South African Airways‘ rescue plan priced at $580 million
As part of an ongoing restructuring process and effort to salvage South African Airways and maintain the airline as South Africa‘s main state carrier, a rescue plan involving a 10 billion rands ($580 million) capital injection was proposed by the airline‘s administrators to the South African government yesterday.
This proposed bailout will be separate from the previous $950 million provisionally set aside by the government to cover the airline‘s debt and debt-service costs. However, the proposed business plan revealed that this new capital will allow the airline to maintain a substantial portion of its route network as it restructures.
From the $580 million mentioned in the release, $163 million will be set aside to maintain operational working capacities, $128 million will address the current layoffs and $174 million will cater for the costs amassed from unused tickets. The remaining $133 million will be split between lessors and creditors with the former receiving $99 million and the latter, $34 million.
As reported by Reuters, the South African Public Enterprise Ministry expressed in a statement that it will review the proposed plan and that it expects that it will lead to “a competitive, viable and sustainable national airline“. Although the airline is projected to make losses of over 6 billion rands ($349 million) over the next 3 years, a reduction in its staff and fleet capacity was stated to be beneficial, as it would only need 1000 staff and 6 aircraft to navigate this period of travel restrictions as compared to its current capacity of 5000 staff and 44 aircraft.
If a reduction in capacity is implemented, the numbers stated are expected to increase to a staff count of 2900 and 26 aircraft once travel restrictions are eased.
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