South African Airways will get a cash injection of R5 billion to enable the struggling national carrier to settle its debts. File Image: IOL South African Airways will get a cash injection of R5 billion to enable the struggling national carrier to settle its debts. File Image: IOL
PARLIAMENT - South African Airways will get a cash injection of R5 billion to enable the struggling national carrier to settle its debts, National Treasury announced in the adjusted expenditure estimates on Wednesday.
"R5 billion is tabled in the Special Appropriation Bill, 2018, for the recapitalisation of the South African Airways SOC Limited to settle due debts."
South African Airways Express, which had its aircraft grounded in May because it was unable to perform proper maintenance, will get R1.249 billion.
The mid-term budget statement noted that state-owned enterprises continued to pose a risk to South Africa's fiscal outlook.
"Several entities with acute financial difficulties do not have sufficient cash to repay debt falling due. Ordinarily these institutions would refinance these amounts, but given negative investor sentiment there is a strong possibility that they will have to redeem debt."
SAA received state bailouts last year to prevent it from defaulting on due debt. Then finance minister Malusi Gigaba drew criticism for allocating the airline R3 billion from the State's National Revenue Fund.
This time, National Treasury has opted to legislate the lifeline, which means that the measure will be brought to Parliament and debated.
The airline posted a loss of R5.7 billion in May. Its turnaround strategy is premised on recapitalisation by the State to the tune of R13 billion over two years.