South African Airways Asks for Further State Funding GuaranteesMike Cohen
South African Airways, the unprofitable state-owned airline, has applied for additional financial guarantees from the government, according to Public Enterprises Minister Lynne Brown.
“SAA has made an application for an additional going concern guarantee, the outcome of which is subject to a response from the National Treasury,” Brown said today in a written statement to Parliament. The ministry is in talks with the Treasury “to find a sustainable resolution to the financial challenges of the airline,” she said.
SAA, which has been surviving on state-backed loans, has hired KPMG LLP to advise on the acquisition of about 25 aircraft to replace older models and reduce operating costs, Chief Executive Officer Monwabisi Kalawe said last month. The airline is battling with an aging long-haul fleet and won’t break even until fiscal year 2016 or 2017, he said.
The carrier won’t be able to file a full-year earnings statement or annual report by the end-September deadline, according to Brown. It will probably require private funding of 50 billion rand ($4.4 billion) to stay afloat, she said last month.