South Africa wants national airline back in air in first half of 2021.
South Africa’s government said on Thursday it wanted its national airline flying again in the first half of next year, after giving it a 10.5 billion rand ($650 million) bailout in the mid-term budget.
The Department of Public Enterprises (DPE) said the latest cash injection meant a restructuring plan for state-owned South African Airways (SAA), which has been in a form of bankruptcy protection since December, can now go forward, Reuters reported.
“The Business Rescue Plan for SAA is fundamental and will create a solid base for the emergence of a competitive, viable and sustainable national airline,” it said in a statement.
But aviation experts said the bulk of the new money is earmarked for repaying SAA’s creditors and the roughly 2 billion rand left over for restart costs would be quickly exhausted.
“It’s nowhere near enough to restart a recapitalised airline,” said Joachim Vermooten, an aviation economist who used to work at the DPE.
The airline could require around 18 billion rand in capital over the next five years, Vermooten estimated based on the scale of operations envisaged in SAA’s restructuring plan and the more than 6 billion rand of losses its administrators were predicting over the next three years.
SAA has not made a profit since 2011, draining scant public resources at a time of weak economic growth.
Photo: Montague Smith/Wikimedia
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