State-owned South African Airways is going into bankruptcy protection.
The government has pledged 4 billion rand ($274 million) to keep the airline running during a restructuring period. SAA hasn’t posted a profit since 2011 and has received 57 billion rand in bailouts since 1994.
The airlines’ finances suffered after the eight-day employee strike in November and an earlier refusal by the Treasury to provide additional funding.
Bloomberg reports that the South African Airways rescue plan includes the following:
- Existing lenders to SAA will provide 2 billion rand of “post-commencement finance” guaranteed by the government and repayable out of future budget appropriations to enable SAA to continue to operate
- The Treasury will provide an additional 2 billion rand of funding in a “fiscally neutral manner”
- Recovery of capital and interest on existing debt provided to SAA by existing lenders that is the subject of existing government guarantees will not be impacted by business rescue
- A review of the airline’s cost structure will be conducted, with a simultaneous effort to retain as many jobs as possible. SAA has more than 5,000 workers, and the SAA Group of companies employs thousands more.