SAA gets R10.5-billion government bailout

 

We cannot break the fiscal framework, Finance Minister Tito Mboweni said while discussing state-owned enterprises. Courtesy #DStv403

CAPE TOWN - The government on Wednesday announced the release of R10.5-billion needed to fund a plan to rescue struggling, state-owned South African Airways.

The cash-strapped flag carrier was placed under a state-approved administration in December following years of mismanagement and rising debt.

In a mini-budget statement on Wednesday, Finance Minister Tito Mboweni said R10.5-billion "is allocated to SAA to implement its business rescue plan". 

READ: SAA waiting for funding to pay technical staff

The bailout is funded through cuts in spending elsewhere in other public entities and conditional grants.

The latest allocation expected to save the limping airline, is in addition to R16.4-billion doled out in February this year to settle guaranteed debt and interest.

Administrators axed most domestic and some international routes in February to save cash -- even before coronavirus grounded airlines globally -- as they drafted a massive restructuring plan to create a leaner, competitive airline.

READ: Government vows to give funding to SAA

The rescue plan will see the airline shrink dramatically, emerging with a fleet of just six aircraft out of the 44 it had last year. Only a fifth of the almost 5,000 employees would remain.

The aim is then to grow it back to 26 planes by the end of 2021 and re-hire 1,000 furloughed staff.

Meanwhile, the DA said SAA should not have been bailed out.

The party said Mboweni has gone back on his promise to get debt under control.

The DA said SAA should not have been bailed out. The party said Mboweni has gone back on his promise to get debt under control. Courtesy #DStv403

Source
AFP