The embattled South African Airways (SAA) is currently debt-free but is looking for additional funding from the National Treasury or private banks.
The State Owned Enterprise (SOE) informed Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday that in order to get back on track, the national carrier needs another capital injection.
SAA said that it had to pull back on its plans as the R3 billion that was going to be injected into the company fell through.
The funds would have come through via the controversial 51% sale of SAA to the Takatso Consortium.
The deal failed to proceed as the late former Minister of Public Enterprises, Pravin Gordhan killed the deal at the last minute.
Takatso would have bought SAA for R51 but would have had to inject R3 billion of capital into the ailing SOE in the form of a shareholder loan.
SAA is also still looking for an equity partner and the Minister of Transport, Barbara Creecy said that the national carrier will lose market share if they do not get a partner.
An equity partner will provide a cash injection to SAA and will allow the company to expand and create more regional and international routes.
Aid from the banks
The airline has also approached banking institutions for aid, according to SAA chairperson, Derek Hanekom.
He told Scopa members that SAA has been engaging with various banks but the company is not looking for a direct loan at this point.
Hanekom said that SAA needs a “loan facility” as a kind of buffer for emergencies.
The national carrier’s cash reserves are low and this makes the company quite vulnerable should there be any major “shockwaves” or emergencies in the future, since SAA does not have any funds to draw on, he explained.
Hanekom also added that the banks have become receptive to SAA, given its recovery and the fact that it is debt-free.
“We are approaching the banks now and I must say because of the many changes that have happened and the company being stabilised at this stage there is much more of a sort of positive approach from the banks,” he said.
Hanekom said that the banks have been looking at SAA’s business plans and specifically at the unencumbered property the airline owns.
SAA owns around R5 billion worth of unencumbered property, and according to Hanekom, these assets allow the airline to stand in “good stead for the possibility of getting the loan facility,” he noted.
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