SOUTH AFRICA: South African Airways Expecting $400 Million Capital Injection From Government

South African government has promised another $400 million capital injection into failing airline South African Airways.

This comes after CEO Vuyani Jarana told the government in April that they needed a capital injection urgently.

Jarana said that the government has committed to inject another 5 billion rands into SAA. Part of that 5 billion rands we will repay some of the creditors, suppliers, then the balance will support us for working capital until around October/November.

The Treasury of the South African Government confirmed in a statement that the outcome of this process is expected to be finalized in time for the 2018 MTBPS (Medium Term Budget Policy Statement).

This statement will be presented to parliament in October.

The Government also added that South African Airways needs a private equity partner to fund the airline further as the parliament shouldn’t need to be bailing them out all of the time.

The airline did concede that job losses will have to be implemented in their current workforce of 10,000 people, saying it was inevitable.

Jarana said that 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?

South African Airlines is to receive a $400 million capital injection from the Government of South Africa.

This is all subject to Treasury approval by October 2018.

Jarana’s ambitions for the airline is to break even within three years as well as being able to pay for their operations without needing handouts from the government.

SAA has not produced a profit for seven years and has received up to 20 billion Rand in state support already.

SAA claims that the $400 million is needed to prop up the business, pay off debts as well as implementing a turnaround plan.

It remains to be seen what the turnaround plan consists of and whether it will produce the results the airline needs and what the government wants so then payback of the bailout and can begin in due course.

Whether cutbacks are going to be needed seems very likely, but it is a promising sign for the employees that Jarana’s priorities in the cutbacks are job preservation and not just the straight-out redundancies that are on everyone’s minds.

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SOUTH AFRICA: South African Airways Needs $399 Million Cash Injection To Stay In The Sky

South Africa’s state carrier SAA requires a $399 million cash injection in the current financial year to help it meet its financial obligations, a senior treasury official said on Tuesday.

National Treasury director-general Dondo Mogajane told parliament the cash injection could however not come from government, which has so far pumped 20 billion rand into the firm.

Mogajane said treasury was willing to consider selling a stake in the airliner to a private equity partner.

Investigations into the audit of South African Airways is to be finalised soon.

The Independent Regulatory Board for Auditors (IRBA) has told Parliament’s standing committee that the probe is far advanced.

It follows a complaint by Democratic Alliance MP Alf Lees against auditors PriceWaterhouseCoopers and Nkonki Inc.

He’s questioned the national carrier’s going-concern status, when it’s struggling to stay in the sky.

Treasury says the national carrier needs another R5 billion in this financial year to keep flying. This is on top of last year's R10 billion bailout.

IRBA chief executive Bernard Agulhas says that the regulator completed its probe of SAA's 2015/2016 financial statements but decided to conduct further checks.

We are concerned that there might be broader issues that we need to cover as more information comes to our attention.

We cannot continue to change the terms of reference of our investigation, but we cannot ignore anything that comes to our attention.

Agulhas says he expects the probe to be finalised at the next meeting of the board's investigations committee.

South African Airways requires a R5 billion cash injection in the current financial year to help it meet its financial obligations.

This is according to National Treasury director-general Dondo Mogajane, who has told parliament the cash injection could not come from government as it has already pumped R20 billion rand into the state-owned enterprise, reports Reuters.

Instead, other avenues are being considered to help cover the shortfall, with Mogajane saying that the National Treasury was willing to consider selling a stake in the airliner to a private equity partner.

The consideration follows confirmation by deputy minister of finance, Mondli Gungubele, that the airline will require an additional R12 billion in bailouts over the next three years.

Speaking to parliament in April, Gungubele said that SAA would need another government bailout in the 2018/19 financial year of R5 billion – with another R5 billion needed in 2019/2020, and another R2 billion needed in 2020/21.

This would allow the airline to continue operations, and also to help service its debt which matures in March 2019.

CEO Vuyani Jarana is at the early stage of a turnaround plan designed to return the carrier to break-even by 2020 and ease dependency on the government, which last year approved a bailout to swerve a default on debt owed to Citigroup Inc.

The airline has shaken up the board and cut routes to reduce costs but is yet to emerge from any financial distress.


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