani, the airline wasn’t able to pay the principal amount although the interest had been serviced. The airline is now looking at changing its repayment strategy to an optimal capital structure which aims at minimising the cost on capital.

“We do need access to capital to sustain the operations and we are having discussions with Treasury, as well as the banks around how we have an open credit line,” Chief Executive Vuyani Jarana told parliament.

The treasury responded to this matter by saying that South African Airlines needs an equity partner to pump money into the company to address the liquidity crisis and help implement the turnaround plan for the airline. 1$ = 12.33 rand