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SAA to get R5bn capital injection after plea for cash – CEO

The company is negotiating a bridging facility with lenders, but will first seek cabinet approval.

South Africa has promised another R5 billion capital injection to help its struggling state airline meet urgent financial obligations, the CEO of South African Airways (SAA) said on Thursday.

SAA has not generated a profit since 2011 and has already received state guarantees totalling nearly R20 billion. It needs the money to help pay debts and prop up the business as it implements a turnaround plan.

The promise of more government cash comes after SAA chief executive Vuyani Jarana told parliament in April that the firm needed the capital injection “now”.

“Government has committed to inject another R5 billion into SAA. Part of that R5 billion we will repay some of the creditors, suppliers, then the balance will support us for working capital until around October/November,” Jarana told Reuters in an interview.

The Treasury said it would follow its normal budgetary process, which entails seeking cabinet approval.

“The outcome of this process is expected to be finalised in time for the 2018 MTBPS (Medium-Term Budget Policy Statement),” the Treasury said.

The MTBPS is usually presented to parliament in October.

Jarana said that while waiting for the funds, the company would negotiate for some breathing space with lenders.

“If Treasury needs a certain period of time to do this, lets say up to September, between now and then, we are negotiating with lenders to give us a bridging facility on the back of that commitment,” he said.

SAA is regularly cited by ratings agencies as a drain on the government purse, but the Treasury is hopeful that new executive leadership led by Jarana, a former executive at telecoms company Vodacom, would return the airline to profitability.

The government has said that SAA needs an equity partner to pump money into the company to address its liquidity crisis and to help with the implementation of a turnaround plan.

The airline was looking at several measures to cut costs and Jurana said reducing the current workforce of about 10 000 people was “inevitable”.

“Whether it’s pilots, cabin crew, administration, we are going to rationalise the workforce. It’s an unavoidable thing. We have been talking to trade unions about how we work together,” Jarana said.

“The first priority for me is job preservation, how do you find alternative jobs for people as a starting point before you go into the hard issues of retrenchments.”

Jarana said the company hopes to break even in three years time and “there onwards, everything else equal, it will be able to start paying for its own operations in terms of positive cash flows”.

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This stinking cow will banckrupt the whole country and the idiots in charge will not see reason. So much for Ramaphoria – he is turning out to be just another lame duck. Dont give them a cent.
So they gave them a commitment but wait for the budget process which has to go through Parly – why if they have the commitment what is parliament supposed to do – just rubber stamp?

5billion here. 5billion there. Pretty soon you are talking about real money.
Sell this p.o.s now please.

Anyone thought of telling your average voter on the street that the ANC government could’ve given every person in the country 100 bucks but instead used it to keep airplanes up in the skies? Sure the impoverished wouldn’t mind losing a monhs groceries for “national pride”.

Whats the total now – R15B? Thats about R300 for very man woman and child. And just imagine how many farms they could buy (that’s available in the market right now) to give to whomever they want.

If SAA was last profitable in 2011 then what makes this new management team believe they will return to profitability even in the next 10 years let alone sooner. Should cabinet approve a further injection of cash to SAA then there should be a concerted effort by the taxpayers to have their views heard and heeded, otherwise a tax revolt may well ensue

Another R5bn. Do CR, NN and PG expect tax morality and compliance to increase on the back of this decision?

It must be good business lending money to SAA or Eskom.

If there are any such funds that borrow these guys money probably should be looking into buying into their portfolios.

When, oh, when, is CR going to realise that his “people” cannot organise the proverbial “p..sup in a brewery” let alone run efficient SOE’s at least at a breakeven!! Not one success story, and yet a common thread cannot be identified, poor Management skills, top to bottom!!

maybe one should look at the various banks for lending them money knowing full well that the government can sign surety on any loan they give, so the banks just keep on giving. The banks should be fined for doing this, SAA is massively in debt which has to be paid back… interest is killing it. The interest rate in SA is disgusting and is one of the leading causes of poverty.

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