SAA launches rescue plan of 5 billion rand in one month and asks for more money

South African Airways (SAA) has spent 5 billion rand to bail out its government in just one month, but says it needs a lot more money to stay in the air.

Not long ago, in his mid-term budget speech, Finance Minister Tito Mboweni reluctantly agreed that the government would rebuild SAA's besieged bank account with 5 billion rand. .

SA5: eruption of 5 billion rands

Mboweni then stated that the national carrier should be closed because it represents a financial burden for the state. A month later, spokesman for the Ministry of Public Enterprises, Adrian Lackay, said the government was both reluctant and unable to continue to convince the troubled society to get out of its self-imposed financial despair.

However, the horror of the announcement of Mboweni's allocation on October 24 was eclipsed by the owned by the state spectacular corporate spending spree.

On November 10, SAA CEO Vuyani Jarana admitted that the company had already spent Rs 3 billion on the bailout to cover urgent debts. Nearly three weeks later, while talking to parliamentarians, Jarana and her CFO, Deon Fredericks, confirmed that the remaining $ 2 billion had been spent on "new capital requirements."

While the rescue plan of 5 billion rand was aimed at getting the SAA out of the doldrums of economic collapse, the company's executives have once again approached the government, cap-in-hand , shouting at the imminent financial ruin.

How much money does SAA really need to "fix the situation"?

According to a report by Carol Paton and published by Business Day, SAA will need an additional 16.7 billion rand from the government to avoid a complete financial and operational collapse. This rescue should take the form of equity guarantees and loans.

SAA needs 3.5 billion rand immediately, as before the end of the year. The troubled airline needs an additional 4 billion rand by March. The rest of the funds must cover exorbitant debts that should expire in four months.

Incredibly, this means that SAA will have spent 8.5 billion rand in less than three months.

Even more shocking is the fact that, even with these mbadive government bailouts, the national airline has pushed its planned "payback" date even further. Fredericks explained that the company had bet on an average oil price of $ 45 a barrel, while in reality, the price hovered around $ 75 a barrel for most of the year. SAA says it will start generating profits by 2021.

During its parliamentary presentation, the SAA board of directors explained that the airline would lose 5.2 billion rubles in 2019 and another loss of 1.9 billion in 2020.