Ailing SAA gets $650M government-backed funding
The government of South Africa kept its promises and provided South African Airways (SAA) 10.5 billion rand ($650 million) necessary to implement the airline‘s restructuring plan.
According to local media reports, on October 28, 2020, the National Treasury of South Africa presented to Parliament the medium-term budget policy statement (MTBPS). Following the document, Tito Mboweni, the Finance Minister, approved a 10.5 billion rand ($650 million) bailout to SAA.
Reportedly, the MTBPS also set an additional financial injection of 6.5 billion rand ($394 million) to settle SAA’s debts and interests. The Finance Minister took into account that the ailing airline was the state-owned flag carrier therefore the funding should come from the government’s budget.
“This allocation is funded through reductions to the baselines of national departments, public entities and conditional grants” speaking to local media said Mboweni.
All operations of the state-owned SAA were suspended on September 29, 2020, after previous attempts to restructure the carrier had been met with opposition from both the government and trade unions. For the implementation of SAA’s resuscitation plan, ticket refunds and severance packages payout for 4,000 employees, the government of South Africa still needs more than $591 million.
The SAA filed for liquidation and bankruptcy protection in December 2019, after 8 years of continuous losses.