South African Airways (SAA) has said it is in urgent need of a new capital injection to keep the state carrier airline afloat.
SAA has said there are ongoing discussions with banks and the National Treasury for an open credit line. “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 can have an open credit line,” said SAA Chief Executive Vuyani Jarana.
The flag carrier airline of South Africa is highly in debt and has not generated profit since 2011. In 2017, the embattled airways was forced to cut its fleet and reduce 23 percent of flights due to the precarious financial position it was deep in.
In 2017, Standard Chartered Bank called in its loan to the struggling airline and the South African treasury asked the Public Investment Corporation, which controls government pension funds, for R100 billion to help bailout state owned enterprises, including SAA. Ratings agencies regularly refer to SAA as a drain on the government purse as it has received state guarantees totalling nearly 20 billion rand ($1.6 billion).
With all the loans and bailout, the airline and gotten, Jarana, still noted that that SAA would need around 5 billion rand (over $404 million) this 2018 for operational cost and to pay down debts. In response, the National Treasury said that the state airways needs an equity partner that will invest hugely to save it from liquidity crisis.