September 18, 2019 / 8:48 AM / 9 months ago

South African Airways cash injection imminent but says it needs more

The logo of South African Airways (SAA) is seen on an aircraft at O.R. Tambo International Airport in Johannesburg, South Africa, February 14, 2019. REUTERS/Mike Hutchings

CAPE TOWN (Reuters) - South Africa’s cash-strapped national airline SAA says a government cash injection of 5.5 billion rand ($376 million)approved for the 2019/20 financial year is expected at the end of the month but it still needs more money, a presentation to lawmakers showed on Wednesday.

South African Airways (SAA) has debt of about 12.7 billion rand, consisting of 9.2 billion rand of legacy debt and a 3.5 billion rand working capital facility provided by banks.

The airline requires 2 billion rand by December to fund working capital for its 2019/20 financial year, the presentation said.

SAA, the turnaround strategy of which has been stymied by mismanagement and inability to service its debt in an increasingly competitive aviation environment, also received a 5 billion rand government bailout in its 2018/19 financial year.

The state-owned flag carrier’s long-term strategy is based on an equity injection of nearly 22 billion rand. The government, meanwhile, wants further cost reductions before committing more money during a time of weak domestic growth and is also considering how it might find a commercial partner for the airline.

In the presentation, SAA said it is in negotiations with lenders to make 2 billion rand available for working capital, adding that it would have to meet certain conditions to obtain the funding.

“Lenders have the following conditions,” it said. “Repayment of short-term funding of 3.5 billion rand by September 2019, which is already provided for, and a debt reduction and payment plan for the legacy debt of 9.2 billion rand.”

($1 = 14.6272 rand)

Reporting by Wendell Roelf; Editing by David Goodman

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